CAIB 1 - Chapter 6

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Questions and Answers

What is the "human" cost of auto accidents in Canada?

Over 4,000 people die and 275,000 are injured in auto accidents each year.

In all provinces, auto owners must purchase at least $200,000 in third party liability insurance.

False

Which of the following is NOT a common way for auto owners to comply with financial responsibility laws?

Paying a bribe (correct)

Providing cash

Using securities

Posting a bond

The ______ is a document that proves an individual's financial responsibility for auto insurance.

Insurance Policy Signup and view all the answers

What is the purpose of the Unsatisfied Judgement Fund?

To ensure that victims receive compensation if they are involved in an accident with an uninsured driver. Signup and view all the answers

What is the primary purpose of accident benefits in auto insurance?

Accident benefits provide immediate financial assistance to injured individuals, regardless of fault, for medical expenses, income loss, and other related costs. Signup and view all the answers

In Newfoundland, accident benefits for dismemberment are based on the same guidelines as other provinces.

False Signup and view all the answers

Match the following types of auto insurance coverage with its description:

Third Party Liability = Provides financial protection for the insured against claims made by others for bodily injury or property damage resulting from their actions. Accident Benefits = Provide no-fault benefits for medical expenses, loss of income, and other related costs to injured individuals. Physical Damage = Covers the insured's vehicle against damage to the auto itself, such as collision, theft, fire or vandalism. Uninsured Motorist = Provides compensation to the insured if they are injured or killed in an accident caused by an uninsured or unidentified driver. Signup and view all the answers

Besides the insured, who else is covered under the Insuring Agreement for third-party liability in Section A of S.P.F. No. 1 - Owner’s Form?

Any person driving the insured's auto with the owner's consent, as well as parties with the owner's permission to drive, are covered as if their name is on the policy. Signup and view all the answers

What is the main exception to "cloudy consent" when it comes to who is covered under third-party liability?

A person driving the insured's car with the explicit permission of the owner, regardless of their relationship to the owner, is considered to have "cloudy consent" and is covered as if their name is on the policy. Signup and view all the answers

The deductible clause in Section C of S.P.F. No. 1 - Owner’s Form applies to all four physical damage coverages.

True Signup and view all the answers

What does the term "general average" refer to when dealing with auto insurance?

General average refers to a maritime principle where the insurer agrees to share the cost associated with jettisoned cargo, even if it wasn't the insured's property, to ensure fair distribution of the loss among all involved parties. Signup and view all the answers

What is the purpose of the "salvage" clause in auto insurance?

The salvage clause protects the insurer from additional losses by allowing them to cover costs incurred to save the auto from further damage following an accident. Signup and view all the answers

What are the circumstances under which fire department charges are covered by auto insurance?

If the fire department is called to put out a fire involving an auto owned by someone who is not a ratepayer in that community, the insurer will cover the costs. Signup and view all the answers

Auto insurance policies automatically cover the loss of use of a stolen auto.

False Signup and view all the answers

What is the primary benefit of having the Legal Liability for Damage (to Non-Owned Autos) Endorsement (S.E.F. No. 27) on an auto insurance policy?

This endorsement provides coverage for damage to vehicles rented or leased by the insured when those vehicles are not owned by them, eliminating the need for additional physical damage coverage from leasing companies. Signup and view all the answers

Besides the insured and their spouse, who else is covered under the "Vehicles under (d)" provision in the Automobile Defined section?

The "Vehicles under (d)" provision covers any other driver residing in the insured's household, provided they are listed on the named persons endorsement. Signup and view all the answers

When an insured rents a private passenger vehicle, they are required to purchase separate physical damage coverage from the lessor.

False Signup and view all the answers

What type of vehicle is NOT covered by the "Any Other Auto of Private Passenger/Station Wagon Type" provision?

A van used for commercial delivery Signup and view all the answers

What is the purpose of the Standard Garage Auto Policy?

The Standard Garage Auto Policy is designed to cover a garage owner's liability for both owned and non-owned autos, including accident benefits and physical damage coverage. Signup and view all the answers

The Uninsured Motorist Coverage is mandatory in all Canadian jurisdictions.

False Signup and view all the answers

The Standard Non-Owned Auto Policy primarily focuses on covering employees' use of their personal autos for business purposes.

False Signup and view all the answers

What is the main difference between the Standard Excess Auto Policy and the Standard Non-Owned Auto Policy?

