WHAT IS INSURANCE? INSURANCE IS RECOVERY

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1 TEACHER S NOTES Purpose: to explore the effect of a car accident on a person s life to recognize the role of insurance as an essential emergency tool for replacement, repair and rehabilitation to explore the value of having car insurance Introductory Class Discussion: Fact: Almost every object we see, every action we do, or any place we go to, the invisible umbrella of insurance is working to protect and compensate if something goes wrong. Driving a car has many risk factors (things that make the situation potentially dangerous) and many protective factors (things that can protect drivers and passengers from danger). Ask the class to name some risk and protective factors for driving a car. Ask the class: Q: What would happen if you were seriously injured in a car accident? (may miss school/work, may need bed rest, may not walk again, may need special care, etc.) Q: What could be done to restore your previous state of health? (rehabilitation, medication, surgery, rest, etc ) Q: What role does insurance play in this process? (if there was insurance, it would provide you protection; the compensation you need to help you get better) Write the word indemnify on the board and ask the class what this word means. Definition: Indemnify means to provide compensation for loss; to put back in the same financial position (not more, not less) as before the loss. Q: How many do you drive a car or want to drive a car? Q: What are the essential things you must have to drive a car? (Car, licence, insurance, understanding of the rules of the road) Q: Why do you think it is so important to have insurance to drive a car to the point that it is a legal requirement? (Insurance is there to provide compensation if you get into a car accident, to repair or replace your car to its condition before the accident. It pays for the cost of rehabilitation if you are injured. It also compensates you, if you are successfully sued by the other driver in the accident.) Q: If you were in a severe car accident that left you permanently disabled, what type of damages can your insurance policy indemnify you for? (Car repairs, hospital stay, rehab, medication, at-home nurse, wheelchair, lost income, etc...) Group Activity: Hand out: Activity Sheet THE NAME OF THE GAME IS RECOVERY -- INSURANCE ROLE PLAY GAME Have students work in pairs to complete the activity sheet. When students have completed the activity sheet, ask the pairs to share their ideas with the rest of the class. Follow-up Discussion: Ask the class: Q: If you were permanently disabled from a car collision, what evidence would you bring to justify your claim for loss of future income? Q: How would such evidence differ for (i) a five-year old, (ii) a 48 year old executive, and (iii) a homemaker? WHAT IS INSURANCE? Page 1 of 5

2 TEACHER S NOTES Independent Activity or Extension Exercise for Students: Have the students write an essay or debate the following: In rehabilitating an accident victim, the responsibility of the insurance company is greater than the responsibility of the victim. Encourage students to seek out and interview a claims adjuster as a school assignment to better understand insurance, the role of a claims adjuster, compensation issues as related to policy coverages and limitations, and how to ensure that your claim when something goes wrong is compensated appropriately. FOCUS ON INSURANCE CAREERS: Claims Adjuster or Loss Investigator Of the many roles within insurance, a Claims adjuster or Loss adjuster investigates insurance claims arising out of losses such as fires, car accidents, and burglaries, and determines the amount of damage or loss covered by the insurance policy. Adjusters make recommendations regarding payment of benefits, based on the coverage noted on the insurance policy, and negotiate payment and settlement. Adjusters may be employed by an insurance company or may act as independent contractors. Part private investigators and part therapist, the adjuster ensures that those who have suffered a loss receive all the benefits and assistance to which they are entitled. The goal of the adjuster is to, as closely as possible, restore people to where they were before they suffered their loss. Extension Exercise for Teachers: Teachers are encouraged to invite a claims adjuster into the classroom to answer students questions. Contact the Insurance Institute to invite an insurance professional, ambassador, into the classroom as part of the Insurance Institute s Career Connections Ambassador Program. Contact x or go online at for more information. WHAT IS INSURANCE? Page 2 of 5

