Misrepresentation of information

If an applicant for an insurance contract provides false information about the described automobile, intentionally misrepresents or fails to disclose necessary information in the application, or if the insured violates the terms of the contract or commits fraud, their claim becomes invalid, and they forfeit their right to receive compensation from the insurer.

• The insurer cannot use any statement made by the applicant as a defence against a claim, unless it is included in the signed written application or, if no signed written application is made, in the supposed application or a part of it that is attached to the policy.

Statutory conditions of insurance

The statutory conditions that are to be included in every insurance agreement include:

Change of risk

The insured must promptly notify the insurer in writing of any changes to the risk material to the contract, including changes to insurable interest, mortgages, liens, encumbrances, and other insurance on the same interest.

Conditions for drivers

The insured and any other drivers must comply with certain conditions of use, such as being authorized to drive, not driving under the influence, and not using the car for illegal purposes or in races.

Notice of accident

If there is an accident or claim, the insured must promptly give written notice to the insurer, verify the claim by statutory declaration, forward any correspondence from claimants, not settle any claims without the insurer's permission, and assist the insurer with obtaining information and evidence.

Notice of damage

If there is loss or damage to the automobile, the insured must promptly give notice to the insurer, protect the car from further damage, and deliver a statutory declaration within 90 days after the date of the loss or damage. Any further loss or damage from failure to protect the car is not recoverable under the contract, and no repairs can be made without the insurer's written consent.

Termination

An insurance contract can be terminated in the following ways

• The insurer can terminate the contract by sending a registered mail notice of termination, giving the insured fifteen days' notice. Alternatively, they can personally deliver a written notice of termination, giving the insured five days' notice.

• The insured can terminate the contract at any time by making a request to do so.

Loss or Damage to Persons or Property

The insured must promptly notify the insurer in writing about any accidents causing loss or damage to persons or property, including any claims made regarding the accident.

If required by the insurer, the insured must provide a sworn declaration stating that the claim arose from the use or operation of the insured automobile and that the person operating the automobile at the time is covered by the contract.

The insured must immediately forward any letters, documents, advice, or legal writs received from or on behalf of the claimant to the insurer. The insured cannot voluntarily accept liability or settle any claims at their own expense, nor interfere in any negotiations, settlements, or legal proceedings.

When requested by the insurer, the insured must assist in obtaining information, evidence, and witness testimony and cooperate with the insurer in the defence of any legal actions or appeals.

Loss or Damage to the Automobile

If the insured automobile sustains loss or damage covered by the contract, the insured must promptly notify the insurer in writing, providing as much information as possible. In addition, the insured must take reasonable measures to protect the automobile from further loss or damage at the expense of the insurer.

• Failure to protect the vehicle from further damage may result in the insured not being able to recover any of the additional losses resulting from the further damage.

Within 90 days of the loss or damage, the insured must provide a sworn declaration stating all of the necessary details of the loss or damage, including its location, time, cause, amount, the insured's interest, any encumbrances, other insurance coverage, and that the loss or damage did not occur through any intentional act or negligence by the insured.

Inspection of Automobile

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

Legal Action

Claims related to liability for damage to someone else's property or personal injury or death of another person, any legal action or proceeding against the insurer must be initiated within two years after the insured's liability is determined by a court. After this period, no action can be taken.

For claims related to loss or damage to the insured automobile, any legal action or proceeding against the insurer must be initiated within two years from the time the loss or damage occurred. After this period, no action can be taken.

Policy

Owner's Policy:

An owner's policy provides insurance coverage to the person named in the policy and any other person who drives the insured's automobile with their consent.

Coverage includes liability for loss or damage:

• Arising from owning, using, or operating the insured automobile.

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

If the owner's policy also covers liability for an automobile not owned by the insured, the insurer can specify that the coverage is restricted to certain individuals named in the policy.

In the event of the insured's death, the following persons are considered insured under the policy:

• The deceased insured's spouse, if living in the same dwelling at the time of death.

• For the described automobile, a newly acquired automobile or a temporary substitute automobile, anyone with temporary custody until probate or administration is granted to the deceased insured's personal representative, or the personal representative themselves.

Non-Owner's Policy:

A non-owner's policy provides insurance coverage to the person named in the policy and any other person specified in the policy.

Coverage includes liability for loss or damage:

• Arising from using or operating an automobile that is not owned by the insured or registered in their name.

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

Rights of unnamed on insurance:

Any person insured but not named in a contract may recover damages, in the same manner, and to the same extent, as those who are named in the applicable contract.

Note:

A person named in the insurance may add an endorsement to a policy stating that a specific person is an excluded driver under the contract.

• If an excluded driver causes an accident while driving an insured automobile, the insured, the insurer is not liable for any of the resulting loss or damage.

Duties of insurer

Every vehicle liability policy must include provisions stating:

• The insurer must investigate and negotiate claims resulting from an accident involving the insured’s vehicle.

• The insurer must settle valid claims in a manner that they deem to be appropriate.

• The insurer must defend the insured in any civil action related to an accident and pay the cost associated with the defence.

• The insurer must reimburse the insured for any medical expenses incurred

Minimum liability under motor vehicle policy

Every motor vehicle liability policy must provide a minimum coverage limit of at least $200,000 for bodily injury or death of one or more persons, as well as for loss or damage to property.

• If a single accident involves both bodily injury or death and loss or damage to property, priority is given to claims related to bodily injury or death up to $190,000, with claims for loss or damage to property having priority up to $10,000.

• The insurer can specify separate limits of liability for bodily injury or death and for loss or damage to property, each at least $200,000.

Stipulations in motor vehicle liability policy:

The motor vehicle liability policy must ensure that the insurer will provide coverage up to the minimum limits prescribed above where the accident occurs if the limit is higher than the limits in the policy.

The insurer cannot use any defence in a claim that would not be valid if the policy was issued in the province or territory where the accident occurred.

By accepting the policy, the insured appoints the insurer as their representative to defend any legal action arising from the ownership, use, or operation of the automobile in any province or territory in Canada.

Physical damage stipulations

The insurer can include exclusions and limitations in a contract for physical damage cover (coverage for loss, damage, or loss of use of the automobile) as it deems necessary.

A contract for insurance against loss or damage to an automobile and the loss of its use may contain a clause specifying how the insurer will pay in the event of a loss.

• The clause can state that the insurer will pay only a predetermined portion of the loss or the amount of the loss minus a specified deductible amount.

• In either case, the payment made by the insurer cannot exceed the total amount of insurance coverage provided by the policy.

Recovery of damages

the insured is entitled to recover damages for their automobile and its contents, as well as loss of use, from their insurer as if they were a third party.

• The recovery is based on the degree of fault of the insured, determined under the fault determination policy.

If the insured is unsatisfied with the settlement proposed by the insurer, they may bring legal action against the insurer.

Limitations on Actions:

• The insured has no right to sue any other person involved in the incident, except their insurer, for damages to the insured's automobile or its contents or for loss of use.

• The insured cannot sue a person under an agreement, other than an automobile insurance contract, for damages or loss of use, unless the person is at fault or negligent.

• The insurer has no right to seek indemnification or subrogation against any person for payments made to the insured under this section, except as permitted by regulation.

Subrogation

When an insurer makes a payment or assumes liability under a contract, they are entitled to the rights of recovery of the insured against any person. They can bring legal action in the insured's name to enforce those rights.

• If the amount recovered by the legal action, after deducting the costs of recovery, 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 the loss or damage was borne by each party.

PEI Insurance Act Pt. VII s. 219, 220, 222, 223, 227-228.1, 234, 235, 242, 243, 254.3, 255