False information provided

where the insured person provides false information or fails to disclose important facts in their insurance application, or where they violate the terms of the insurance contract or commit fraud. If any of these situations occur:

• If the applicant provides false information about the described automobile or knowingly fails to disclose important information in the application, this harms the insurer.

• If the insured person violates a term of the contract or commits fraud.

• If the insured person willfully makes a false statement when making a claim under the contract.

In any of these cases, the insurance claim made by the insured person is considered invalid, and they lose the right to receive compensation or indemnity from the insurer. This means that the insurance company is not obligated to provide coverage or payment for the claim.

An insurance company cannot use any statement made by the applicant as a defence unless it is included in the signed written application or in a document attached to the policy. In cases where there is no signed written application, the insurer can only use the information contained in the application or attached to the policy to defend against a claim.

Statutory conditions

Changes in risk

The insured person must inform the insurance company in writing if there are any changes to the risk that could affect the insurance contract. This includes changes in the insured person's interest in the vehicle, such as selling or transferring it, as well as changes in the vehicle's ownership status due to factors like a mortgage or lien. It also includes informing the insurer if there is any other insurance covering the same loss or damage.

Insured not to drive

The insured person should not drive the automobile under certain conditions. This includes situations where they are not authorized or qualified to drive, prohibited by court order, underage, using the vehicle for illegal activities, or participating in races or speed tests.

Others using vehicle

The insured person should not allow others to use the automobile under certain conditions. This includes situations where the person is not authorized or qualified to drive, is underage, prohibited by court order, using the vehicle for illegal activities, or participating in races or speed tests.

Notice to insurer

If there is an accident causing loss or damage to persons or property, the insured person must promptly notify the insurer in writing, provide all available details of the accident, and inform the insurer if the person responsible for the accident is insured under the contract. They must also forward any letters or documents received from the claimant to the insurer. If required by the insurer, they must provide a statutory declaration verifying the claim.

Consent of insurer prior to action

The insured person should not take any actions regarding liability or claim settlement without the insurer's consent or interfere with negotiations or legal proceedings.

Information to insurer

If requested by the insurer, the insured person must assist in gathering information, evidence, and witness testimony related to the claim and cooperate with the insurer in the defence of any legal action or appeal, except for financial contributions.

Insured at the scene of an accident

If there is loss or damage to the automobile covered by the contract, the insured person must promptly notify the insurer in writing, provide as much information as possible, and take reasonable measures to protect the automobile from further loss or damage. They must also submit a statutory declaration within ninety days, stating the details of the loss or damage, the insured person's interest, any existing encumbrances or other insurance on the vehicle, and that the loss or damage was not due to the insured person's intentional act or negligence.

• If additional loss or damage occurs to the automobile due to a failure to protect it as required in the above, the insured person cannot claim coverage for that additional loss or damage.

Repairs necessary

Repairs beyond what is necessary to protect the automobile from further loss or damage should not be undertaken, and no physical evidence of the loss or damage should be removed without the written consent of the insurer or until the insurer has had a reasonable time to examine the automobile.

Examination

The insured person must submit to an examination under oath and provide the insurer with any documents relating to the claim as requested.

Liability

The insurer is liable for the actual cash value of the automobile at the time of loss or damage, with appropriate deductions for depreciation. The insurer's liability is limited to the cost of repairing or replacing the automobile with similar materials. If any part of the automobile is obsolete and unavailable, the insurer's liability is limited to the value of that part at the time of loss or damage.

Option of insurer

Instead of making a cash payment, the insurer may choose to repair, rebuild, or replace the damaged property with similar materials within a reasonable time if they provide written notice of their intention to do so within seven days of receiving the proof of loss.

Abandonment of automobile

The insured person cannot abandon the automobile to the insurer without the insurer's consent. If the insurer chooses to replace the automobile or pays the cash value, they become the owner of any salvage.

Disagreement of costs

If there is a disagreement about the repairs, replacements, or the amount payable for the loss or damage, the matter can be determined through an appraisal process before any recovery can be made under the contract. A written demand for an appraisal is required, and proof of loss must be provided before an appraisal can take place.

• The insured person must allow the insurer to inspect the automobile and its equipment at reasonable times.

Payment by insurer

The insurer must pay the insurance money owed under the contract within sixty days of receiving the proof of loss or, if an appraisal is conducted, within fifteen days of the appraisal award.

Limitation of action

The insured person cannot bring an action to recover a claim amount unless they have complied with the requirements or until the loss amount has been determined through the specified methods.

