Chapter 8 – Uninsured Automobile Coverage
Introduction
· Uninsured auto coverage – protects the insured by permitting recovery from his own insurer of amounts which the insured would be entitled to recover from the uninsured or unidentified auto owner
· An insured’s policy will not pay if a fund exists in the jurisdiction where the accident happened which would respond to the claim
· In Ontario
· The fund is still necessary for those victims who do not have access to an owner’s policy (eg pedestrians who do not own an auto)
· The Yukon and Northwest Territories
· All Canadian and US
· Physical damage is covered if the responsible owner/driver is identified
· The insured must be legally entitled to recover a loss from the uninsured or unidentified motorist
· Points to remember:
o The same rules apply to suits as previously discussed
o DCPD does not apply to owned vehicle damage since the AF party is not insured
o If you are driving an uninsured auto and you are hit by another auto, you are not permitted to sue even though the other person is 100% AF
Policy section 5 coverage
Definitions
· Uninsured auto – one for which neither the owner nor driver has liability insurance to cover BI or PD arising out of its o/ship, use or operation or the insurance is not collectible
· Unidentified auto – one whose owner or driver cannot be determined – hit and run. It is deemed to be in fact uninsured
What is covered
· The insurer will pay:
o Any amounts you have a legal right to recover from the owner/driver of an unidentified/uninsured auto for BI
o Any amounts any person has legal right to recover from the owner/driver of an unidentified/uninsured auto for BI/death
o For damages to and for loss of use of the auto or its contents or both that you have a legal right to recover from the identified owner/driver of an uninsured auto. Subject to the $300 deductible, the insurer will pay up to $25,000
· Damage to the auto caused by an unidentified auto is NOT covered under this section
Persons insured
· The following are insured persons under this section of the policy:
o With respect to death or BI
§ Any occupant of the auto
§ The insured and his spouse and any dependent relative of either
· While the occupant of an uninsured auto or
· While not an occupant in an auto, streetcar or railway vehicle if struck by an uninsured or unidentified auto
§ Being struck – physical contact is not necessary. If the vehicle came close enough to cause the victim to take evasive action and suffers injury it is considered being struck
§ If the named insured is not an individual (eg corporation) any directors, partners, employees for whose regular use the auto is furnished and their spouse an dependent relative either
· While the occupant of an uninsured auto or
· While not an occupant in an auto, streetcar or railway vehicle if struck by an uninsured or unidentified auto
§ If the director, partner, employee or their spouse is the owner of an auto that is insured, the po9licy of that auto will provide coverage and not the policy of the corporation
§ Described auto leased for more than 30 days, the person or organization who is the lessee is treated as the named insured
o With respect to damage to the auto – the owner
o With respect to contents of the auto – the owner of the contents
Claims procedures
Claims for BI or death
· If the third party is unidentified
o The accident must be reported to the policy w/in 24 hrs or as soon as practicable after that
o The insured must give the insurer a written statement w/in 30 days
· If the third party is uninsured
o The insured must give the insurer written notice w/in 30 days of the accident or as soon as possible after that
· If the third party is either uninsured or unidentified
o Provide evidence to support the claim w/in 90 days
o If requested, the insured must provide a certificate from the medical or psychological advisor of the insured person
o If requested the insured must undergo examinations by a qualified medical or psychological advisor at the insurer’s expense
o The insured must provide details of any other insurance policy
Claims for property damage
· Claim for PD provided third party is not only uninsured but also identified
· Insured must notify insurer in writing w/in 7 days of the accident or as soon as possible
· Protect the vehicle against further damage
· Make no repairs beyond those needed for protection of the auto or remove evidence of the damage w/out the insurer’s written consent
· Permit the insurer to inspect the auto at any reasonable time
· Complete a statutory declaration (proof of loss) w/in 90 days of accident if requested
· Must not abandon the auto to the insurer unless it agrees to accept it
Limitations and exclusions
· The insurer is liable for the lesser of the min limits where the accident occurs or the min limits of Ontario
· Where the insured is entitled to recover money under any other insurance policy other than money payable on death, the insurer is only required to pay the difference b/w that amount and the amount under the above point
· The insurer is not liable for any payment if the insured is entitled to recover under the third party section of the auto policy
· There is no liability to anyone who can recover from an unsatisfied judgment fund or similar fund
· There is no liability for any loss/damage caused directly/indirectly by radioactive material
· The amount payable for PD to the auto and its contents is subject to a $300 deductible and a max of 25,000
· There is no liability on the insurer for loss/damage that occurs while the auto is being operated by an excluded driver
· Claims for BI or death have priority of payment to 95% of the amount payable and for damage to the auto and its contents priority of 5%
Highway victims indemnity funds
· Highway victims indemnity funds ensure that innocent victims are compensated
· Set up in all Canada – AB, BC, Man, ON, Sask have govn’t operated funds, NB, Nfld, NS, PEI are compensated by Facility Association when they are not covered by section D of their auto policy
· Quebec the Fonds d’indemnisation is administered by the Societe de l’assurance due Quebec
· The fund steps in as though it were an insurer providing the min liability limits in the province
· More recently some funds have investigated and negotiated a reasonable settlement if the claim was straightforward
· In Quebec
· Persons who suffer injury or PD must apply to the Fund
· If the uninsured owner denies liability, the Fund may require that the victim sue and a judgment rendered b4 making payment
· Payments from the Fund are based on the extent of the uninsured driver’s legal liability – if the claimant is AF the Fund does not pay
· In ON, the enactment of the Compulsory Auto Insurance Act substantially reduced the role of the Motor Vehicle Accident Compensation Fund by providing broader coverage
· For PD claims all provinces except Sask
· AB does not respond to PD claims
· The Funds provide coverage for uninsured losses only so if an insured has coverage the insured must claim from his own insurer
Sample Review Questions - Automobile Insurance (Part 1)
1. Highway Victims Indemnity Funds protect innocent victims of uninsured/unidentified motorist who do not have access to auto policy.
