Chapter 7 Loss of or Damage to the Insured Automobile Key Point Questions

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Chapter 7 Loss of or Damage to the Insured Automobile Key Point Questions
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2014-03-05 10:08:00
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Chapter Loss or Damage Insured Automobile Key Point Questions
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Chapter 7 Loss of or Damage to the Insured Automobile Key Point Questions
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  1. 1)Identify 3 sources of Own Damage coverage for vehicle owners in Manitoba?
    a) Some vehicles have Own Damage coverage included with basic Autopac – if the insured automobile is of a certain type and falls within uses for which coverage is provided

    •  
    • b) Some vehicles have Own Damage coverage included under basic Autopac, but the coverage is subject to a specified limit – in certain cases, additional coverage above this limit maybe purchased, while in others, no additional cover may be purchased from Autopac

     

    c) Some vehicles do not qualify for Own Damage coverage under basic Autopac, but may purchase Own Damage coverage through private insurers or the Special Risk Extension(SRE) department of MPI
  2. Is Own Damage coverage compulsory in
    Manitoba? Explain.
    yes except for optional Autopac
  3. Why might a lessor require an insured to
    purchase Own Damage coverage for a leased vehicle?
    In many jurisdictions, Own Damage coverage is optional. However, insureds leasing or financing the purchase of their vehicle may be required to purchase it under automobile lease contracts or purchase finance contracts.
  4. Compare and contrast Specified Perils coverage, Comprehensive coverage, Collision coverage and All Perils coverage.
    Collision

    •  
    • Collision coverage indemnifies an insured
    • for damage to the vehicle caused by impact with another vehicle, person, or object or with the surface of the road. This coverage is available to an insured who is at fault in the crash. It will also cover the costs of towing,
    • storage, salvage disposal, if needed.

     

    Comprehensive

    insurance covers loss of or damage to the vehicle by most causes, except those covered by collision. The perils covered include the following:

     - Fire

    - Theft(except by an employee or member of the insured’s household)

    - Vandalism

    • - Falling or flying objects, including rock or
    • gravel damage to the windshield

    - Malicious mischief

    - Lightning

    - Windstorm

    - Earthquake

    - Hail

    - Impact with animals

    - Missiles

    - Riot

    - Civil commotion 


    - Rising water

    • - The stranding, sinking, burning, derailment,
    • upset, or collision of a conveyance transporting the vehicle on land or water

     

    Specified Perils

     

    This coverage specifies the perils or causes of loss that are insured. It may be sold in combination with collision coverage or alone. It is similar to comprehensive, but covers a much more limited list of risks:

     

    - Fire

    - Theft(except by an employee or member of the insured’s household)

    - Vandalism

    - Lightning

    - Windstorm

    - Earthquake

    - Hail

    - Explosion

    - Riot

    - Civil commotion 


    • - Falling or forced landing of an aircraft or a
    • portion of it

    - Rising water

    • - The stranding, sinking, burning, derailment,
    • upset, or collision of a conveyance transporting the vehicle on land or water

     

    Some losses not covered by perils include damage from vandalism, malicious mischief, falling objects, or impact with an animal. Comprehensive coverage is needed to protect against these perils.

     

    All Perils

     

    All perils combines collision or upset coverage and comprehensive coverage. It also covers certain types of theft that are excluded under comprehensive, including theft of the automobile by a person residing in the insured’s household.
  5. Explain the purpose and use of deductibles.
    Under Own Damage coverage, the lower the deductible is the higher premium is. Coversely, the higher the deductible is, the lower the premium is. Deductibles are useful tools in keeping down premium costs. Expenses for processing and settling small claims are disproportionately high and often exceed the amount of the loss itself. Since all expenses will evntually be reflected in premiums, deductibles are effective in reducing claim costs. This is because losses under the deductible are paid by insureds, which allows insurers to pass on cost savings in their premiums and encourages insureds to be more prevention conscious.
  6. How are deductibles determined under All
    Perils coverage provided by basic Autopac?
    • The deductible for all perils coverage
    • depends on the type of vehicle that is insured.

     

    • Ex: private passenger automobiles have a
    • basic deductible of 500.00, while some trailers have a basic deductible of
    • 150.00.
  7. How might an insured obtain a lower deductible for All Perils coverage?
    • Insureds who desire a lower deductible may purchase one through optional Autopac, SRE, or extension insurance provided by private
    • insurers
  8. What is the coverage territory for Own Damage coverage under basic Autopac?
    • Basic Autopac insures vehicles and any
    • permanently attached equipment against accidental loss or damage in Canada or
    • the U.S.A.

     

    This coverage reimburses insureds for amounts that are as close as possible to the actual value of their loss.
  9. Define depreciation.
    Depreciation: is the value something has lost just through wear and tear.
  10. Define actual cash value (ACV).
    Actual Cash Value: is the vehicle’s fair market value immediately before it was damaged
  11. Mike loses control of his vehicle on black ice and hits a hydro pole by the side of the road. He is not injured, but he has damaged the front bumper on his vehicle, a 6 year old minivan. Will MPI pay to repair the vehicle with a brand new bumper? Explain.
    • When parts need replacing, the options range from using recycled parts to band new
    • factory-manufactured parts. Which option MPI chooses depends on the vehicle’s age and condition and the availability of parts.