Time limitation of action

Any action or proceeding against the insurer regarding loss or damage to the automobile must be initiated within two years after the loss occurs. In cases of loss or damage to persons or property, the action or proceeding must be initiated within two years after the cause of action arises.

Notice/Proof of claim

Notice of claim or proof of claim can be given by the insured person's agent if the insured person is absent or unable to do so. The agent must have a valid reason for acting on behalf of the insured person, or if the insured person refuses, the notice or proof can be given by a person entitled to receive any part of the insurance money.

Termination of contract

The contract can be terminated by the insurer by providing a fifteen-day notice by registered mail or a five-day written notice in person. The insured person can terminate the contract at any time upon request. If the contract is terminated by the insurer, they must refund the excess premium paid by the insured person. If the insured person terminates the contract, the insurer must refund the excess premium paid based on a short-rate premium calculation. The refund can be made by money order, cheque, or other agreed-upon methods.

Notice of termination

Written notice to the insurer can be delivered or sent by registered mail to the insurer's chief agency or head office. Written notice to the insured person can be delivered in person or sent by registered mail to the insured person's latest provided address.

Termination not allowed

An insurance company cannot terminate an insurance contract except for specific reasons, which are:

• If the insured person has not paid the premium or any part of it that is due under the contract, or any charges under any related agreements.

• If the insured person has knowingly provided false information about the described automobile, which harms the insurer's interests.

• If the insured person has knowingly misrepresented or failed to disclose important information required in the insurance application.

• If there has been a significant change in the risk associated with the insurance.

These rules only apply to contracts that have been 60 days. And contracts that cover vehicles used for business, trade, or professional purposes are not covered by the above rules.

Owner’s policy

An owner's insurance policy covers the person named in the policy as well as anyone else who has the insured person's consent to drive the insured person's car. It provides coverage for liability imposed by law on the insured or the driver for any loss or damage:

• Arising from owning, using, or operating the car; or

• resulting from bodily injury or death of any person and damage to property.

If the owner's policy also provides coverage for liability in relation to a car not owned by the insured, the insurance company may specify that the coverage is only for certain individuals mentioned in the policy.

If the insured person named in the policy dies, the following individuals are considered insured under the policy:

• The spouse of the deceased insured, if they were living together at the time of the insured's death.

• For the described car, any newly acquired car that was obtained by the deceased insured before their death, as well as a temporary substitute car:

  • Any person who has temporary custody of the car until the deceased insured's personal representative receives legal authorization.

  • The personal representative of the deceased insured.

Non-owner insurance

A non-owners insurance policy covers the person named in the policy and any other person specified in the policy for liability imposed by law on the insured or that other person for any loss or damage:

• Resulting from the use or operation of a car (as defined in the policy), which is not owned by the insured or registered in their name.

• Resulting from bodily injury or death of any person and damage to property.

Mandatory provisions

Every motor vehicle liability policy must include the following provisions:

When a person insured by the policy is involved in an accident with an insured automobile, resulting in loss or damage to persons or property, the insurance company must:

• Investigate the loss or damage upon receiving notice.

• Negotiate with the claimant and settle any resulting claims as deemed necessary by the insurer.

The insurer must defend the insured in any civil lawsuit filed against them due to the loss or damage to persons or property, and the insurer will cover the costs of such defence.

The insurer must pay all costs awarded against the insured in a defended civil lawsuit, including any interest on the part of the judgment that falls within the limits of the insurer's liability.

If a person is injured in an accident, the insurer must reimburse the insured for any immediate medical expenses incurred.

Insurer not liable

The insurer is not responsible or liable for any of the following under a motor vehicle liability policy:

• Any liability imposed on a person insured by the policy under a workmen's compensation law.

• Any liability resulting from bodily injury or death to an employee of a person insured by the policy while they are involved in operating or repairing the automobile.

Minimum liability

Every motor vehicle liability policy provides insurance coverage for at least two hundred thousand dollars (excluding interest and costs) in case of an accident. This coverage includes liability for bodily injury, death, and loss or damage to property.

In the event of an accident causing both bodily injury or death and loss or damage to property:

• Claims for bodily injury or death have priority up to one hundred and eighty thousand dollars over claims for loss or damage to property.

• Claims for loss or damage to property have priority up to twenty thousand dollars over claims for bodily injury or death.

Instead of specifying separate limits for bodily injury and property damage, the insurer can specify a combined limit of at least two hundred thousand dollars (excluding interest and costs) for both bodily injury and property damage.

