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CAR INSURANCE
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Contents
Introduction Applying for auto insurance
What do I need to know to fill out an automobile insurance application?
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What is the impact of inaccuracies or omissions in applications for automobile insurance? Why is it important to pay premiums on time? What should I know about a lapse in insurance coverage? What coverage is mandatory and what coverage is optional? How do deductibles work?
Establishing a premium
What influences my premium? How can I get a premium discount? How do claims affect my premium? How do convictions affect my premium?
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With appropriate acknowledgement, this publication may be reproduced and used in whole or in part, provided such reproduction is intended for personal or educational use and not for monetary gain of any kind. In all written or spoken references to this information, please include Information provided courtesy of Insurance Bureau of Canada.
Introduction
Every year, information officers at Insurance Bureau of Canadas Consumer Information Centres answer tens of thousands of questions from insurance policyholders across the country. At the Ontario Consumer Information Centre, many of these questions are about automobile insurance. Automobile insurance is complex. As a consumer, you should examine your policy carefully. Few people bother to read their policy until they are involved in a collision, a car they own is broken into, or they have some other problem. When shopping for auto insurance, remember that the wording of your policy will be the same no matter which insurance company issues it because the Ontario Automobile Policy and related endorsements (endorsements are add-ons to basic coverage) are forms approved by the Financial Services Commission of Ontario (FSCO). However, not all companies provide all the endorsements. Your insurance representative can help you decide what coverage is best for you. In this publication, we have done our best to answer the questions most often asked about car insurance in Ontario. If you have other questions or need more information, please call us or visit our website. The Consumer Information Centre can also help you with your home and business insurance.
1. Vehicle information
Year, make, model, body type, number of cylinders or engine size, gross vehicle weight rating. Vehicle identification number, or VIN (serial number). Estimated annual driving distance. Lienholders name and postal address (the person or group you are still making payments to if your car loan is not paid in full). Automobile use, including pleasure, business, driving to work.
2. Driver information
For each driver name, drivers licence number, date of birth, date first licensed in Canada, other classes of licence (if any), the percentage of time each driver uses the vehicle(s). Whether you or the other drivers have driver training. If so, the training certificate(s) need(s) to be attached so that you and the other drivers can be considered for premium discounts. Whether anyone else in the household or business is licensed to drive. If so, details need to be provided in the remarks section of the application. Whether any drivers licence, vehicle permit, etc., issued to you or any person in the household or business has been suspended or cancelled in the last six years. Whether any insurance company cancelled automobile insurance for you or any driver listed on the application in the last three years. Whether any automobile insurance policy issued to you or any listed driver has been cancelled or any claim has been denied for material misrepresentation (not telling the truth) in the last three years. Whether you or any listed driver has been found by a court to have committed a fraud involving automobile insurance.
A letter can be provided by your insurer if you are going to cancel your policy for any of the following reasons:
You operated or caused or permitted the operation of the automobile without auto insurance during the lapse in coverage. Your policy was cancelled for non-payment of premium. Your drivers licence was suspended because of a conviction related to the use or operation of the automobile, e.g., impaired driving. You did not inform the insurer of a collision or conviction.
You have sold your car and do not plan to replace it for a while. You will be moving out of the country temporarily. You are going to drive a company car and will not need your own vehicle.
When you want insurance coverage at a later date, you may need to prove you had prior insurance. You can obtain a letter from your insurance representative outlining your current policy number, insurance company, how long you were insured and your collision and conviction history.
Alternatively, you can write down the reason for a lapse in insurance and make two copies. Give one to the insurance representative and ask him or her to sign the other copy for your records. This provides you with documentation when you need insurance again, in case that broker/agent is no longer available to verify your lapse in coverage. Also keep a copy of your latest policy.
MANDATORY coverage
To drive in Ontario, you must have direct compensation property damage (DCPD) coverage, uninsured automobile coverage, liability bodily injury coverage, and accident benefits coverage. These are all compulsory. This means that, by law, you must buy these types of coverage.
