Vehicle Insurance
Misrepresentation of information
If the insured person:
Provides false information about the vehicle being insured that harms the insurer, or intentionally hides or misrepresents important information required in the insurance application;
Violates a condition of the insurance contract or commits fraud;
Intentionally makes a false statement when filing a claim;
Then, the claim will be considered invalid, and they will lose the right to receive compensation from the insurance company.
Any statement made by the applicant (the person applying for insurance) can only be used as a defence by the insurer if it is included in the signed written application or, if there is no signed written application, in the portion of the application that is part of or attached to the policy.
Any statement contained in a copy of the application, except for the description of the risk and the extent of insurance coverage, cannot be used as a defence by the insurer unless they can prove that the applicant actually made the statement mentioned in the copy of the application.
Statutory conditions
Statutory conditions are specific rules and requirements that are considered part of an insurance contract. These conditions must be included in the policy and are legally binding. Any changes or additions to these conditions are not enforceable unless they are included in the statutory conditions. These include:
Material Change in Risk: The insured must promptly inform the insurer in writing of any changes to the risk that are significant to the contract. This includes changes in the insured's interest in the automobile, such as selling or assigning it, as well as changes in the automobile's condition or other insurance coverage.
Prohibited Use by Insured: The insured is not allowed to drive or operate the automobile under certain circumstances, such as when not authorized by law or qualified to drive, when their license is suspended, when they are underage, or when engaged in illegal activities or racing.
Prohibited Use by Others: The insured is also prohibited from allowing others, such as household members, to use the automobile in certain circumstances, such as when they are not authorized or qualified to drive, when their license is suspended, or when engaged in illegal activities or racing.
Requirements on Damage to Persons or Property: The insured must promptly notify the insurer in writing of any accidents resulting in loss or damage to persons or property and any associated claims. They must cooperate with the insurer, not assume liability or settle a claim without the insurer's consent, and provide necessary information and documents.
Requirements Where Loss or Damage to Automobile: If the automobile is damaged or lost and covered by the insurance contract, the insured must promptly notify the insurer, protect the automobile from further damage, and provide a statutory declaration within 90 days stating the details of the loss or damage. Repairs should not be undertaken without the insurer's consent, except for immediate protection purposes.
Examination of Insured: The insured must submit to an examination under oath or affirmation if requested by the insurer and provide relevant documents for examination.
Insurer Liability: The insurer's liability for loss or damage to the automobile is limited to the actual cash value of the automobile at the time of the loss or damage. They may choose to repair, rebuild, or replace the damaged property instead of making a payment.
No Abandonment; Salvage: The insured cannot abandon the automobile to the insurer without their consent. If the insurer replaces the automobile or pays its cash value, they become the owner of the salvage.
In Case of Disagreement: If there is a disagreement regarding repairs, replacements, or the amount payable for a loss or damage, the issue will be determined through appraisal before any recovery can be made under the contract.
Inspection of Automobile: The insured must allow the insurer to inspect the automobile and its equipment at reasonable times.
Time and Manner of Payment of Insurance Money: The insurer is required to pay the insurance money they owe within a specific timeframe after receiving the proof of loss or an appraisal award.
When Action May be Brought: The insured cannot bring an action to recover a claim amount unless they have complied with the requirements related to notice of claim and proof of loss. The timeframe for starting an action or proceeding against the insurer varies depending on the type of claim.
Who May Give Notice and Proofs of Claim: In the absence or inability of the insured, their agent may give notice of claim and make proofs of claim. If the insured refuses to do so, a person to whom a portion of the insurance money is payable may give notice and make proofs.
Termination: The contract may be terminated by the insurer or the insured upon providing the required notice. In case of termination by the insurer, they must refund the excess premium paid.
Owner’s policy
An owner's insurance policy provides coverage for the person named in the policy and other individuals who have the insured person's permission to personally drive the insured vehicle. The coverage applies to any liability that the insured person or those individuals may have under the law for loss or damage caused by:
Ownership, use, or operation of the vehicle, and
Bodily injury or death to a person, as well as damage to property.
If the owner's policy also includes coverage for a vehicle that is not owned by the insured person, the insurance company can specify in the policy that the coverage is only for the individuals specified in the policy.
If the insured person named in the owner's policy passes away, the following individuals will be considered insured under the policy:
The deceased insured person's spouse, if they were living in the same dwelling at the time of death.
