C14 Automobile Insurance Part 1 (Atlantic Provinces) Addendum April 2013

C14 Automobile Insurance Part 1 (Atlantic Provinces) Addendum April 2013 (To be used with 2009 edition of the text.) Note: This addendum addresses recent changes to automobile insurance in Nova Scotia, and also incorporates the previous addendum for this text, issued in February 2010. Study 3, page 5 The section entitled Combined No-Fault for Injury and Vehicle Damage has been changed to the following: Direct Compensation for Property Damage Direct compensation for property damage (DCPD) allows insured drivers to be compensated by their own insurer for property damages resulting from an automobile collision caused by another party. Working with their own insurer allows drivers involved in an automobile collisions to complete the claims process more efficiently and get appropriate compensation quickly. This system is in place and works well in Ontario, New Brunswick and Quebec. Nova Scotia s new DCPD system will be based on New Brunswick's model. Introducing DCPD in Nova Scotia will not change a consumer s right to sue for other damages. Those rights are maintained under the tort system. Study 5, page 3 Insert the following as a sub-section under the heading Nova Scotia: Limited Liability and New Priority of Pay Rules for Rental Companies The liability of rental and leasing companies for a collision caused by the driver of a rental vehicle will be limited to damages of up to $1 million. Damages above $1 million will be the responsibility of the individual at fault. This reform applies to rental companies and leasing companies that do not offer the option to purchase the vehicle at the end of the lease. Under new priority of pay rules, insurance held by the person renting or leasing the vehicle will respond first, followed by that of the driver (if the driver is not the same person who rented the vehicle), followed by the rental or leasing company's insurance, up to a value of $1 million. Addendum for C14 (Atlantic) 2009ed April 2013 Page 1 of 10

Study 5, page 5 The title of the section at the bottom of the page and the first sentence of the section has been changed to the following: Section A.1 Direct Compensation Property Damage (New Brunswick and Nova Scotia) In 2005, New Brunswick introduced Direct Compensation Property Damage coverage under Section A.1 of the S.P.F. No. 1, and Nova Scotia did the same in April 2013. Study 5, page 9 The following Sentence has been added to the end of the second paragraph in the section under the heading Policy Limits: There is also a limit on awards for pain and suffering in Nova Scotia. Study 5, page 10 Review Question 4 has been changed to the following: 4. State TWO (2) defenses to absolute liability available to insurers? Study 6, page 3 The section entitled Newfoundland, Nova Scotia, and Prince Edward Island Accident Benefits has been replaced with the following The following sections contain general descriptions of the various types of Accident Benefits available to insureds in New Brunswick, Newfoundland, Nova Scotia, and Prince Edward Island. Table 6.1 Accident Benefits Coverage Limits in Atlantic Provinces, following this discussion, lists the various coverage limits and definitions applicable to coverage for the provinces individually. Medical, Rehabilitation, and Funeral Expenses (Subsection 1) This subsection covers reasonable expenses for medical, surgical, dental, ambulance, hospital, nursing, and rehabilitation costs that are deemed essential by the insured s physician, as well as the insurer s medical advisor. These expenses must be incurred within four years of the date of the accident, and must not be covered by provincial or private health plans. Coverage expires the sooner of when the four-yearperiod expires, or the maximum coverage limit is reached. Death Benefits and Loss of Income (Subsection 2) Death Benefits Payment of a death benefit is provided by this subsection for death that occurs within 180 days of the accident as a result of injuries sustained in the accident, or within 104 weeks if there is continuous disability for that period. Differing amounts are paid depending on the status of the deceased person in the household and if a spouse or dependent(s), or both, survives. The definitions dependents vary from province-to-province, and are included in Table 6.1 for reference. Loss of Income Benefits Insureds who sustain injuries in an automobile accident that keep them from working and earning a living may qualify for loss of income benefits. The benefits pay for 80% of the insured person s weekly income less income available from other sources including Employment Insurance, sick leave benefits, Addendum for C14 (Atlantic) 2009ed April 2013 Page 2 of 10