Type of Coverage
Liability Bodily Injury
Accident Benefits
The details of the accident benefits are set out in the Statutory Accident Benefits Schedule of the Insurance Act of Ontario, and are also available on Insurance Bureau of Canadas website at www.ibc.ca.
Uninsured Automobile
Protects you if you are injured or killed by an uninsured motorist or hit-and-run driver to the extent that you were not at fault. Covers damage to your automobile caused by an identified uninsured motorist.
$200,000 limit.
Up to $25,000, subject to a deductible of $300. Standard $500 deductible (can be increased or decreased).
Allows you to claim for damage to your vehicle and its contents caused by someone else. DCPD means that, to the extent that you are not at fault in a collision with another vehicle, your own insurer will pay for damage to your vehicle and its contents.
OPTIONAL coverage
You are not required by law to purchase collision or comprehensive coverage. However, if you owe money on your vehicle, your lienholder (the person or group you are making payments to if your car loan is not paid in full) may require you to have these types of coverage to protect their interest in your vehicle.
Type of Coverage
Collision or Upset Comprehensive All Perils
You may buy coverage beyond the minimum required by law to $1 million or $2 million. You may buy coverage beyond the minimum required by law. The optional benefits your insurance company offers are: Increased income replacement. Caregiver, housekeeping and home maintenance. Increased medical, rehabilitation and attendant care. Increased death and funeral. Dependant care. Indexation of benefits to inflation.
Endorsements
In addition to the types of coverage listed above, you may purchase a number of enhancements to your insurance policy (known as endorsements). These are the six most common endorsements:
Rented or leased vehicles (OPCF 5) Extends coverage to a vehicle you drive that is owned by a leasing company. Loss of use (OPCF 20) Pays for a rental vehicle if your vehicle is being replaced or repaired as a result of damage or loss caused by an insured peril. Ask your agent or broker for the limit applicable to your policy. Liability for damage to non-owned automobile(s) (OPCF 27) Provides legal liability protection for physical damage to a vehicle that you, your spouse or any listed driver operates but does not own, such as a rented or borrowed vehicle. Removing depreciation deduction (OPCF 43) Removes your insurers right to deduct depreciation from the value of your vehicle when covering damage or loss to your vehicle from an insured peril.
Family protection coverage (OPCF 44R) Protects you or an eligible family member to the same limits as your own third-party liability coverage if you or an eligible family member are involved in an automobile collision where the at-fault party is inadequately insured to cover the claims. When you fill out your application for automobile insurance, you have to indicate whether or not you want this coverage. Added coverage to offset tort deductibles (OPCF 48) Reduces the deductible associated with court-awarded compensation for pain and suffering from $30,000 to $20,000 and for Family Law Act claims from $15,000 to $10,000.
There are many other endorsements available that are less common but may be of benefit to you. Your insurance representative will be familiar with all of them and will advise you if any would be of benefit to you.
Establishing a premium
What influences my premium?
Automobile premium levels are affected by many factors, such as:
The age and driving experience of each driver in the household. (Are any drivers under age 25? Are they male or female?) The amount of time each driver will be using the vehicle. The claims and collision history for each driver over the last six years. Each drivers conviction record for the last three years. Whether any driver in the household has had a licence suspension within the last six years or an automobile insurance policy cancelled in the last three years.
The ways you use your vehicle. (Do you use your vehicle just for pleasure? Do you drive to work or use your car for business?) The type of vehicle you drive. The year, make, model and body type of your vehicle. The approximate number of kilometres you drive your vehicle annually. The listed drivers of your vehicle.
You may get a discount if you install lossprevention devices, such as a car immobilizer. If your car is not used in winter, speak to your insurance representative about arranging an agreement of suspension of coverage endorsement (OPCF 16). This suspends coverage in relation to the use or operation of the vehicle but maintains coverage associated with the ownership of the vehicle (e.g., DCPD in case your car gets struck by another vehicle while parked) as well as accident benefits in case you, your spouse and/or any listed drivers are in a collision as occupants in an automobile you do not own or are struck by an uninsured automobile. Increasing your deductibles could give you a lower premium.