Regarding the described vehicle, any newly-acquired vehicle that was obtained by the deceased insured person before their death and any temporary substitute vehicle, as defined by the policy, will be covered by the policy. The coverage extends to:
An individual who has temporary custody of the vehicle until the deceased insured person's estate is settled through probate or administration.
The personal representative (executor or administrator) of the deceased insured person's estate.
Note: If a motor vehicle liability insurance policy specifically lists a driver as an "excluded driver," the insurance company is not responsible for covering any losses or damages that occur while that excluded driver is operating the insured vehicle.
Non-owner’s policy
A non-owner's insurance policy provides coverage for two individuals: the person named in the policy and another person specified in the policy. This coverage applies to any liability that is imposed by law on the insured individual or the other person for any loss or damage.
Minimum policy
A motor vehicle liability insurance policy provides coverage for accidents up to a limit of $200,000 (excluding interest and costs). This coverage applies to liability resulting from bodily injury or death of one or more persons, as well as loss of or damage to property.
The policy specifies how claims are prioritized in the event of an accident. Claims related to bodily injury or death have priority up to $180,000, while claims related to loss of or damage to property have priority up to $20,000. This means that in case of limited coverage, claims for bodily injury or death are given priority over claims for property damage.
The insurer has the option to specify a limit of liability of at least $200,000 for both bodily injury or death and loss of or damage to property, rather than having separate limits.
The insurer can also increase or reduce the limit specified in the policy for a named person's use or operation of the vehicle, as long as the reduced limit is not less than the minimum required under the law.
The limits mentioned in this provision can be amended by the Lieutenant-Governor in Council through an order, and any references to these limits in the Highway Traffic Act should be understood in light of these amendments.
Excess coverage
The law doesn't prevent an insurance company from offering coverage under a motor vehicle liability policy that has a higher limit than another specific policy. This can apply to both primary insurance policies and additional coverage policies.
If the primary policy is no longer in effect, the excess policy associated with it will no longer be valid either.
Limited liability
An insurance company may make an agreement with the policyholder in a motor vehicle liability policy. This agreement states that the policyholder will reimburse the insurer with an agreed amount if there is a claim or a court judgment against the policyholder by a third party. This agreement can be enforced by the insurer and the policyholder must fulfill their obligation as stated in the agreement.
Insurer in legal action
When an insurer is defending a legal action on behalf of the insured due to bodily injury, death, or property damage caused by a vehicle or its use, the insurer should try to settle the claim quickly.
If the insurer admits liability for all or part of the claim, they should make payments to the claimant while the final amount is being determined. The amount of the payment is based on the insurer's estimate, considering the information provided by the claimant.
Failure by the insurer to comply with these requirements can be considered by the court when awarding costs.
Loss of earning capacity
In cases of income loss or loss of earning capacity resulting from bodily injury or death caused by a vehicle, certain damages for income loss or loss of earning capacity may be limited according to regulations.
Damages for loss of income or earning capacity in a legal action should be reduced by any payments already received by the plaintiff, such as benefits under provincial laws, other jurisdictions, or income continuation benefit plans.
Damages may also be reduced by accident benefit payments received or remaining entitled to by the plaintiff, but this only applies to incidents occurring after a certain date.
Multiple insurers
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 who should defend the insured in legal action, the insured or an insurer can apply to the court for directions.
The application and subsequent court proceedings only involve the insured and the insurers, and the evidence from those proceedings cannot be used in a separate legal action brought against the insured.
An order from the court regarding the obligation to defend does not affect the insurers' rights and obligations regarding the payment of indemnity under their respective policies.
When multiple insurers provide indemnity to the insured, including excess insurance, they are responsible for contributing to expenses, costs, and reimbursement as determined by their respective liabilities for damages awarded against the insured.
Not wearing seatbelt
If a person is required by the Highway Traffic Act to wear a seat belt but sustains bodily injury or dies in an accident while not wearing one, the amount they can recover in a legal action for damages will be reduced by 25%. This reduction can be avoided if they can prove that the failure to wear the seat belt did not contribute to the injury or death.
If the person's failure to wear a seat belt was not the sole factor contributing to their injury or death, and they cannot prove that it didn't contribute, the reduction in damages will be determined based on all circumstances but will not be less than 25%.
The reduction in damages does not apply if the person was wearing a seat belt but not in the proper manner as required by the Highway Traffic Act.