While both policies provide broader coverage than the S.P.F. No. 1 - Owner’s Form, the Standard Excess Auto Policy focuses on extending the 3rd Party Liability limits, whereas the Standard Non-Owned Auto Policy covers both liability and physical damage for a wider range of circumstances. Signup and view all the answers

The Standard Lessor’s Contingent Auto Policy is primarily used to protect lessors from financial losses due to their lessee's failure to pay rent.

False Signup and view all the answers

What is the insurer's responsibility regarding a material change in risk?

The insurer requires the insured to immediately notify them, in writing, of any known changes that could affect the insurable interest or risk associated with the policy. Signup and view all the answers

What is the primary exception to the rule that an individual must be authorized to drive a vehicle?

The primary exception is that an individual is considered authorized to drive if they have a valid driver's license, permit, or can prove their qualifications to drive. Signup and view all the answers

What is the significance of the Statutory Condition 3 in auto insurance?

This condition outlines the insured's responsibilities following an accident, including providing timely notification to the insurer, verifying the claim's origin, forwarding any documentation related to the incident, and assisting the insurer in gathering information. Signup and view all the answers

The "promptness" of the insured's notification of an accident is defined by a specific time frame outlined in the statutory conditions.

False Signup and view all the answers

Which of the following is NOT a requirement under the Statutory Conditions for the insured to comply with after an accident?

Refuse to cooperate with the insurer's investigation Signup and view all the answers

What are the two main ways the insurer can settle a loss/damage claim?

The insurer can choose to settle a loss/damage claim either on a cash basis, providing the insured a financial settlement, or on a repair/replacement basis, fixing or replacing the damaged property. Signup and view all the answers

The insurer can automatically choose to repair or replace the insured's vehicle after a claim, without notifying the insured first.

False Signup and view all the answers

What is meant by the concept of "no abandonment salvage"?

It dictates that the insured cannot simply abandon their damaged vehicle to the insurer without their consent. Instead, the insured must protect the vehicle from further damage and ensure it's available for evaluation or salvage by the insurer. Signup and view all the answers

If the insured is unsure about the extent of repairs needed after a claim, it's acceptable to proceed with necessary repairs without the insurer's approval.

False Signup and view all the answers

What are the circumstances under which an appraisal is required to settle a loss/damage claim?

An appraisal is required if there's a disagreement concerning the nature and extent of repairs or replacement needed, or if there's disagreement regarding the adequacy and amount payable. Signup and view all the answers

The insurer has the right to inspect the insured's vehicle at any time.

False Signup and view all the answers

Under what circumstances can the insured initiate legal action against the insurer?

The insured cannot initiate legal action until the Statutory Conditions for the claim have been met, or until the amount of loss has been determined, or if a judgement has been made against the insured after trial, or if they reach a written agreement with the insurer. Signup and view all the answers

The time limit for filing a legal action against the insurer is the same for both damage to persons/property and damage to the auto.

False Signup and view all the answers

What are the main advantages of the "Valued Auto" endorsement?

This endorsement ensures that the insured vehicle is valued at the agreed-upon amount, providing greater financial protection for antique, classic, or restored vehicles and avoiding potential disagreements about the vehicle's actual cash value. Signup and view all the answers

Besides theft, what other circumstances warrant the immediate activation of the "Loss of Use" coverage?

The "Loss of Use" coverage is activated when the insured's vehicle cannot be operated due to damage, such as a major accident, or if the vehicle is stolen. Signup and view all the answers

The Legal Liability for Damage (to Non-Owned Autos) Endorsement covers all types of non-owned vehicles rented by the insured.

False Signup and view all the answers

The Collision Damage Waiver (CDW) offered by rental agencies is considered auto insurance.

False Signup and view all the answers

What is the primary purpose of the Recreational Vehicle Endorsement (S.E.F. No. 32) in auto insurance?

This endorsement extends coverage to individuals operating recreational vehicles driven by unlicensed, unqualified, or underage drivers on off-public highway areas. Signup and view all the answers

Besides new vehicles, what other circumstances might cause a depreciation waiver, through the Limited Waiver of Depreciation Endorsement (S.E.F. No. 43R), to be added to a policy?

This type of depreciation waiver might also be added to a policy when it is covering a vehicle that is leased by the insured, providing similar protection for new or recently acquired leased vehicles. Signup and view all the answers

The Family Protection Endorsement significantly increases the insured's 3rd Party Liability limits, even if the responsible motorist is only underinsured, not fully uninsured.