part-time employment, etc. subject to a maximum weekly limit. To qualify for loss of income benefits, insureds must meet certain criteria outlined in the policy. The duration of loss of income payments is determined by an insured s inability to return to work. Benefits are paid for the first 104 weeks (two years) if the insured suffers substaintial inability to perform the essential duties of his or her occupation. Benefits continue after 104 weeks if the insured establishes that the injury continuously prevents him or her from engaging in any occupation for which the insured is suited by education, training, or experience. Benefits for Principal Unpaid Housekeeper A benefit is available to insureds who acted as a principal unpaid housekeeper at the time of the accident, and are unable to perform any of their household duties following an accident. This benefit covers the cost of payments for housekeeping services snow removal, mowing the lawn, etc. Insureds cannot qualify for weekly loss of income payments and housekeeping expenses; it has to be one or the other. Table 6:1 Accident Benefits Coverage Limits in Atlantic Provinces Coverage New Brunswick Newfoundland Nova Scotia Prince Edward Island Subsection 1 Medical and $50,000 / person $25,000 / person $50,000 / $25,000 / person Rehabilitation person Funeral $2,500 $1,000 $2,500 $1,000 Expenses Subsection 2 Death Benefits Death of head of household: $50,000 Death of spouse of head of household: $25,000 Death of dependent: $5,000 For 2 or more survivors add $1,000 for each survivor other than the first after death of head of household Death of head of household (or spouse of): $10,000 Death of dependent: $2,000 For 2 or more survivors add $1,000 for each survivor other than the first after death of head of household Death of head of household (or spouse of): $25,000 Death of dependent: $5,000 For 2 or more survivors add $1,000 for each survivor other than the first after death of head of household Death of head of household (or spouse of): $10,000 Death of dependent: $2,000 For 2 or more survivors add $1,000 for each survivor other than the first after death of head of household Dependent defined as A dependent person under 19, living in the household A dependent person 19, or older, who is mentally or physically infirm, or who attends school, college, or A dependent person under 18, living in the household A dependent person 18, or older, who is mentally or physically infirm, or who attends college or university A dependent person under 18, living in the household A dependent person 18, or older, who is mentally or physically infirm, or who attends college or A dependent person under 18, living in the household A dependent person 18, or older, who is mentally or physically infirm, or who attends college or Addendum for C14 (Atlantic) 2009ed April 2013 Page 3 of 10

Loss of Income university fulltime 80% gross weekly income Max weekly benefit: $250, for up to 104 weeks $100/week for up to 52 weeks for principal unpaid housekeeper full-time 80% gross weekly income Max weekly benefit: $140, for up to 104 weeks $70/week for up to 12 weeks for principal unpaid housekeeper university full-time A dependent parent or relative of the head of the household (or spouse), living in the household 80% gross weekly income Max weekly benefit: $250, for up to 104 weeks $100/week for up to 52 weeks for principal unpaid housekeeper university full-time 80% gross weekly income Max weekly benefit: $140, for up to 104 weeks $70/week for up to 22 weeks for principal unpaid housekeeper Examples Death Benefits i. The head of the household in Prince Edward Island dies, leaving a spouse and one dependent survivor. The following benefit is payable: Benefit for death of head of household = $10,000 Benefit for additional survivor = $1,000 Total = $11,000 ii. The single 21-year-old head of the household in Nova Scotia dies leaving her widowed mother who lives in the same household and was principally dependent. The following benefit is payable: Benefit for death of head of household = $25,000 iii. The head of the household in New Brunswick, his spouse, and a dependent child die, leaving two dependent children. The following benefit is payable: Benefit for death of head of household = $50,000 Benefit for death of spouse = $25,000 Benefit for death of dependent = $5,000 Benefit for additional survivor = $1,000 Total = $81,000 Study 6, page 7 Insert the following after the section entitled Supplemental Benefits Respecting Accidents Occuring in Quebec (Subsection 2A) Nova Scotia and Prince Edward Island : Diagnostic and Treatment Protocols for Minor Injuries in Nova Scotia Addendum for C14 (Atlantic) 2009ed April 2013 Page 4 of 10