2. Uninsured – neither the owner nor driver has liability insurance to cover BI or PD arising out of the o/ship, use or operation of an automobile or the insurance is not collectible.
Unidentified – the owner or driver cannot be determined (hit and run).
3. Insured persons under section 5 are:
- With respect to death or BI:
a. Any occupant of the auto
b. The insured and his spouse and any dependent relative of either
i. While the occupant of an uninsured auto
ii. While not an occupant in an auto, streetcar or railway vehicle, if struck by an uninsured or unidentified auto
c. If the named insured is not an individual (corporation) any directors, partners, employees for whose regular use the auto is furnished and their spouse and dependent relative of either
i. While the occupant of an uninsured auto
ii. While not an occupant in an auto, streetcar or railway vehicle, if struck by an uninsured or unidentified auto
- With respect to damage of the auto – the owner
- With respect to contents of the auto – the owner of the contents
4. To claim under uninsured motorist coverage, the insured must be legally entitled to recover a loss from the uninsured or unidentified motorist – the uninsured or unidentified motorist must be AF.
5. Uninsured Motorist would typically cover claims for BI or death when the third party is uninsured or unidentified and claims for PD but only when the third party is uninsured and identified
6. Limits that apply to payments under section 5 are the lesser of the min limits where the accident occurred or the min limits in ON.
7. When the total amount claimed is more than the coverage limit, payments are apportioned 95% BI and 5% PD
8. Limits and exclusions that apply to section 5 are:
a. The insurer is liable for the lesser of the min limits where the accident occurred or the min limits in ON
b. Where the insured is entitled to recover money under any other insurance policy other than money payable on death, the insurer is only required to pay the difference b/w that amount and the amount under paragraph a
c. The insurer is not liable for any payment if the insured is entitled to recover under the third party section
d. There is no liability to anyone who can recover from an unsatisfied judgment fun or similar fun
e. There is no liability for any loss/damage caused directly/indirectly by radioactive material
f. The amount payable for PD and its contents is subject to a $300 deductible and a max of $25,000
g. There is no liability on the insurer for loss/damage that occurs while the auto is being operated by an excluded driver
9. The determination of legal liability and the amount of damages are matters for negotiation b/w the insured and the insurer. If an agreement cannot be reached, if both parties agree they may submit the matter to arbitration or take it to court.
10. Claims procedure when presenting a claim for PD:
- Notify the insurer in writing w/in 7 days of the accident
- Protect the auto against further damage
- Make no repairs beyond those needed fro protection of the auto or remove evidence of the damage w/out the insurer’s written consent
- Permit the insurer to inspect the auto at any reasonable time
- Complete a statutory declaration w/in 90 days of the accident if requested
- Not abandon the auto to the insurer unless it agrees to accept it
Claims procedure when presenting a claim for injury:
If the third party is unidentified:
- Report the accident to the policy w/in 24 hrs
- Give the insurer a written statement w/in 30 days setting out details of the accident
If the third party is uninsured:
- Give the insurer written notice w/in 30 days of the accident
If the third party is either uninsured or unidentified:
- Provide as much evidence as possible to support the claim w/in 90 days
- Provide a certificate from the medical or psychological advisor if requested
- Undergo examinations by a qualified medical or psychological advisor at the insurer’s expense if requested
- Provide details of any other insurance policy under which there is a right to compensation
11. Property damage caused by an unidentified auto is not covered under section 5 b/c to do so would encourage abuse; persons who have single vehicle accidents and have no collision coverage or don’t want to claim under it and pay the deductible or spoil their driving record would claim hit and run.
12. The Highway Victims Indemnity Fund differs from Uninsured Motorist Coverage in that the Fund provides coverage for uninsured losses only, so if an insured has coverage for a particular loss the insured must claim for from their insurer.
13. All provinces have Highway Victims Indemnity Funds.
14. In Canada
15. When the Highway Victims Indemnity Fund pays a claim for an uninsured motorist, an application will be made w/ the registrar of motor vehicles to have the driver’s license of the owner/driver suspended until the judgment amount is repaid to the Fund.
16. When an uninsured motorist denies liability for an accident, the victim would have to sue and a judgment rendered b4 the Fund makes a payment.
17. A pedestrian who does not own an auto and is struck by a hit and run driver would turn to the Highway Victims Indemnity Fund to help cover the cost of his injuries.
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