     

    • Sometimes, it is not practical or even safe to use a replacement part that is equal in
    • value to the one damaged in the accident.

     

    Ex: It is better to replace worn out tires with new ones. In these situations, MPI will use a brand new part, but the insured will have to pay for some of it, depending on the wear on the part before the accident – called depreciation, or betterment.
  12. What amounts will Autopac pay in addition to amounts payable for the loss of or damage to an insured vehicle?
    a)   General average, salvage, or fire department charges;

    • b)Customs duties or bonds, required by Canada or the U.S.A., arising from replacement parts used to repair the vehicle in the U.S.A. as a result of an accident occurring there; and
    •  
    • c)Bonds required by a court, a province of Canada,or a state of the U.S.A.
  13. Would a flat tire be covered under Own Damage coverage? Explain.
    Tires would only be covered if the damage was from a crash, fire, theft or vandalism
  14. Could an insured claim for rust damage to
    his vehicle? Explain.
    • Rusting would only be covered if the damage was caused by something that Autopac covers, such as collision, fire, theft, or
    • vandalism
  15. Give examples of 2 kinds of theft that would be excluded from Autopac coverage.
    • a) Loss or damage caused by the theft of the
    • vehicle if the person whole stole it lives in the same household as, or is an employee of, the insured person

     

    • b) Loss or damage from people either stealing, or improperly taking ownership of a vehicle through a conditional sales contract,
    • lease, or similar agreement
  16. If a vehicle suffers loss or damage while
    in the care, custody, or control of another person with the owner’s consent, in what circumstances would MPI go after that person to recover amounts paid under Own Damage coverage (and NOT waive its right of recovery)?
  17. Why must insureds comply with the Conditions of Coverage?
    Insured’s must follow the conditions of coverage in order to ensure that their all peril’s coverage is valid.
  18. Summarize the driving limitations placed on the insured by the Conditions of Coverage
    • a) While he or she is under the influence of
    • intoxicating liquor or drugs to such an extent as to be, for the time being, incapable of the proper control of the vehicle;

    •  
    • b) While in a condition for which he or she is
    • convicted of an offence under  section 253(a) of the Criminal Code; (relating to operating the vehicle while impaired by alcohol or drugs)

    •  
    • c) While in a condition for which he or she is
    • convicted of an offence under section (b) of the Criminal Code; (relating to exceeding
    • the legal blood alcohol limit)


    • d) While he or she is not for the time being
    • qualified and authorized by law to drive the insured vehicle, or while, in any event, being under the age of 16 years, he or she is not the holder of a valid and subsisting driver’s certificate;

    •  
    • e) While his or her license to drive or operate the vehicle is suspended or while his or her right to obtain a license is suspended or while he or she is prohibited under order of any court from driving or operating the vehicle;


    • f) For any illicit or prohibited trade or
    • transportation;

    •  
    •  g) In any speed test or race;

    •  
    • h) When attached to that vehicle is a trailer that, being required to be registered under The Drivers and Vehicles Act, is not so
    • registered; or

    •  
    • i) To escape or avoid arrest or other similar
    • police action or in contravention of a signal from a peace officer requiring him or her to bring the vehicle to a stop

    •  
    • Also, the insured named in an owner’s certificate shall not permit, suffer, allow,or
    • connive at, the use of the vehicle designated therein by any person, in an way, or for any purpose, contrary to the provisions outlined above.
  19. What must an insured do if a loss occurs that is covered under Autopac All Perils coverage?
    After suffering loss or damage covered under all perils, the insured is required to promptly notify the Corporation of any other insurance of the same interest, whether valid or not, insuring against all or part of the loss or damage.
  20. What happens if the insured and MPI disagree as to the settlement amount for an Own Damage claim? How is a settlement reached in these cases?
    • When the insured and MPI disagree as to the
    • nature and extent of the repairs and the replacements required, the adequacy of repairs or replacements made, or the amount of insurance money payable in respect of any loss or damage, the question shall be determined by appraisers before recovery is made under all perils coverage. In this case, appraisers will make their determination independent of all other questions and whether or not MPI has confirmed coverage.

    •  
    • Where there is such a dispute, the insured
    • and the Corporation shall each nominate an appraiser to act on his, her, or its behalf and shall notify the other of the name, address, and telephone number of the nominated appraiser.

     

    • The provision then details procedures to be
    • followed by the appraisers when they are coming to a settlement, including the
    • procedures to follow if the 2 appraisers cannot come to an agreement.
  21. Differentiate between primary and excess
    insurance, and state whether basic Autopac is considered primary or excess insurance.
    Primary insurance: covers up to the policy’s limit, whether or not other policies cover the same risk.