3 STUDENT ACTIVITY SHEET THE NAME OF THE GAME IS RECOVERY -- INSURANCE ROLE PLAY GAME Choose a partner. Interview one another, role playing the parts of claims adjuster and accident victim, then complete the questions together using the information sheet. Accident Victim: You decided to bike to your first day of your new summer job in July, leaving the family car for your sister. While riding your new high-end bicycle in the right lane of a fairly busy downtown street, a motorist does not look as he rounds a corner, and hits you with his car. Details: Fortunately, you were wearing your helmet and he is only driving 30 km an hour. However, your bicycle is totaled and you have badly injured the muscles of your right leg and your right arm. You are working full-time as a camp counsellor for the summer, teaching skate boarding, rollerblading and tennis. You earn $300 per week. The doctors at the hospital say that you ll be recovering for the rest of the summer. Claims Adjuster: You are a claims adjuster working for the victim s insurance company. The victim who under his/her parent s automobile insurance policy, has full coverage for this accident as the loss is still deem an accident involving an automobile. It is your job to set out what type and amount of funds are available to get the person back on the road to recovery, and to replace the damaged bike. Note: Automobile insurance rules, regulations and coverages varies with each province, please go online to > Curriculum Connections > Downloads to research your province s specific information before answering the questions below. Please also refer to the Information Sheet: No-Fault Automobile Insurance in Canada to help answer the questions. 1. Explain in your own words the term No-Fault insurance. 2. Explain the term Accident Benefits. What types of coverage does this include? 3. Explain the term Direct Compensation Property Damage. Does your province subscribe to direct compensation property damage? 4. What is the compulsory minimum time limit and dollar amount on the out-of-pocket medical procedures and rehabilitation that auto insurance will pay? 5. How much disability income will be earned while you (the victim) are not able to fulfill your duties as camp counsellor? 6. Who would be responsible for paying for the replacement of your high-end bicycle? You (personally), your parents home insurance, or the driver s liability insurance? Explain. 7. If neither you nor your parents purchased auto insurance and the driver that hit you took off after hitting you on the bike, who would indemnify you for your injuries? WHAT IS INSURANCE? Page 3 of 5

4 INFORMATION SHEET NO-FAULT AUTOMOBILE INSURANCE IN CANADA No-Fault Insurance: what does this really mean? No other phrase used in insurance has been more widely misunderstood by the general public than no-fault. Simply, this means claims are paid out without referring to who was at fault in an accident. This means there is always an at-fault party in an accident, but with no-fault insurance, the not-at-fault party does not have to go after the at-fault party for compensation. In other words, unlike a tort system, there is no need to sue for liability involving a process of litigation before a claim is settled. Each party involved in an automobile accident claims from their own insurance company for compensation. This dramatically decreases the time and expenses for a claim to be indemnified. No-fault insurance is only for automobile insurance and is divided into two types: for a person s injuries and for vehicle damages (explained below). Accident Benefits, the no-fault insurance for people s injuries To reduce the heavy financial burden and receive immediate compensation for any injured people in auto accidents, Accident Benefits protection was created. Today, this form of no-fault protection provides compensation, regardless of fault, if the insured (or driver), passengers or pedestrians suffer injury or death in an auto collision. Accident Benefits provides coverage for compensation such as out-of-pocket medical expenses, rehabilitation, funeral expenses, death benefits, and disability income benefits (the type and dollar amount differs for each province). Accident Benefits is compulsory in all provinces and only optional in Newfoundland & Labrador. Direct Compensation: Property Damage, physical vehicle protection Direct Compensation is a form of no-fault insurance coverage for direct property loss. It differs from Accident Benefits to the extent that fault is factored for indemnity. This is still considered no-fault protection as for any auto collision you are involved in, your own insurance company compensates you for the share of the loss of your vehicle to the extent you are not at-fault. This coverage is only available in three provinces and there are provincial rules that determine the amount of fault in a collision. Third Party Liability Insurance: Protection aiding the Tort System On the opposite side of no-fault insurance, Third Party Liability insurance provides protection for liability imposed by law on the at-fault party for bodily injuries and/or damages to the property of others in the use of an automobile. Simply, this coverage is only available if you are sued by the not-at-fault party in an auto collision WHAT IS INSURANCE? Page 4 of 5

5 INFORMATION SHEET and made by the courts to compensate the loss. This coverage is mandatory across Canada and is available regardless of no-fault benefits (except for Quebec and Manitoba). Priority of Payments for Accident Benefits This is a guide used by the insurance industry to determine from whom an injured person will collect No-Fault Accident Benefits. A. All persons must claim Accident Benefits from their own automobile insurer. If the person is a named insured on more than one automobile insurance policy, he or she must claim Accident Benefits from the policy that he or she was occupying at the time of the accident. B. If there is no such insurance (e.g., person or spouse does not own an automobile), benefits are payable by the insurer of the automobile in which he or she was an occupant. C. If recovery cannot be had (e.g., no insurance on the automobile in which person was an occupant), then recovery can be made from the insurer of the any automobile involved in the accident. D. If no recovery is possible from any of the above three sources (e.g., the injured person is a pedestrian who does not own an automobile and is the victim of a hit and run), the benefits will be paid by the Uninsured Automobile coverage in the injured s policy, unless the Canadian province, territory or US State where the injury took place has a special fund from which to claim. WHAT IS INSURANCE? Page 5 of 5