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1) What functions do the Statutory Conditions perform?
The Statutory Conditions are definitions, rules, and regulations that govern automobile insurance contracts in the common law provinces.
- Their intent is to protect the rights of the insured and the insurer by stating what is expected of each in certain circumstances, and specifying ways of handling certain situations that could arise and affect coverage under the contract.
2) Where do the Statutory Conditions get their authority?
The federal Government
3) To what automobile insurance policies do they apply?
All types of policies ex: owner’s, non-owned, garage, and so forth
4) What types of changes are considered “material” to an automobile policy?
Material changes: are those that would influence a reasonable prudent insurer to decide whether to stay on risk or influence the terms on which the risk is retained.
a) Any change in the insurable interest of the insured named in this contract in the automobile by sale, assignment or otherwise, except through change of title by succession, death or proceedings under the Bankruptcy Act(Canada)And in respect of insurance against loss of or damage to the automobile
b) Any mortgage, lien or encumbrance affecting the automobile after the application for this contract;
c) Any other insurance of the same interest, whether valid or not, covering loss or damage insured by this contract or any portion thereof
5) How does Autopac deal with changes in the use of an automobile?
Autopac requires that the registration be changed if the use of the automobile changes
6) State the prohibited uses of an automobile by an insured?
The insured shall not drive or operate the automobile:
a) Unless he is for the time being either authorized by law or qualified to drive or operate the automobile; or
b) While his license to drive or operate an automobile is suspended or while his right to obtain a license is suspended or while he is prohibited under order of any court from driving or operating an automobile; or
c) While he is under the age of 16 years or under such other age as is prescribed by the law of the province in which he resides at the time this contract is made as being the minimum age at which a license or permit to drive an automobile maybe issued to him; or
d) For any illicit or prohibited trade or transportation; or
e) In any race or speed test.
7) Is there any difference between the prohibited uses by the insured and the prohibited uses by others? Explain.
8) What is the difference between “authorized by law” and being “qualified” to drive?
Authorized:means having a valid driver’s license for the class of vehicle being operated.
Qualified: means being capable of obtaining a driver’s license immediately.
9) Under what circumstances would extension insurance purchased from a private insurer become primary over basic Autopac?
If an insured purchases basic Autopac but applies to a private insurer for extension insurance, the difference in wording is important. If the operator is qualified but not licensed, the extension insurance issued by the private insurer will become primary.
10) What must an insured do after being involved in an accident where there is loss or damage to persons or property?
a) The insured must give, in writing, all available particulars of both the accident and any claim made on account of the accident.
b) The insured must verify that the claim arose from the operation of the automobile and the person operating the automobile is a person insured. He must establish that the vehicle and the driver are insured by the policy in question. The information provided enables the insurer to investigate the loss and to set up a defense if one is required. The insured may be required to give information in a statutory declaration (sworn statement) in certain circumstances.
Ex: if the insurer suspects fraud or that the insured is not telling the truth
c) The insured must forward all writs, claims, and correspondence to the insurer immediately. The insurer must be kept informed of what is happening with respect to the 3rd parties. Complying with this provision is absolutely essential to protect the interests of both the insurer and insured. The insurer has 20 days from the time the statement of claim is issued to enter an appearance. If it serves a notice of intent to defend it has another 10 days. If these steps are not taken, the plaintiff can apply to the court for a default judgment.
11) Why is it so important for an insured to forward immediately to the insurer all documents received with respect to a claim?
To protect the interests of both the insurer and the insured.
12) What might happen if an insured voluntarily assumes responsibility for a vehicle accident involving another vehicle, and then submits a claim to the insurer for the accident?
If the insured voluntarily assumes liability or makes settlement of a claim, the insured does so at their own cost because these actions may negate a defense being set up by the insurer.
13) Who pays for the cost of investigating and securing information with respect to an automobile accident?
14) Why is an insured advised not to have his or her vehicle repaired before the insurer has inspected it?
Because it is necessary to ensure the insurer has the opportunity to examine the automobile to determine the extent of damage. This does not prevent the insured from making repairs necessary to protect the vehicle from further damage any other repairs may only proceed with the written consent of the insurer, or after a reasonable time has elapsed after the accident. A reasonable time depends on the circumstances of the case.