True Signup and view all the answers

What is the major difference between Uninsured Motorist Coverage and the Family Protection Endorsement?

While both coverages protect the insured when involved in an accident with an uninsured or underinsured motorist, Uninsured Motorist Coverage focuses on covering the insured's own damages, while the Family Protection Endorsement aims to provide coverage for the insured's dependents as well. Signup and view all the answers

The Standard Driver's Auto Policy is available in all Canadian jurisdictions.

False Signup and view all the answers

What distinct feature makes the Standard Garage Auto Policy unique?

The Standard Garage Auto Policy is distinct in its comprehensive coverage for both owned and non-owned vehicles, including sections for third-party liability, accident benefits, and physical damage for the garage owner's business operations. Signup and view all the answers

The Standard Non-Owned Auto Policy primarily focuses on providing liability coverage for business owners when their employees are using their personal vehicles for business purposes.

False Signup and view all the answers

What is the primary function of the Standard Excess Auto Policy?

The Standard Excess Auto Policy's main function is to extend the 3rd Party Liability limits beyond what is typically provided through other policies, catering to those requiring additional financial protection for potential claims. Signup and view all the answers

The Standard Lessor’s Contingent Auto Policy is typically purchased by businesses involved in leasing vehicles over extended periods.

True Signup and view all the answers

Which of the following types of notice is NOT acceptable for conveying a written notice to the insurer?

Email Signup and view all the answers

What is the significance of the Standard Endorsement Forms?

These forms provide a standardized way for insureds to add specific coverages or adjust their policy's terms within the framework of the policy itself. This fosters consistency and clarity across various provinces. Signup and view all the answers

Policies that cover the same coverage as the S.P.F. No. 1 - Owner's Form may have different names in other provinces.

True Signup and view all the answers

Study Notes

Insurance Training & Education

The company's name is ensure TRAINING & EDUCATION.
CAB 1 General Insurance is a topic covered.
An attendance poll asked if students could hear the facilitator and see the slides.
Students were asked to write down the most confusing concept for two minutes.
The forgetting curve was introduced to help students recall concepts effectively. Re-reviewing material helps retain information over time.
An insurance graphic organizer was used for chapter 5 of CAIB 1.
A question about environmental exclusions was given as an exam question for CAIB 1, Chapter 5.
Environmental exclusions provide no coverage for emissions, releases, discharges, etc. into land/water.
Major loss sources from smoke/fires are excluded.
Exclusions do not apply to bodily injury/property damage from emissions/releases if from accidents with proof with insured.
Other amendments cover bodily injuries from hostile fire, accidental chemical drifts (aircraft not used), and damage detected in 120 hours of spraying.
Canada's private auto insurers pay more than $7 billion annually covering deaths, injuries and damages related to auto accidents.
Approximately 4,000+ people die and 275,000 are injured annually in Canada in auto accidents.
Auto insurance premiums are the main source of income for many Canadian brokers.
Compulsory insurance in all provinces covers third-party liability.
Owners of passenger vehicles in all provinces must carry a minimum third-party liability limit of $200,000.
Insurance policies detailing common methods of meeting financial responsibility laws are discussed. The methods vary by province; however, methods like posting bonds or providing cash/securities are not the most common, buying insurance policies is more common.
Losses due to uninsured drivers have funds established in all provinces to provide victims' some compensation.
Compulsory coverage for all common law provinces (except Newfoundland) may include medical payments, funeral expenses, and disability income benefits.
Insurance is compulsory for auto residents in Saskatchewan, Manitoba, and British Columbia, due to most bodily injury/property damage claims being uninsured.
Private insurers used standard policy forms.
Insurance coverage must cover every licensed driver.
Facility associations exist in each province to ensure coverage to those who were rejected coverage.
Some provinces use no-fault insurance plans, primary purpose is to cover injured parties regardless of who caused the accident.
Other jurisdictions use a 'threshold' no-fault method. Legal action can be taken against the responsible party if monetary amounts exceed a threshold (that amount may cover pain/suffering or economic losses).
Modified no-fault plan.
Saskatchewan uses a no-fault plan, usually for Canadian visitors, for auto accidents.
Auto application forms are discussed—including full name/address/ID, policy period (expires), auto particulars, insuring agreements-premium amounts, drivers of the automobile, and physical/mental impairments.
Coverage and policy payments may be dependent on whether the auto is used in a business capacity or personally.
If there are details of false statements or inaccurate information on the application form, there are penalties.
Penalties may be levied from false statements, misrepresenting risks, or not providing necessary facts.
Penalties will include the insurers right to get reports from other sources
Penalties include the insurer requiring additional information (EX. previous insurers name if applicable)
There are various conditions of a policy including the method of payment, loss of use time frame, and damage or loss to the insured auto.
There are different methods or kinds of coverage for accidents, and depending on the kind of coverage, timeframes and processes differ.

