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A Guide To Understand Auto Insurance

 Because an insurance policy is a legal document, its language is sometimes hard to understand. As a service to our clients, V.B. Insurance Brokers Ltd is pleased to provide a guide to understand your auto insurance policy. This guide covers only the highlights of this policy, and does not pretend to explain each and every condition, nor does it override or alter any policy wordings.

Mandatory Coverages:

Liability:

Liability protects you against claims made by other people for their injuries and damage to their property, up to the limits shown on your policy. In addition, if it is necessary to go to court, as a result of your legal liability, your insurance company pays any legal and court costs (limits apply). The minimum liability coverage required by law in Alberta is $200,000. However, due to recent claims and court judgements, we recommend $1,000,000 as a minimum coverage.

Accident Benefits:

Accident Benefits provides benefits to you and other insured persons if you are injured or killed in an automobile accident, regardless of who caused the accident. These benefits include, but are not limited to:

  • income replacement for persons who have lost income up to $400 per week
  • payment of medical, rehabilitation, and attendant care expenses
  • funeral expense benefit
  • a death benefit to a surviving spouse and dependents
  • payment of care expenses to persons who cannot continue to act as a caregiver

 Optional Coverages:

Physical Damage:

The cost of repairing or replacing your vehicle due to an insured loss. Their are different types of physical damage coverages:

  • Specified Perils - provides coverage due to a loss by fire, lightning, theft or attempt thereat, windstorm, earthquake, hail, explosion, riot or civil commotion, falling or forced landing of aircraft or parts thereof, rising water, or the stranding, sinking, burning, derailment or collision of any conveyance in or upon which the automobile is being transported on land or water. Theft by person residing in the same dwelling, or by an employee is excluded.
  • Comprehensive - provides coverage from any peril other than collision with another object or by upset. Most commonly explained as fire, theft, vandalism or hitting wild animals. Also includes all coverages listed under specified perils. Theft by person residing in the same dwelling, or by an employee is excluded.
  • Collision - provides coverage due to loss caused by collision with another object or by upset
  • All Perils - provides coverage due to loss cause by all perils.

Deductible Clause

Each occurrence causing loss or damage covered under section c "physical damage", the deductible listed on your policy will apply. In the event of fire or lightning or theft of the entire vehicle, the deductible will be waived, unless otherwise specified on your policy (SEF #40).

 Standard Endorsement Forms (SEF)

SEF forms are used to custom design coverage specific to your needs. Each may have an effect on your premium. These are examples of the most commonly used SEF's:

  • SEF #5 - Permission to Rent or Lease - applies to any leased vehicle
  • SEF #8A - Property Damage Reimbursement. This endorsement is used when there is an agreement between the insurance company and the policy holder, that an individual will not drive the automobile. If the individual does drive and is involved in an accident of any type, then the policy holder agrees to pay the insurance company the amount specified.
  • SEF #13D - Comprehensive Cover - Limited glass. This endorsement excludes coverage for the front windshield in the event of loss. We suggest purchasing a policy for auto glass sepperate, if coverage is required for the windshield.
  • SEF #19 - Limitation of Amount - limits the value to a specified amount in the event of a physical damage loss to a specified amount.
  • SEF #20 - Loss of Use - provides coverage for a rental substitute vehicle when the insured automobile is inoperable because of a physical damage loss.
  • SEF #27 - Legal Liability for Physical Damage to a Non-Owned Automobile - this endorsement extends Physical Damage Coverage to include one automobile of the private passenger type rented or borrowed for 30 days or less at any one time during the policy period. This applies only  when the vehicle is used by the Named Insured within North America.
  • SEF #28 - Reduction of Coverage when Vehicle Operated by Named Persons - reduces the coverage provided by the policy in the event the named person operates the vehicle. This reduces the coverage to $200,000 liability only, and provides no physical damage coverage. Used along with SEF #8A.
  • SEF #40 - Fire and Theft Deductible - this endorsement is used to apply the physical damage deductible to all fire and total theft losses.
  • SEF #43R or 43L - this endorsement waives depreciation on new vehicles for a specified time period. If the vehicle is leased, then it will show 43L.
  • SEF #44 - Family Protection - the insurer provides additional benefits to the Named Insured and family who have a claim against another motorist for injuries or death if the other motorist has insufficeient insurance to pay the claim. The maximum payable under this coverage is the difference between the insured limit of the policyholder's policy and the policy limits carried by the underinsured motorist.

 Some Things that Affect Your Premium:

  • age and experience of the driver of the vehicle

  • territory in which the vehicle is driven

  • if the vehicle is used for business

  • if the vehicle is driven to work, and if so, the distance

  • number of drivers of the vehicle, their ages and experience

  • accident records of all drivers

  • year, make, model of the vehicle

  • prior insurance history

  • number of convictions for each driver in the past 3 years