Some companies offer discounts for using your car infrequently (low mileage use), for graduating from an approved driver training course, or for volume when two or more vehicles are insured for the same household. Retirees with no employment income receive a discount. Some companies provide other discounts to mature drivers over age 55. You may be eligible for a discount if you choose to insure your home and car with the same company. Some companies provide an extra discount when renewing policies for long-time customers who are claims-free.
Minor
One conviction 0% Two convictions 5% Three convictions 15% Four convictions 25% Each additional 15%
Major
One conviction 15% Each additional conviction 25%
Serious
One conviction 100% Each additional conviction 100%
Major
Convictions for any of the following offences under any act governing highway traffic or under the Compulsory Automobile Insurance Act (CAIA), or under the Motor Vehicle Accident Claims Act (MVACA) or for any offence substantially the same committed within or outside Canada: Failure to report damage to highway property Failure to stop on request of or to obey directions of a police officer Failure to report a collision Failure, in the event of a collision, to give name and licence number to the police or any other person entitled to such information Failure to obey school crossing stop sign Improper passing of a school bus Improper passing/speeding in a school or playground zone Stunting Producing false evidence (CAIA) Making a false statement regarding insurance (MVACA) Producing false insurance (MVACA) Making a false statement (CAIA)
Serious
Convictions for any of the following offences under the Criminal Code of Canada or under an act governing highway traffic or under any other act or for any offence substantially the same whether committed within or outside Canada or any conviction that appears on a driver record abstract as a Criminal Code conviction: Speeding 50 kph or more over the speed limit Driving without insurance Operating motor vehicle no insurance (CAIA) Criminal negligence committed in the operation or use of a motor vehicle Manslaughter committed in the operation or use of a motor vehicle Driving while licence under suspension Racing Careless driving Driving without due care and attention Driving without an interlock device where its installation is a requirement for licence reinstatement Dangerous driving Impaired driving
Lack of control of vehicle any type Motor-assisted bicycle carrying passengers Motorcycle operating with only an instruction permit Motorcycle failure to wear helmet Passing infraction any type except school bus or school/playground zone Pedestrian crossing violation any type Radar warning device in motor vehicle if illegal in province/territory Railway crossing violation any type Safety zone violation any type Seatbelt violation any offence Signalling offences any type Slow driving endangering others any type Smokescreen device on vehicle Speeding any type, except when listed as major or serious Squealing tires Stopping illegal/improper any type Tires defective/worn any type Towing prohibited/unsafe any type Traffic signals/regulating lights disobeying any type Traffic signs disobeying any legal sign except parking regulations Trailer improper attachments/ improper towing Turns illegal/improper any type Unlicensed driver any type including improper licence class Unsafe move Unsafe vehicle any type Wrong side of road/wrong way any type Failing to yield any type including failing to yield to a public bus
Ontario Graduated Licence - permit novice driving in contravention of conditions/restrictions - class G1 accompanying driver fails or refuses to provide a breath or blood test - class G1 accompanying driver has excess blood alcohol - class G1 driver unaccompanied by qualified driver - class G1 driver with front seat passengers - class G1/G2 driver with excess passengers - class G1 driver on prohibited highway - class G1/M1 driver at unlawful hour - class M1 driver on motorcycle with passenger - class M1 driver on motorcycle on prohibited highway
Failure or refusal to submit to a breath or blood test Failure to pass a breath or blood test Failure to stop/remain at the scene of a collision Class GI/G2/M1/M2 fail/ refuse breath sample Class G1/G2/M1/M2 driver with alcohol in blood
Note: If convictions for impaired driving and failure or refusal to take a breath or blood test relate to the same occurrence, they will be considered as one conviction.
Betterment
When an insurer is paying for a vehicle to be repaired, the shop will replace damaged parts with parts of the same vintage as the car. For example, the damaged bumper of a 1994 car would be replaced with a 1994 bumper. If new parts are used as replacements even though used parts are available, the value of the car may be increased. In such a case an amount will be calculated, known as betterment, representing the increase in value, and you may be asked to contribute to the cost of repairs.
insurance representative about scheduling your sports equipment, cameras and other vulnerable items with additional coverage, especially if your policy has a forced-entry policy condition.