As part of its 2013 insurance reforms, Nova Scotia introduced diagnostic treatment protocols for certain types of injuries that meet the definition for minor injuries, including sprains, strains, and certain types of whiplash-associated disorders. This means that insureds who suffer these types of injuries in an automobile collision have direct access to physiotherapy and chiropractic treatment without waiting for approval from an insurer or a physician s referral. (The details of these protocols are beyond the scope of this course.) Study 7, page 8 The paragraph beside the marginal heading Loss of use by theft has been changed to the following: (2) Where the insured purchases All Perils, Comprehensive, or Specified Perils, the insurer further agrees, following a theft of the entire automobile covered thereby, to reimburse the insured for expense not exceeding $25 for any one day nor totaling more than $750 incurred for the rental of a substitute automobile, including taxicabs and public means of transportation. (In Newfoundland, the limits are$30 per day, $900 total.) Study 8, page 2 The last sentence in the paragraph beside the marginal heading Must be legally entitled to recover has been changed to the following: In other words, the insured will recover under the uninsured motorist coverage of his/her own policy only if the uninsured/unidentified motorist was at fault and no Highway Victims Indemnity Fund exists where the accident happened. Study 8, page 7 Review Question 1 has been replaced with the following: 1. Do Highway Victims Indemnity funds (or similar funds) provide compensation for property damage if the responsible owner and/or driver is unidentified? Study 8, page 8 Question 5 on Test. No. 2 has been changed to the following: 5. You were injured by an uninsured motorist from a U.S. state having no Highway Victims Indemnity Fund. Your vehicle is a total loss and your injuries will prevent you from working for at least two months. The accident occurred on a highway in your province of residence, and was completely the other motorist s fault. You have coverage under the SPF 1, including Third Party Liability coverage, Accident Benefits, Uninsured Motorist coverage, and All Perils coverage. (a) How would your insurance policy compensate you for i. the damage to your vehicle? ii. the bodily injuries you have suffered? (b) Can you sue the uninsured motorist who caused the accident to recover damages? If so, would you have any recourse if you are unable to recover the judgment from the uninsured driver? Explain. (c) What coverage would be available to you if you were a pedestrian who was injured by the uninsured motorist and you do not have access to Uninsured Motorist coverage? Addendum for C14 (Atlantic) 2009ed April 2013 Page 5 of 10

(5 marks each = 15 marks) Study 9, page 3 The sentence above the last paragraph on the page has been changed to the following: These definitions apply to Sections A, B, C, and D of the policy. Study 9, page 4 The sentence following the definition of a Temporary Substitute Automobile has been changed to the following: This definition applies to Sections A, B, and D of the policy. The paragraph beside the marginal heading Other non-owned automobiles has been changed to the following: For Section A, B, and D coverage only, any borrowed vehicle is covered, other than the one described, while driven by the insured or by his or her spouse, provided that, Study 9, page 5 The marginal heading Permission granted to pull trailers has been moved to beside item (f). Study 9, page 6 The first paragraph under the heading War Risks Excluded has been changed to the following: The insurer shall not be liable under Section B, C, or D for any loss, damage, injury, or death caused directly or indirectly by bombardment, invasion, civil war, insurrection, rebellion, revolution, military or usurped power, or by operation of armed forces while engaged in hostilities, whether war be declared or not. Study 10, page 6 The second sentence in the paragraph beneath item (c) has been changed to the following: The time it takes to forward the writ to the insurer is very important because only 10 days (20 days in N.B.) is allowed after service of a writ to enter an appearance, after which the Plaintiff can apply to the court for a Default Judgment. Study 10, page 12 The last sentence of the first paragraph has been changed to the following: In the Atlantic Provinces, the time period is two years, except in Nova Scotia, where it is three years. Study 11, page 11 The section under the heading Loss of Use has been changed to the following: Loss of use by theft covered by Section C igher limits and dditional perils The Additional Agreements under Section C provide coverage for loss of use of the automobile due to theft. This coverage reimburses insureds for expenses incurred for renting a substitute automobile or for using taxis or public transportation, up to a daily limit and total limit per occurrence. Insureds who desire additional coverage for loss of use may purchase a transportation replacement endorsement for an additional premium. It provides a higher limit per day and per occurrence for renting a substitute automobile or taking taxis or public transportation, and covers Addendum for C14 (Atlantic) 2009ed April 2013 Page 6 of 10