Insurance Application Form Requirements

An auto insurance application form provides necessary information for underwriting, issuing, and rate assessment of auto insurance policies.
Forms specify questions for both private passenger and commercial vehicles.
The policy period is generally 12 months and starts when the application is taken at the insured's address.
The covered auto is described in detail, including make, model, year.

Coverage for loss from theft

If a vehicle is stolen while still in the insured's ownership, the insurer will pay for the loss of use of the vehicle.
The payment amount is based on a set rate per day, up to a maximum amount of days.
The time frame during which the insured vehicle is covered starts from the day the notice was made to the insurer or the time police were contacted.

Policy Coverages

A range of different scenarios are covered by the policies that include physical damage (from all perils), collision, and comprehensive losses.
Deductibles can vary depending on the claim, but are usually less than those for a collision loss claim.
There are specified exclusions applicable to all coverages, such as losses/damages arising from normal wear & tear, the loss/damages of a conversion, and if the claim is due to a voluntary release of ownership.
The insurance company may cover costs for losses in cases of salvage of the auto, and expenses incurred to save an auto from further loss from an accident (like tow truck and storage fees).
An insurer can waive subrogation against any external party involved in an accident with the insurer's consent for use of the insured's auto.
Insurance will also cover losses from others who drive your vehicle, based on their legal use/possession (like if the insured let a friend use their vehicle).
Loss of use compensation can cover taxis, buses, and other transportation expenses when use of an insured auto is impacted.
Physical damage coverages will have limits to ensure cost aren't limitless. Limits may be set to a higher range for larger vehicles (like commercial trucks) or depending on the situation (like damage due to wild animals).

Additional Insurance Agreements

Insurers can agree to extend damages coverage. This would cover costs that are liable as required by Marine Law
Insurers can agree to costs associated with protecting the vehicle from further loss, if the vehicle is involved in an accident. (EX, towing, storage, etc)
Insurers can waive the right to seek compensation from others, if they are involved in using insured autos.
Insurance might cover theft of an auto by paying for its replacement or cash settlement values.

Uninsured/Unidentified Auto Coverage

Insurers (in most provinces) cover bodily injury/death caused by an uninsured/unidentified motor vehicle, to compensate insured or others injured.
Policy limits apply if the amount is deemed as the least of the valid provincial/territorial statutory limit.
When an insured is involved in a loss/damage claim, conditions include reporting to the authorities within a certain timeframe, and filing a written statement within 30 days, with the insurer.
The insurer will pay damages when a claimant is insured by the agreement, and this is the individual's responsibility rather than someone else's.
There may be cases when no coverage is applicable to avoid compensation scenarios (when a party is driving an unregistered vehicle, if a driver does not have a valid license, committing a crime related to driving, etc).
Types of losses/damages include bodily injury to a person who is occupying or driving the insured vehicle, or bodily injury to a pedestrian.

Insurance Policy Forms

There are different forms for different situations/policies. Different policy forms address specific exposures which would not be covered by a standard owner's form auto policy. Common forms include those addressing the use of an auto by others, and additional coverage for business or employment uses.

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Test your knowledge on the concepts covered in CAIB 1 General Insurance. This quiz reviews key topics such as environmental exclusions, the forgetting curve, and major loss sources related to insurance coverage. Prepare for your exam with a focus on Chapter 5 materials.

CAIB 1 - Chapter 6

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Questions and Answers

What is the "human" cost of auto accidents in Canada?

In all provinces, auto owners must purchase at least $200,000 in third party liability insurance.

Which of the following is NOT a common way for auto owners to comply with financial responsibility laws?

The ______ is a document that proves an individual's financial responsibility for auto insurance.

What is the purpose of the Unsatisfied Judgement Fund?

What is the primary purpose of accident benefits in auto insurance?

In Newfoundland, accident benefits for dismemberment are based on the same guidelines as other provinces.

