Vehicle Insurance
Claims for Insurance
If an applicant for an insurance contract provides false information about the described vehicle to be insured or knowingly misrepresents or fails to disclose important facts in the application, the claim by the insured will be invalid. This means the insured person will not be able to receive compensation for their claim, and their right to receive payment from the insurer is forfeited.
Similarly, if the insured person violates any terms of the insurance contract or commits fraud, or if they make a false statement regarding a claim, their claim will be considered invalid, and they will not be entitled to receive indemnity or compensation.
In order to defend a claim under the insurance contract, the statements made by the applicant can only be used if they are contained in the signed written application or in the application portion attached to the policy. Statements made in copies of the application cannot be used as a defence unless the insurer can prove that the applicant made those statements.
Adverse contractual action
Adverse contractual action refers to negative actions that an insurance company or agent can take in relation to an insurance contract for a private passenger vehicle. These actions include:
Refusing to provide a premium quotation promptly.
Rejecting an application for automobile insurance.
Declining to issue a contract.
Declining to renew a contract.
Terminating a contract before its expiration.
Canceling a contract before its expiration.
Refusing to provide certain coverage or endorsements.
Refusing to continue existing coverage or endorsements.
Taking any other action specified by regulations as adverse contractual action.
There are specific reasons allowed for an insurer, insurance agent, or insurance broker to take adverse contractual action. These reasons include:
Non-payment of the premium or a portion of the premium.
Failure of the insured or applicant to inform the insurer about the principal driver of the insured vehicle.
Compliance with regulatory requirements or directives, such as ceasing insurance operations or license suspension.
Regulatory orders to cease business or insuring risks.
Intent to withdraw from the automobile insurance business, as notified under specific regulations.
Other reasons specified by regulations.
If a premium payment is overdue and the insurer takes adverse contractual action due to non-payment, they can refuse to renew or issue a contract until the arrears are paid.
Statutory conditions of policy
Material Change in Risk:
The insured person must promptly inform the insurance company in writing of any changes to the risk that are significant to the insurance contract. This includes changes in the insured person's interest in the insured item (e.g., a car) or changes in mortgages, liens, or other insurance covering the same interest.
Prohibited Use by Insured:
The insured person is not allowed to drive or operate the insured item under certain circumstances. This includes situations where the insured person is not legally authorized or qualified to drive, has a suspended license or driving rights, is underage, or uses the item for illegal activities or racing.
Prohibited Use by Others:
The insured person is not allowed to permit or allow other individuals to use the insured item under certain circumstances. This includes situations where the other person is not authorized or qualified to drive, has a suspended license or driving rights, is underage, or uses the item for illegal activities or racing.
Requirements in Case of Loss or Damage to Persons or Property:
The insured person must promptly notify the insurance company in writing of any accidents causing loss or damage to persons or property, provide necessary details and documents, and cooperate with the insurer in the investigation and settlement of claims.
Requirements in Case of Loss or Damage to the Insured Item:
In the event of loss or damage to the insured item, the insured person must promptly notify the insurance company in writing, protect the item from further damage, and provide a statutory declaration within 90 days with details about the loss or damage. The insured person may be required to allow inspections, produce documents, and submit to examination under oath.
Payment of Insurance Money:
The insurance company must pay the amount it owes under the contract within a specified time after receiving the proof of loss or after a dispute resolution process is conducted. The insured person cannot bring an action to recover the claim amount until certain requirements are fulfilled.
Termination:
The insurance contract may be terminated by either the insurer or the insured with proper notice. In case of termination by the insurer, a refund of excess premium paid is required.
Notice:
Written notices to the insurer should be delivered or sent by recorded mail to the insurer's designated address. Written notices to the insured should be personally delivered or sent by recorded mail to the insured's latest postal address.
Time limitations on actions
For loss or damage to the insured vehicle: If there is a loss or damage to the insured vehicle, the legal action must be initiated within 2 years from the date of the occurrence of the loss or damage.
For loss or damage to persons or property: If there is a loss or damage to persons or property caused by the insured vehicle, the legal action must be initiated within 2 years from the date the cause of action against the insurer arose.
This refers to the date when the injured party became aware of the damage and has a legal basis to pursue a claim against the insurer.
To ensure that policyholders are aware of these time limits, insurance policies covered by this regulation must include a statement that clearly states the following:
"Every action or proceeding against an insurer to recover insurance money payable under the contract is completely barred unless it is initiated within the time specified in the Insurance Act."
Coverage
Owner's Policy:
An owner's policy is an insurance contract that provides coverage to the person named as the insured in the policy (referred to as the "named insured") and any other person who is authorized by the named insured to drive a vehicle owned by the named insured.