loss of use of the automobile arising out of any peril covered by the physical damage section of the policy. Insureds may be able to choose a limit per day and per occurrence, or their insurers may have standard limits. These limits will then be stated in the endorsement. Study 11, page 12 point iii (at the bottom of the page) has been changed to the following: iii) If the lienholder knows of a misrepresentation or other breach of policy conditions, it must notify the insurer within 15 days of learning of it. Study 12, page 6 The second-last sentence of the paragraph beside the marginal heading Private section insurers has been changed to the following: The government insurers must, and do, provide basic coverages as well as certain extended coverages to such vehicles. Study 13, page 4 The following subsection was inserted at the end of the section entitled Drivers: Prohibited Risk Classification Factors Due to legislative changes, insurers in New Brunswick, Newfoundland, and Nova Scotia can no longer use age or marital status as underwriting variables. Insurers in Newfoundland are also prohibited from using gender, marital status, and whether the driver has other policies with the Facility Association as reasons to refuse coverage. In Nova Scotia, insurers will no longer be permitted to use at fault accidents as a rating variable if no payment has been made by the insurance company. Insurers who incur expenses as a result of a claims notification of their insured cannot consider this a claims payment for rating purposes. Study 13, page 10 British Columbia and Prince Edward Island have been added to the list of provinces with rate boards. Study 13, page 11 British Columbia and Prince Edward Island have been deleted from the list of provinces without rate boards. Study 15, page 5 The first sentence in the paragraph beneath the heading Income Replacement has been changed to the following: Income replacement benefits are determined by using a percentage of the net income of the victim. Study 15, page 8 9 The second paragraph beneath the heading Fonds d indemnisation has been replaced with the following: A victim sustaining property damage, and in some cases bodily injury, who has obtained a final judgment in Quebec following an automobile accident that occurred in Quebec may apply to the Fonds. Payments are limited to $50,000 per accident The Société pays compensation up to $10,000 for property damage to a vehicle. All compensation payable for property damage is subject to a $500 deductible set by regulation. For damage caused to a vehicle, the deductible will be the higher of Addendum for C14 (Atlantic) 2009ed April 2013 Page 7 of 10

$500 for a vehicle valued under $5,000 on the day when the accident occurred; or 10% of the worth of a vehicle valued $5,010 or more on the day of the accident. In the box The Fonds d indemnisation, the last sentence has been changed to the following: Limit of compensation: $50,000 and a $500 deductible for property damage. Study 15, page 10 The paragraph beside the marginal heading Plan de répartition des risques has been replaced with the following: The purpose of the P.R.R. is similar to the risk sharing pools managed by the Facility Association in other provinces. Both allow participating insurers to share the underwriting profit or loss and administrative costs of the pooled risks. However, in Quebec, insurers may transfer any risk they have accepted through the regular market that does not meet their minimum underwriting standards. In other provinces, insurers transfer risks that meet their underwriting rules, but present higher than average risk of loss. (This topic is discussed in more detail in a previous chapter.) Bullet (b) and the marginal heading Aprraisal centres has been replaced with the following: Damage appraisal (b) to oversee collision repair appraisal; Under the Automobile Insurance Act, the G.A.A. has created a network of appraisal centres, which are subject to its standards, procedures, and regulatory measures. The goal is to keep premiums reasonable, and to minimize compensation costs by using precise and professional appraisal techniques. Study 15, page 12 The following section has been inserted beneath the bulleted list: The Québec Automobile Insurance Application Application provides essential rating information The application contains the information required to underwrite, rate, and issue the policy. In Quebec, the insurer must supply a true copy of the application to the insured when the policy is issued, so great care must be taken to ensure that all questions are answered and all the necessary information has been obtained. The information required is the same whether it is received in writing or taken over the telephone. The application form itself is not regulated in Quebec, so questions found in applications can vary slightly from one insurer to another. However, the Declarations derived from it are standard for all insurers. Signed application Generally in Canada, insurers are not required to obtain signed applications before issuing automobile policies. Whether an application is signed by the insured, the insurer must still send the insured a copy of the completed application form. In Quebec, the insurer s obligations are detailed in the Civil Code. Addendum for C14 (Atlantic) 2009ed April 2013 Page 8 of 10