Notice
If an insured person is sued for damages caused by an automobile, they must notify the insurer in writing within 5 days of being served with the legal notice or process.
If the insured person is found liable and a judgment is made against them, they must disclose the details of their motor vehicle liability policy to the judgment creditor within 10 days of receiving a written demand for it.
Limitation of liability clause
The insurer has the right to include exclusions and limitations in the contract regarding the loss, damage, or loss of use of the insured automobile.
The insurance contract may contain a clause stating that in the event of a loss, the insurer will only pay a portion of the loss or the amount of the loss after deducting a specified sum, as long as it doesn't exceed the total amount of insurance coverage.
If such a clause is included, the policy must clearly state on its face in noticeable type that it contains a "partial payment of loss clause."
Compensation for physical damages
In situations where an automobile or its contents suffer damage as a result of an accident involving one or more automobiles in the province, the insured party can recover damages for the damage to their automobile, its contents, and loss of use from their own insurer as if they were a third party. The amount of recovery will be based on the degree of fault of the insured party, determined according to fault determination rules. If the insured is not satisfied with the degree of fault determined or a proposed settlement, they can take legal action against their insurer. However, the matters in dispute will be determined according to ordinary legal rules.
The insured party cannot take legal action against anyone else involved in the accident, except their insurer, for damages to their automobile or its contents or loss of use. They also cannot take action against a person under any agreement that is not an automobile insurance contract, unless that person is at fault or negligent. The insurer cannot seek indemnification or subrogation from anyone for payments made to the insured under this section, except as permitted by the regulations.
Medical expenses
If an insurance contract includes coverage for medical, surgical, dental, ambulance, hospital, professional nursing, or funeral services, the insurance only applies to reasonable expenses. These expenses are covered under the following circumstances:
If a person who is insured under the contract sustains bodily injury or dies while driving, being carried in, entering, getting on to, alighting from, or being struck by an automobile owned by the insured named in the contract. This coverage applies when the contract provides liability insurance for bodily injury or death caused by an automobile or its use.
If the insured named in the contract, their spouse, or a dependent relative living in the same dwelling sustains bodily injury or dies while driving, being carried in, entering, getting on to, alighting from, or being struck by another automobile defined in the contract for the purpose of the insurance coverage.
In both cases, the insurance coverage is limited to reasonable expenses related to medical, surgical, dental, ambulance, hospital, professional nursing, or funeral services.
Accident coverage
If an insurance contract provides accident insurance benefits for the death or injury of an insured person resulting from an accident involving an automobile, the insurance applies under the following circumstances:
The coverage applies to a person who sustains bodily injury or dies while driving, being carried in, entering, getting on to, alighting from, or being struck by an automobile owned by the insured named in the contract. This coverage is provided when the contract includes liability insurance for bodily injury or death caused by an automobile or its use.
The coverage also applies to the insured named in the contract, their spouse, and a dependent relative living in the same dwelling. It covers bodily injury or death that occurs while driving, being carried in, entering, getting on to, alighting from, or being struck by another automobile defined in the policy.
Limitation period
Any action brought by the insured to the insurer has a time limitation of 1 year after the date of the accident.
Subrogation
When an insurer makes a payment or assumes liability for a payment under an insurance contract, they gain the rights of the insured to recover from the responsible person. They can take legal action in the name of the insured to enforce those rights.
If the amount recovered, after deducting the costs of the recovery, is not enough to fully compensate for the loss or damage suffered, the remaining amount is divided between the insurer and the insured in proportion to the extent they have borne the loss or damage.
If the insured's interest in the recovery is limited to the amount specified in a clause of the contract, the insurer has control over the legal action.
If the insured's interest in the recovery exceeds the designated amount and the insured and the insurer disagree about various matters related to the legal action, such as choice of lawyers, the conduct of the case, settlement offers, apportionment of money, costs, or launching an appeal, either party can apply to the Trial Division (a court) for a decision. The court will make a reasonable order considering the interests of both the insured and the insurer.
Only the insured and the insurer are entitled to notice and have the right to be heard in the application. The evidence or materials used in this application are not admissible in the trial of an action involving the insured or the insurer.
A settlement or release given before or after a legal action does not prevent the rights of the insured or the insurer, unless they both agree to it.
NFLB Insurance Act s. 8-12, 21, 23, 24, 26.3-27, 28.1-31, 32.1, 34, 35, 41, 45