Chapter 4–Application For Automobile Insurance PDF

Preview

Summary

Download Chapter 4–Application For Automobile Insurance PDF

Description

Automobile Insurance (Part 1) Chapter 4 – Application For Automobile Insurance Introduction Auto policy forms, applications and claim forms must be approved by the Superintendent The application contains the info required to underwrite, rate and issue the policy Insurance act provisions relating to auto insurance applications and policies The following forms must be approved by the Superintendent: o Application for insurance o Policy, endorsement or renewal o Claims form o Continuation certificate It is a misconception that an auto policy cannot be issued w/out first receiving a signed written application If a signed application is not received, the insurer must send a form of application to the insured so that it can be signed and returned W/out a signed application any misrepresentation or violation of conditions to render a claim invalid would weigh heavily against the insurer An insurer cannot use as a defense of a claim any info found in a purported copy of an application when there is no signed written application An insurer is required to furnish the insured w/ a policy and every endorsement or other amendment or a true copy of them When a policy is issued and it differs in any way from the written application, the following provisions apply: o The insurer must point out in writing in what ways the policy differs o If the insured does not object in writing w/in 7 days, ht policy is deemed to cover as it is written If the insurer adopts the standard owner‟s policy, it may issue a certificate instead of the policy – it has the same force and effect as a policy W/out a written application, the applicant does not see the warning for misrepresentation or violation of conditions to render a claim invalid until after the policy is delivered and the warning will be lost on them b/c people do not read their policies – another reason to get application signed before issuing policy Accuracy is imperative when completing an application for auto insurance The knowledge of the broker/agent is considered the knowledge of the insurer – the broker/agent has a professional responsibility to ensure the doctrine of utmost good faith is upheld The Ontario application for automobile insurance (OAF 1) The OAF 1 is the only form approved for use in underwriting auto insurance for the OAP 1 Section 1: Applicant‟s name and postal address/lessor (if applicable) o This info is essential to the proper formation of the contract and is used for:  Identifies the person insured as the R/O of the vehicle  Provides the info used for rating  Is helpful in obtaining an abstract of the driver‟s driving record Section 2: Policy period o Includes the time, day, month and year of the policy inception o It expires at 12:01 am, local time at the postal address stated Section 3: Described automobile o Each auto will be used primarily in the vicinity of the applicant‟s address unless otherwise stated in the Remarks o Details and description of each vehicle is required for rating purposes as well as for identification in the event of a claim o If there is a lienholder or a lessor, they must be named and the address given in order to:  Establish the insurable interest of the applicant in the auto  Record the interest of lienholders/lessors so that their interest may be protected in the event of a claim

The R/O is the person whose name appears on the o/ship while the actual owner is for example the person who actually paid for the vehicle Section 4: Driver information o Requires the names of all drivers in the h/h or business and their driving info o Criteria for retiree discount:  Retired; no employment income, not working or operating a business  Age 65 or older or collecting CPP or QPP or other RPP  Principal rated driver of the vehicle o Licensed less than 6 yrs in Canada, driving experience in other countries may be recognized o The applicant ought to know whether or not he had his license suspended, lapsed or cancelled during the last 6 yrs o Info pertaining to the insurance record of the applicant and any listed drivers w/in the past 3 yrs is also required Section 5: Previous accidents and insurance claims o Details are required about all accidents and claims arising from the o/ship, use or operation of any auto during the past 6 yrs Section 6: Convictions o All convictions arising out of the operation of auto is required for the past 3 yrs Section 7: Remarks o Used for additional details relating to sections 1-6 Section 8: Rating info o Summary of info from sections 1-7 intended to be completed by the broker/agent; it will be used to calculate the premium Section 9: Coverages o Mandatory coverages: Liability Covers insured persons if someone else is killed or injured or their property is damaged in an auto incident. It will pay all sums for which the insured is legally liable up to the limit of coverage Accident Benefits Pays benefits that insured persons are entitled to received if injured or killed in auto accident Uninsured Auto Provides coverage if the named insured or other insured persons are injured or killed by an uninsured motorist or by a hit-and-run driver. It cover damage to the named insured‟s auto and its contents caused by an identified uninsured motorist DCPD Provides coverage in ON, for damage to the insured auto and to property it is carrying when another motorist is responsible for the accident o

*Loss or Damage

Provides a selection of optional coverages for the insured auto. Payments cover direct and accidental loss of or damage to a described auto and its equipment * A deductible applies on each claim except for loss or damage caused by fire or lightning or by theft of the entire auto Section 10: Method of payment o The insurer is not bound by the premium estimated on the application o Premiums are computed based on the choice of coverages and a minimum retained premium is specified – it will cover the costs of issuing the policy and processing a cancellation if the policy does not run its full term Section 11: Declaration of applicant o There is a penalty if the applicant gives false particulars of a described auto to be insured and these particulars are to the prejudice of the insurer o This section also gives the insurer the authority to carry out the usual driving history checks Section 12: Report of broker/agent o Completed, signed and dated by the broker/agent o Tells an underwriter whether they are already on the risk, if the business is not new to the broker but new to the company

Sample Review Questions - Automobile Insurance (Part 1) 1.

The purpose of an automobile application is that it contains the info required to underwrite, rate, and issue a policy.

2.

Automobile policy forms, applications, and claim forms are regulated and approved by the Superintendent.

3.