Discrepancies If there are any differences between the application and the policy, the insurer must draw special attention to these differences in a separate written document to the client. If a policy is not identical to the application and the insured is not properly notified, the insured can demand that the coverage requested in the application be provided. For example, if the application specified a $500,000 limit for Civil Liability coverage but the policy was issued for $200,000, the insured is entitled to be insured for $500,000. Burden of proof rests with insurer The burden of proving any misrepresentation or a failure to disclose required facts rests with the insurer. If the insured misrepresents the facts, it will be easier for the insurer to prove it if the application has been signed by the client and contains the misleading or deceptive statement. Study 15, page 13 14 Numbers have been deleted beside points in The Q.P.F. 1 list and beside the headings in the sections following it. Study 15, page 13 The section entitled 1. Declarations has been replaced with the following: Declarations This part contains the main items of the application. It identifies the names of the parties, describes the risk, identifies the coverages, and identifies other information relevant for underwriting the risk. Seven items are considered within the Declarations: Item 1 identifies the insured and where the vehicle will be principally operated. Item 2 identifies the policy period. All policies go into effect and expire at 12:01 A.M. standard time at the insured s address. Item 3 identifies the vehicle information and rating criteria. It also contains the names of lienholders and other creditors having a financial interest in the vehicle. Under the Civil Code, creditors are required to give notice of their interests and to prove them if necessary. It is not up to the insurer to investigate whether a lien exists on a vehicle before settling a claim. Item 4 specifies the coverages purchased by the insured, the premiums, and the deductibles. Item 5 must be completed if the applicant is not both the registered and the actual owner of the described automobile. Item 6 allows insurers to record two types of information to be used for risk assessment and rating: Spontaneous declarations made by the applicant without being asked a question The formal questions asked by the insurer and the applicant s responses, which can include date of birth, occupation, and employer; use of vehicle; and the driver s past experience relating to driving offenses and past claims The insurer is permitted to ask questions about all relevant issues rather than being tied to the standard questions found in earlier application forms. Information disclosed must be clearly reproduced in the application, which may then be signed by the insured and a copy given to the insured. Addendum for C14 (Atlantic) 2009ed April 2013 Page 9 of 10

Item 7, Notice, states that the client and the insured must report all drivers who use the automobile and who do not use it exceptionally. Study 15, pages 16 18 The sections entitled Application and Declarations and Information Required in an Application have been deleted. Study 15, page 19 The second bullet point (and the list beneath it) under the heading Groupement des assureurs automobiles (G.A.A.) has been changed to the following: The Automobile Insurance Act defines the responsibilities and powers of the G.A.A.: Availability of liability insurance Damage appraisal Direct Compensation Agreement Standard Accident Report Risk sharing Statistical agency Management of the Fichier central des sinistres automobiles Study 15, page 20 In the Organizational Chart Automobile Insurance Act of Quebec, the bullets beneath the heading G.A.A. have been changed to the following: Availability of mandatory insurance QPF 1: Section A Damage appraisal Direct Compensation Agreement Standard Accident Report Risk sharing mechanism Statistical agency Fichier central des sinistres automobiles Study 17, page 6 In Example 1, the amount Kozak recovers has been changed to the following: Kozak: Paid by SGI under Collision $2,300 ($3,000 - $700 deductible) Paid by SGI Canada under Collision 500 ($700 - $200 difference between deductibles) Total recovery $2,800 Addendum for C14 (Atlantic) 2009ed April 2013 Page 10 of 10