    Excess insurance: is triggered only when the primary insurance is exhausted

    • Basic Autopac would be considered primary
    • insurance and extension coverage would be considered excess insurance.
  22. What time frame does MPI follow for payment of Own Damage claims?
  23. State 4 types of coverage available under Autopac.
    a) All Perils

    b) Collision or upset

    c) Comprehensive

    d) Specified perils
  24. Why might an insured purchase a car protection policy?
    Basic Autopac covers vehicles for ACV, up to a MIV of $50,000. Car protection policies offered through Autopac provide coverage above the ACV (Actual Cash Value).
  25. With regards to leased vehicles, what is investment value?
    • Investment value: is the down payment or trade-in allowance identified on the leasing
    • agreement, not including any taxes paid on that amount. Also there is no inflation adjustment and the vehicle’s MIV must watch the ACV.
  26. Summarize the protection offered by Rental Car Insurance (RCI), and identify any differences in coverage for vehicles rented in different jurisdictions.
    • Rental Car Insurance (RCI) covers Manitoba
    • residents who rent or borrow passenger vehicles or light trucks (4,540 kg or less GVW) in Canada or the USA. It Covers:

    •  
    • a) 3rd Party Liability;

    b) Damage to vehicles rented outside of Manitoba;*

    c) Lessee loss of use (replacement car coverage) – up to a daily limit and maximum limit;

    • d) Lessor loss of use (downtime charges for
    • vehicles taken off the road for repair) – up to a daily limit and maximum limit; and

    e) PIPP.

    •         
    • *Vehicles that are rented or borrowed within
    • Manitoba are covered under Autopac, so do not require this damage coverage. However RCI lowers the Own Damage deductible that the insured must pay for damage to vehicles rented in Manitoba to $100.

    • The type of RCI policy required depends on
    • where the rental vehicle is originally rented or borrowed. 3 types of RCI policies are available to provide adequate protection for vehicles rented or borrowed in different jurisdictions:

    a) Rental Car Manitoba

    b) Rental Car Canada

    c) Rental Car USA
  27. Don has purchased RCI. Will he be covered
    if he rents a vehicle while on vacation in England?
    No, because coverage is limited to vehicles used in Canada, the USA., and the ports thereof
  28. What types of vehicles might require Own
    Damage coverage from SRE or private insurers?
    various types of commercial vehicles
  29. Marie has installed aftermarket car audio equipment valued approximately $2,500 in her vehicle.
     
    a)      How much coverage will she have for the car audio equipment under basic Autopac in the event of an Own Damage claim?
     
    $1000.00
     
    b)     How might she ensure that the equipment is fully covered?
     
    She would purchase additional coverage
    a) How much coverage will she have for the car audio equipment under basic Autopac in the event of an Own Damage claim?

     $1000.00

    b) How might she ensure that the equipment is fully covered?

    She would purchase additional coverage
  30. Compare and contrast the loss of use coverage available from basic Autopac and from optional Autopac.
    Basic Autopac

    - Covers insureds for some of the costs of using other transportation when their vehicle has been stolen or damaged in a collision that is the fault of another Autopac-insured motorist. It does not cover them if the collision is their own fault.

    •  
    • - Under this coverage, MPI will reimburse insureds whose vehicles are stolen for reasonable expenses associated with taking taxis, using public transportation, or renting another vehicle. There is a daily limit and maximum overall limit for this coverage

    • - This protection starts 72 hours after insureds report the theft to MPI or to the police. It ends when the insured vehicle is
    • repaired, when MPI offers a settlement, or when the coverage limit is reached –
    • whichever comes first.

    - When insured vehicles are damage in a collision that is the fault of another Autopac-insured motorist, insureds may have a claim for replacement transportation expenses.

    • - To do so, insureds must prove that they needed to pay for other transportation and that they did their best to minimize these
    • costs. Insureds must choose the least expensive, most reasonable transportation
    • option

    Ex: using public transportation and taxis, unless renting a vehicle would be less costly.

    • - Expenses must be kept to a minimum because the at-fault motorist is responsible only for insureds’ transportation expenses
    • that are strictly necessary.

     

    Optional Coverage

    • - Insureds can also purchase optional loss of use coverage through Autopac, called Auto Loss of Use. It covers the loss of use of
    • vehicles due to reasons other than theft of the entire vehicle or damage caused by another Autopac-insured driver.

    - This coverage pays for the reasonable costs of other transportation, even if insureds are responsible for the accident. It also reduces their waiting period if the vehicle was stolen. There are 2 levels of coverage that can be purchased. Both provide the same type of coverage but 1 policy will have a higher daily limit and a higher overall policy maximum.

    • - For accidental damage that makes insured
    • vehicles undriveable, coverage starts immediately. Otherwise, coverage starts
    • when insureds take their vehicle in for repairs.

     - For stolen vehicles, coverage starts at 12:01 am the day following insureds reporting the loss the police or to MPI.

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