15) Whose responsibility is it to protect an automobile after an accident? Who pays for expenses incurred while doing so?
It is the Insured’s responsibility to protect the vehicle after a car accident and the Insurer pays for the expenses incurred
16) What are the “proof of loss” requirements?
It is must be submitted to the insurer within 90 days of the accident. The condition states the details to be provided; the insurer must provide a blank proof of loss to the insured.
17) How is the value of an automobile determined for the purpose of a loss settlement?
The value of the vehicle is determined usually by Actual Cash Value.
Replacement cost generally increases as time goes by mostly because of inflation. Sometimes, vintage, veteran and other “special” automobiles are insured on a “valued” basis – at the time of placing insurance, the insured and insurer agree on the amount that will be paid in the event of total loss and this agreed amount is inserted into the policy. If a total loss occurs this is the amount that is paid with no account being taken of depreciation or obsolescence. In Manitoba, this coverage is not available under basic Autopac, but may be available through extension insurance purchased from private insurers.
18) How is “actual cash value” determined?
Actual Cash Value: replacement cost less depreciation
19) Who has the option of deciding whether a damaged automobile will be repaired or replaced?
20) Is there a time limit within which the repairs must be made or the vehicle replaced?
The insurer must notify the insured of their intention to replace, repair, or rebuild the lost or damaged property within 7 days of receiving proof of loss.
21) What are the rules with respect to abandonment of a damaged vehicle?
There shall be no abandonment of the automobile to the insurer without the insurer’s consent. If the insurer exercises the option to replace the automobile or pays the actual cash value of the automobile, the salvage, if any, shall vest in the insurer.
The insured might be tempted to leave the wreck where it is, throw up his hands, and leave it to the insurer. This provision does not allow the insured to do this without consent for the insurer
22) Who is entitled to the salvage when an insurer replaces or pays for a damaged vehicle?
23) How much time does the insured have to give notice of a loss to the insurer?
24) What are the conditions for bringing an action against one’s insurer?
The insured who brings an action is required to meet requirements about reporting the details of the loss and damage caused by the loss as specified in Statutory Condition 3 - where loss or damage to persons or property and Statutory Condition 4 – Requirements where loss or damage to automobile.
25) Who may give notice and proof of a claim?
Notice may be given by the following:
a) The agent of the insured – this not the insurance agent; it is the insured’s legal representative and could be someone such as a parent, child, lawyer, or business agent. The insured’s inability to give notice or proof must be explained; he or she might be incapacitated because of the accident, or someone else could have been driving the automobile with permission while the insured is out of the country or otherwise inaccessible.
b) A person to whom any part of the insurance money is payable(ex: 3rd parties or lessors) – the inability of the insured to give notice or proof must be explained, or it must be shown that the insured refused to give notice or proof
26) How much time does the insurer have to pay the claim?
The insurer must pay the required insurance money within 60 days of receiving the proof of loss
27) How does an insurer cancel an automobile policy?
The insurer may terminate a policy by doing either of the following:
a) Giving 15 days’ notice by registered mail
The 15 days’ notice begins the day following receipt of the letter at the post office to which the registered letter is addressed
b) Giving 5 days written notice personally delivered
If notice of termination is personally delivered, it is wise practice to have a witness present, such as, another employee of the insurer or the broker. A receipt for the notice of termination should be obtained from the person to whom the notice was delivered
28) How does an insured cancel an automobile policy?
The insured may cancel at any time:
a) No special conditions apply
b) Refund premium on short rate basis subject to minimum retained premium
c) Refund payment to be made as soon as possible
29) What are the provisions for giving notice to an insurer?
Any written notice to the insurer may be delivered at, or sent by registered mail to, the chief agency or head office of the insurer in the province. Written notice may be given to the insured named in this contract by letter personally delivered to him or by registered mail addressed to him at his latest post office address as notified to the insurer. In this condition, the expression “registered” means registered in or outside Canada.
30) List the Statutory Conditions
a) Material change in risk
b) Prohibited use by insured
c) Prohibited use by others
d) Requirements where loss or damage to persons or property
e) Requirements where loss or damage to automobilef) Inspection of automobile
g) Time and manner of payment of insurance money
h) Who may give notice and proofs of claim