Coverage:
The policy provides insurance coverage for liability that the named insured or authorized drivers may have due to the ownership, use, or operation of the insured vehicle. It covers:
Liability for injuries or damage caused to other people or their property arising from the ownership, use, or operation of the vehicle.
Liability for bodily injury or death to any person and damage to property resulting from accidents involving the insured vehicle.
Coverage for Non-Owned Vehicles:
If the owner's policy also includes coverage for vehicles not owned by the named insured, the insurance company may specify in the policy that the coverage is limited to those individuals who are specifically mentioned in the policy.
Death of the Named Insured:
If the named insured passes away, the policy extends coverage to the following individuals:
The spouse or adult interdependent partner of the deceased insured, provided they were living in the same dwelling at the time of the insured's death.
Newly acquired vehicles that were obtained by the deceased insured before their death and temporary substitute vehicles, as defined by the policy.
Any person who has temporary custody of the vehicle until the deceased insured's estate is settled.
The personal representative (executor or administrator) of the deceased insured.
A non-owners policy is an insurance contract that provides coverage for the person named in the policy and any other specified person. This coverage applies to liability arising from the use or operation of a vehicle that is not owned or registered in the name of the insured.
Non-named insured
If a person is insured under a contract but is not specifically named in the contract, they still have the right to receive compensation (indemnity) from the insurance company. They can make a claim and receive coverage in the same way and to the same extent as if they were named as the insured in the contract.
For this purpose, the law considers that the person is treated as if they were a party to the insurance contract and had provided something of value (consideration) in exchange for the coverage.
Physical damage coverage
Exclusions and limitations:
The insurer has the authority to include exclusions and limitations in the contract regarding the loss, damage, or loss of use of the insured automobile. This means they can specify what types of losses or damages are not covered by the insurance policy.
Partial payment clause:
The contract or a specific part of it can include a clause stating that, in the event of a loss, the insurer is only obligated to pay either a predetermined portion of the loss or the amount of the loss after deducting a specified sum mentioned in the policy. However, this payment cannot exceed the total amount of insurance coverage provided by the policy.
Notice on the policy:
When such a clause is included in the policy, the face of the policy must prominently display the words "This policy contains a partial payment of loss clause" in bold and conspicuous type. This notice serves to inform the policyholder about the presence of this particular clause in their policy.
Reduction in award
Reduction of loss of earnings:
If an award includes compensation for loss of earnings, it must be reduced by income tax (if not already taxed), contributions to the Canada Pension Plan, and Employment Insurance premiums that would have been payable on the lost earnings if the accident had not occurred.
Reduction of payments related to damages:
Any portion of the award related to specific types of damages must be reduced by payments received by the claimant, both before and after the award, for the same type of damages. These payments include various forms of benefits, pensions, compensations, and prescribed payments under different jurisdictions.
Limits on policy
Minimum coverage:
Every motor vehicle liability policy must provide coverage for bodily injury, death, and property damage resulting from an accident, with a minimum limit of at least $200,000. This coverage is exclusive of interest and costs.
Priority of claims:
In the event of an accident involving both bodily injury/death and property damage, claims related to bodily injury/death have priority over claims for property damage up to $190,000. Claims for property damage have priority over bodily injury/death claims up to $10,000.
Alternative limit specification:
Instead of specifying separate amounts, the insurer may choose to provide a limit of liability of at least $200,000 for both bodily injury/death and property damage.
Flexibility of limits:
The insurer can increase or reduce the limits specified in the contract for the use or operation of the vehicle by a named person. However, the limits cannot be reduced below the minimum required under the law.
Separate premium display:
The premium for the required motor vehicle liability insurance must be shown separately on the policy, distinct from any additional or other benefits offered.
Increasing coverage limits:
An insured person or applicant can request an increase in the liability coverage limit. The insurer cannot refuse such a request to increase the limit to $500,000, $1,000,000, or $2,000,000 for bodily injury/death and property damage coverage, exclusive of interest and costs.
Accident insurance benefits
A motor vehicle liability policy provides accident insurance benefits for prescribed persons in prescribed amounts. The coverage includes death benefits, funeral costs up to a prescribed maximum, weekly disability benefits for total disability, and prescribed medical payments.
Stipulation in motor vehicle liability policy
Liability coverage:
Every motor vehicle liability policy issued in Alberta must state that the insurer is liable up to the minimum limits established in the province or territory where the accident occurs if those limits are higher than the limits specified in the policy.
No additional defences:
The insurer cannot raise any defence against a claim that they wouldn't be able to raise if the policy were issued in the province or territory where the accident occurs.
Appointment of an insurer as an attorney:
By accepting the policy, the insured appoints the insurer as their irrevocable attorney to appear and defend against any legal actions brought against the insured arising from the ownership, use, or operation of the automobile in any province or territory.
AB Insurance Act s. 554-556, 558-560, 563, 570, 271, 273-274, 284