C14: Automobile Insurance Part 1 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Indemnity principle

The insured is restored to the same financial position as before the loss, never better off; overpayment is prevented and betterment is deducted from repair settlements.

Insurable interest

A financial stake in the vehicle such that loss causes the insured actual economic harm; required at the time of loss for a claim to be payable.

Utmost good faith

Both insurer and insured must disclose all material facts; misrepresentation or non-disclosure can allow the insurer to void the contract from inception.

Subrogation

After paying a claim, the insurer acquires the insured's right to recover from the at-fault party, preventing the insured from double recovery.

Declarations page

The policy section listing the named insured, described automobiles, policy period, limits of liability, deductibles, and listed drivers.

Insuring agreement

The clause that grants coverage by describing what the insurer promises to pay; read together with exclusions and conditions to determine scope.

Policy endorsement

A written amendment attached to the policy that changes, adds, or removes coverage; where it conflicts with the base policy, the endorsement prevails.

Statutory conditions

Mandatory policy terms prescribed by provincial regulation that cannot be waived by the insurer and override conflicting printed wording.

Third party liability

Coverage for sums the insured is legally liable to pay for bodily injury or property damage caused to others, up to the stated per-occurrence limit.

Duty to defend

The insurer's obligation to pay for lawyers and court costs to defend the insured against covered claims, even if the allegations are false.

Permissive driver

A person using the described automobile with the named insured's consent; coverage extends to that person as an additional insured.

Per-occurrence limit

The maximum the insurer pays for all claims arising from a single accident, regardless of the number of injured parties.

No-fault accident benefits

Benefits that pay regardless of fault, including medical, rehabilitation, income replacement, and death benefits, subject to provincial schedules.

Income replacement benefit

A weekly payment replacing a percentage of gross income (commonly 70%) after a waiting period, subject to a maximum set by regulation.

Catastrophic impairment

A severe injury designation under provincial rules that unlocks higher benefit limits and longer durations for medical and rehabilitation coverage.

Medical payments coverage

Optional coverage paying reasonable medical expenses for accident victims up to a stated limit, regardless of who caused the accident.

Collision coverage

Physical damage coverage for impact with another object or overturning, regardless of fault, subject to a deductible selected by the insured.

Comprehensive coverage

All-perils physical damage coverage for non-collision losses such as theft, fire, vandalism, weather, and glass damage.

Actual cash value

Replacement cost of the vehicle minus depreciation at the time of loss; the standard basis for total loss settlements.

Betterment

The amount charged to the insured when repairs leave the vehicle in better condition than before the loss, such as new parts replacing worn ones.

Uninsured motorist coverage

Coverage responding when the at-fault driver has no insurance or cannot be identified, such as a hit-and-run driver.

Underinsured motorist coverage

Coverage paying the shortfall when the at-fault driver's liability limit is insufficient to satisfy the claim in full.

Hit-and-run deductible

A deductible applied to uninsured motorist claims where the at-fault driver cannot be identified, set by provincial regulation.

Material change in risk

A change in circumstances that alters the insurer's assessment of risk, such as a new driver or commercial use, which must be reported.

Proof of loss

A sworn statement of the claim amount with supporting documents, due within a prescribed period (commonly 90 days) after the loss.

Limitation period

The time within which the insured must sue the insurer, typically two years from the date the claim is discovered.

Termination notice

The prescribed advance notice the insurer must give before cancelling a policy, often 15 days, set by provincial regulation.

Territory rating

A rating factor reflecting claim frequency and severity by geographic area; urban territories typically carry higher rates than rural ones.

Vehicle symbol

A rating code reflecting the vehicle's repair cost and damageability; higher symbols produce higher physical damage premiums.

Claims history surcharge

An increase in premium applied for at-fault accidents or convictions, while a clean record typically earns a discount.

Risk selection

The underwriting decision to accept, decline, or surcharge a risk based on guidelines, rating variables, and loss experience.

Fleet policy

A single policy covering multiple vehicles with shared declarations and an aggregate limit, often used by businesses.