Match the following types of auto insurance coverage with its description:

Besides the insured, who else is covered under the Insuring Agreement for third-party liability in Section A of S.P.F. No. 1 - Owner’s Form?

What is the main exception to "cloudy consent" when it comes to who is covered under third-party liability?

The deductible clause in Section C of S.P.F. No. 1 - Owner’s Form applies to all four physical damage coverages.

What does the term "general average" refer to when dealing with auto insurance?

What is the purpose of the "salvage" clause in auto insurance?

What are the circumstances under which fire department charges are covered by auto insurance?

Auto insurance policies automatically cover the loss of use of a stolen auto.

What is the primary benefit of having the Legal Liability for Damage (to Non-Owned Autos) Endorsement (S.E.F. No. 27) on an auto insurance policy?

Besides the insured and their spouse, who else is covered under the "Vehicles under (d)" provision in the Automobile Defined section?

When an insured rents a private passenger vehicle, they are required to purchase separate physical damage coverage from the lessor.

What type of vehicle is NOT covered by the "Any Other Auto of Private Passenger/Station Wagon Type" provision?

What is the purpose of the Standard Garage Auto Policy?

The Uninsured Motorist Coverage is mandatory in all Canadian jurisdictions.

The Standard Non-Owned Auto Policy primarily focuses on covering employees' use of their personal autos for business purposes.

What is the main difference between the Standard Excess Auto Policy and the Standard Non-Owned Auto Policy?

The Standard Lessor’s Contingent Auto Policy is primarily used to protect lessors from financial losses due to their lessee's failure to pay rent.

What is the insurer's responsibility regarding a material change in risk?

What is the primary exception to the rule that an individual must be authorized to drive a vehicle?

What is the significance of the Statutory Condition 3 in auto insurance?

The "promptness" of the insured's notification of an accident is defined by a specific time frame outlined in the statutory conditions.

Which of the following is NOT a requirement under the Statutory Conditions for the insured to comply with after an accident?

What are the two main ways the insurer can settle a loss/damage claim?

The insurer can automatically choose to repair or replace the insured's vehicle after a claim, without notifying the insured first.

What is meant by the concept of "no abandonment salvage"?

If the insured is unsure about the extent of repairs needed after a claim, it's acceptable to proceed with necessary repairs without the insurer's approval.

What are the circumstances under which an appraisal is required to settle a loss/damage claim?

The insurer has the right to inspect the insured's vehicle at any time.

Under what circumstances can the insured initiate legal action against the insurer?

The time limit for filing a legal action against the insurer is the same for both damage to persons/property and damage to the auto.

What are the main advantages of the "Valued Auto" endorsement?

Besides theft, what other circumstances warrant the immediate activation of the "Loss of Use" coverage?

The Legal Liability for Damage (to Non-Owned Autos) Endorsement covers all types of non-owned vehicles rented by the insured.

The Collision Damage Waiver (CDW) offered by rental agencies is considered auto insurance.

What is the primary purpose of the Recreational Vehicle Endorsement (S.E.F. No. 32) in auto insurance?

Besides new vehicles, what other circumstances might cause a depreciation waiver, through the Limited Waiver of Depreciation Endorsement (S.E.F. No. 43R), to be added to a policy?

The Family Protection Endorsement significantly increases the insured's 3rd Party Liability limits, even if the responsible motorist is only underinsured, not fully uninsured.

What is the major difference between Uninsured Motorist Coverage and the Family Protection Endorsement?

The Standard Driver's Auto Policy is available in all Canadian jurisdictions.

What distinct feature makes the Standard Garage Auto Policy unique?

The Standard Non-Owned Auto Policy primarily focuses on providing liability coverage for business owners when their employees are using their personal vehicles for business purposes.

What is the primary function of the Standard Excess Auto Policy?

The Standard Lessor’s Contingent Auto Policy is typically purchased by businesses involved in leasing vehicles over extended periods.

Which of the following types of notice is NOT acceptable for conveying a written notice to the insurer?

What is the significance of the Standard Endorsement Forms?

Policies that cover the same coverage as the S.P.F. No. 1 - Owner's Form may have different names in other provinces.

Study Notes

Insurance Training & Education

Insurance Application Form Requirements

Coverage for loss from theft

Policy Coverages

Additional Insurance Agreements

Uninsured/Unidentified Auto Coverage

Insurance Policy Forms

Studying That Suits You

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