Can be applied to almost every possible collision scenario. Apply regardless of road or weather conditions, visibility, point of impact on the vehicles or the actions of pedestrians. May find you or the other driver wholly or partially at fault.
If the circumstances show that more than one driver was negligent (or at fault), both drivers insurance companies may become involved in the settlement, based on the degree of responsibility connected to each driver. If there is a dispute about responsibility, it may be necessary to go to court to resolve it. Visit IBCs website to download a copy of Ontarios Fault Determination Rules at http://www.ibc.ca/en/ Car_Insurance/documents/brochure/ON-FaultDetermination-Rules.pdf.
Cover more than 40 collision situations, using diagrams to show specific situations.
When you are shopping for insurance, always ask the insurance representative how your premium will be affected after an at-fault collision. In addition, remember that when you lend your car to someone, you are also lending him or her your
insurance. If the individual you lent your car to has an at-fault collision with your car, the collision will go on your insurance record and your insurance premium could go up.
What are my rights if I drive without insurance and I am in a collision in Ontario that is not my fault? Can I sue the at-fault driver and recover my losses from his or her insurer?
If you drive without insurance, the Ontario Insurance Act takes away your right to recover any loss or damage from bodily injury or death from the other person. The act also takes away your right to recover damage to the vehicle or its contents from the other person. If you are at fault, the other persons insurance company can sue you to recover the amounts they paid out. No-fault does not mean no blame. Your best bet is to drive safely. No one can find fault with that.
There are four different brands used: Irreparable a vehicle written off as a total loss that can be used for parts or scrap only. This vehicle cannot be driven in Ontario. Salvage a vehicle written off as a total loss that can be used for parts or scrap or repaired, subject to inspection criteria approval branding it rebuilt. Rebuilt a vehicle that was branded as salvage but has been rebuilt and inspected in accordance with regulatory criteria. None a vehicle not given any of the other three brands because it may have had a damage-related brand applied outside Ontario, it may have been damaged or rebuilt before March 31, 2003, the degree of damage does not meet branding criteria, or the vehicle was never in a collision. A vehicle could also receive the Stolen Vehicle Designation. This can only be assigned by police. This designation makes it more difficult for thieves to register stolen vehicles because it prevents thieves from putting the VINs from wrecks onto stolen cars. The following vehicles are exempt from the vehicle branding program: trailers, traction engines, farm tractors, road-building machines, bicycles, motorassisted bicycles, motorized snow vehicles, streetcars, and motorcycles (other than motorcycles that are irreparable) or motor vehicles with a model year of 1980 or earlier.
Enhance road safety by ensuring proper repair of salvage vehicles. Protect consumers in the vehicle marketplace. Make the use of stolen vehicles more difficult. Make stolen parts more difficult to re-use. Minimize the fraudulent use of Vehicle Identification Numbers (VINs) from wrecked vehicles.
If a vehicle is branded as irreparable, it can only be used for parts or scrap. It can never be repaired and driven on Ontario roads. If a vehicle is branded as salvage, it can be fixed but must go to an inspection station and pass rigid safety standards to be reclassified as rebuilt and used on the road. It is not recommended that you keep a vehicle that is branded salvage. There have been situations where an owner has spent a lot of money having the vehicle repaired, only to find out later that it does not meet the rebuilt standards and cannot go back on the road.
result in an increase in premiums provided you are 25% or less at fault, and your coverage automatically provides a rental vehicle and protection for damage to non-vehicle equipment); Your uninsured automobile coverage, if the driver and owner of the at-fault vehicle are identified, but uninsured; or Your own optional collision or comprehensive coverage if the at-fault vehicle cannot be identified.
Your DCPD, provided the at-fault driver is insured by an insurance company licensed in Ontario or one that has filed with FSCO to provide this coverage (direct compensation claims will not
2011 Insurance Bureau of Canada. All rights reserved. The information provided in this brochure is intended for educational and informational purposes only. Please consult the appropriate qualified professional to determine if this information is applicable to your circumstances. 12/11