The insurer has the flexibility to increase or decrease the limit specified in the policy for a named person's use or operation of the automobile, as long as the limit is not reduced below the minimum requirements.

Limited liability

Insurers have the option to offer insurance coverage under a motor vehicle liability policy with a higher limit than another specific designated motor vehicle liability policy. This can apply to both first-loss insurance (covering a specific amount before the designated policy) or excess insurance (covering amounts beyond what the designated policy covers).

If the designated policy mentioned in the excess contract ends or is terminated, the excess contract is also automatically terminated. In other words, the excess coverage is dependent on the existence of the designated policy, and if that policy ceases to exist, the excess coverage also ends.

Multiple policies

If a person is insured under multiple motor vehicle liability policies and there is a dispute between insurers or between an insurer and the insured regarding which insurer is responsible for defending the insured in a civil lawsuit, they can apply to a judge for directions. The judge will provide instructions on how the obligation should be fulfilled.

Only the insured and the insurers involved are entitled to notice and can present their arguments before the judge. Any material or evidence used in this application cannot be used during the trial of a lawsuit brought against the insured for the same incident.

If the insured is covered by multiple policies, including excess insurance, and needs to make payments for expenses, costs, or reimbursements, the insurers will contribute to these payments based on their respective liabilities for damages awarded against the insured.

Partial payment of loss clause

An insurance contract for loss or damage to a vehicle can include a clause specifying that the insurer will only pay a portion of the loss or the loss amount after deducting a specified sum, as long as it does not exceed the total amount of insurance coverage. The policy must clearly indicate the presence of this partial payment of loss clause.

Claim under another contract

If a claim is made under a contract other than a motor vehicle liability policy, the insurer must adjust the claim amount with both the named insured and any other interested parties listed in the contract. If the insured is unavailable or unable to submit the required notice or claim, the insurer may adjust and pay the claim to another person listed in the contract after a waiting period of at least sixty days.

Effect of not wearing seatbelt

If a person who is legally required to wear a seat belt under the Motor Vehicle Act sustains bodily injury or dies in an accident while not wearing a seat belt, the amount of damages they or their representative can recover in a lawsuit related to the accident will be reduced by 25%.

• This reduction applies unless it can be proven that the failure to wear a seat belt did not contribute to bodily injury or death.

• If the person's failure to wear a seat belt was not the sole factor contributing to their bodily injury or death and they also engaged in other actions or omissions that contributed, the reduction in damages will be determined based on all the circumstances but will not be less than 25%.

In legal proceedings

In a lawsuit for damages resulting from an accident, there will be a limit on the amount of compensation that can be awarded for non-pecuniary loss (pain and suffering) caused by a soft tissue injury or a minor personal injury. The specific limit will be determined by the regulations.

In a lawsuit for damages resulting from an accident, the plaintiff can claim compensation for loss of income between the accident date and the judgment date. The amount awarded will be calculated based on the income the plaintiff would have received during that period, minus any applicable income tax.

In a lawsuit for damages resulting from an accident, the compensation awarded to the plaintiff for loss of income will be reduced by any payments the plaintiff received during that period under any jurisdiction's enactment, an income continuation benefit plan, a disability insurance policy, or a sick leave plan related to their occupation or employment. The reduction is applicable even if the plaintiff's credits under the sick leave plan are considered a capital asset.

Subrogation

When an insurance company makes a payment or assumes liability under a contract, it gains the right to seek reimbursement from any person responsible for the loss or damage. The insurer can bring a legal action in the name of the insured to enforce these rights.

If the amount recovered through legal action or settlement is not enough to fully compensate for the loss or damage, the remaining amount is divided between the insurer and the insured. The division is based on the proportion in which they have borne the loss or damage.

If the insured's interest in the recovery is limited to the amount specified in the insurance contract, the insurer has control over the legal action.

If the insured's interest in the recovery exceeds the amount specified in the contract, and the insured and the insurer cannot agree on various matters related to the legal action or settlement, either party can apply to a judge for a decision. The judge will consider the interests of both the insured and the insurer and make a fair order regarding the disputed matters.

Only the insured and the insurer are entitled to notice and a hearing in such applications, and any materials or evidence presented in the application cannot be used in the trial of an action brought by or against the insured or the insurer.

A settlement or release given before or after a legal action is initiated does not prevent the insured or the insurer from pursuing their rights, unless they both agree to the settlement or release.

NB Insurance Act s. 229, 230, 230.1, 232, 233, 237, 239, 243, 245, 249, 253-254, 265.2-265.5, 266