The rules relating to automobile applications and policies are found in the Insurance Act.

4.

It is not mandatory to obtain a signed application before an auto policy is issued however it is desirable and insurers should insist on it. If no signed application is received, the insurer must send a form of application to the insured so that it can be signed and returned.

5.

Disadvantages of an oral application: it is more difficult to prove misrepresentation – it is the insurer‟s word against the insured‟s; if there are any doubts, they would weigh heavily against the insurer. An insurer cannot use as a defense any information found in a purported copy of an application.

6.

If a policy with a lower limit than was asked for in the written application was issued, the insurer must: a. Point out in writing in what ways the policy differs from the application

7.

If the insured receives a policy that does not correspond to the written application, he can object to the changes by advising the insurer in writing w/in 7 days otherwise the policy is deemed to cover as it is written.

8.

If a misrepresentation is suspected, the onus of proof is on the insurer.

9.

The 12 info sections in an application for auto insurance are: a. Applicant‟s name and postal address/lessor b. Policy period c. Described automobile d. Driver information e. Previous accidents and insurance claims f. Convictions g. Remarks h. Rating information i. Coverages j. Method of payment k. Declaration of applicant l. Report of broker/agent

10. A policy may commence at any time of day but expires at 12:01 am local time, at the postal address stated of a given date. 11. An accurate description of the auto to be insured is important for rating purposes as well as for identification in the event of a claim. 12. All convictions arising out of the operation of an auto during the past 3 yrs for all drivers listed is required. For each conviction, the date and description must be given. 13. Past insurance experience of the applicant and other drivers are required b/c the insurer requires details relating to cancellations of any auto insurance policy and denial of any claim b/c of material misrepresentation. 14. Information relating to the use of the vehicle is important to the insurer b/c it changes the exposure of the risk. A vehicle that is used for business or is driven great commuting distances during rush hours is exposed to more risk than one that is driven for pleasure only or used for family activities. 15. The difference b/w the R/O and actual owner of a vehicle is, the R/O is the person whose name appears on the o/ship while the actual owner is for example the person who actually paid for the vehicle.

16. There is no benefit to registering a vehicle under your parents name if you are underage. A problem that could arise is determining who actually has insurable interest in the vehicle. 17. According to the Insurance Act, a person shall not be deemed to be the owner of the auto for the reason only that the person has a lien on the auto or has legal a title to the auto as security. 18. With respect to the misrepresentation of facts on an auto insurance application, the application says there is a penalty if the applicant gives false particulars of a described auto to be insured and these particulars are to the prejudice of the insurer. A claim is invalid and the right of the insured to recover indemnity is forfeited. 19. Examples of problems that can arise when an application contains incorrect info even though there was no intent to defraud or mislead include: an applicant‟s spouse had insurance declined 2 yrs ago and the applicant did no know about it. 20. The rating info is a summary from sections 1-7. For each auto insured it shows the class, driving record, drivers, at-fault claim surcharge, conviction surcharge, list price new of vehicle, vehicle code, rate group, location, territory, and discounts. 21. The item relating to obtaining personal info on the applicant is necessary b/c it gives the insurer the authority to carry out the usual driving history checks. It complies w/ consumer reporting requirements that a consumer must be notified in writing before a report containing personal info is requested from a consumer reporting agency. 22. Mandatory coverages include: a. Liability b. Accident Benefits c. Uninsured Automobile d. DCPD Optional coverages are: physical damage (loss or damage) 23. It is important that applicants be required to sign applications b/c it is easier to establish misrepresentation, avoid future misunderstandings, prevent fraud, and to ensure they have read and understood the seriousness of misrepresentation. 24. The insurer‟s obligations with respect to providing a “policy” to an insured is that the insurer is required to furnish the insured with a policy and every endorsement or other amendment or a true copy of them. 25. Yes it is permissible to issue a policy that differs from a written application. The following provisions apply: a. The insurer must point out to the insured in writing in what ways the policy differs from the application b. If the insured does not object to the changes by advising the insurer in writing w/in 7 days, the policy is deemed to cover as it is written 26. Misrepresentation – giving false particulars of the risk, making false statements about the risk. 27. When a policy contains a deductible, the insurer must apply it on each claim except for loss or damage caused by fire or lightning or by theft of the entire auto. 28. Another name for an Ontario Policy Change Form is endorsements. 29. The premium on an application is shown as estimated premium b/c it will be confirmed or adjusted by the insurer. There may be a calculation error or a surcharge if undeclared accidents or convictions are discovered. 30. Special reference made to OPCF 44 on the application is a space for indicating yes or no. This protects the broker and insurer should a client declined the endorsement and then when a loss occurs allege that he was not told about it.

31. The significance of the „declaration of applicant‟ in the application is to draw to the applicant‟s attention the seriousness of its provisions.

32. Examples of misrepresentation: a. Stating vehicle is used for pleasure but really used to deliver pizza 33. Examples of fraud: a. Insuring a phantom vehicle 34. Criteria for retiree discount: a. Retired; no employment income, not working or operating a business and b. Age 65 or older or collecting CPP/QPP/other RPP and c. Principal/rated driver of the vehicle 35. Report of broker provides the following info: a. Has the broker/agent bound the risk b. Is the business new to the broker/agent c. What type of motor vehicle liability card was issued – temporary/permanent/none d. How long has the broker/agent known the applicant e. How long has the broker/agent known the principal driver...