Chapter 2 - ACTSC 363 Chapter 2 P/C Coverage 2.2 Auto...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ACTSC 363 Chapter 2 P/C Coverage 2.2 Auto Insurance Important coverage: 1) Liability Insurance 2) Medical Benefits 3) Uninsured and Underinsured Motorist Coverage 4) Collision and other than collision insurance - 1) and 2) are compulsory in many jurisdictions, and insurance must meet financial responsibility limits - Insured parties are named PH and immediate family. Coverage applies if auto is being driven by “invited driver” and extends to utility trailer attached to vehicle. - Policy does not cover normal operations (rust and tear) and ceases if vehicle is being used for commercial purposes. 2.2.1 Liability Insurance - coverage effective when PH injures a 3 rd party or damages 3 rd party’s property. PH’s property is normally covered under homeowners policy - the total cost of legal defense and payment of damages can exceed the policy limits b/c only the payment of damages is subject to policy limits. However, insurer is allowed to cease its legal defense when the amount it has paid for damages reaches the policy limits. - No coverage If workers compensation is supposed to provide the benefits 2.2.2 Medical Benefits - is called medical payments in a tort jurisdiction, personal injury protection in a no-fault jurisdiction or accident benefits in Canada. - coverage provides protection to PH and family in case of injury in an accident for which the PH would be liable, or for any accident in a no-fault jurisdiction. - Disadvantage of tort system: larger claims are under-compensated; only about 25% of the premium goes to injured party; other 75% goes to legal fees, court costs, and insurer admin expenses. - - Advantage of tort system: majority of cases settled out of court, small claims are highly overcompensated - Under no-fault system, the personal injury protection of parties involved in the accident pays for the benefits. - In theory, the total prem under no-fault should be lower than the total prem under tort system b/c many legal and court expenses are reduced or eliminated. - Flexibility of tort system is lost to defined benefits in no-fault system - Threshold no-fault system: u first look to your own insurer for defined no-fault benefits for minor accident, but if injuries exceed a defined verbal threshold, u can then pursue a tort settlement
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
- Three provinces in Canada runs auto insurance through government monopoly, where there is no issue as to who is at fault since there is only one insurer/payer. 2.2.3 Uninsured and Underinsured Motorist Coverage - provides protect for PH if injured by either an unidentified, uninsured, or underinsured motorist - under this coverage, in a tort jurisdiction, the PH has coverage from his or her own insurer equivalent to what would have existed had the motorist causing the accident been identifiable or fully insured. Coverage is similar to no-fault in this respect - this benefit provides an incentive for the PH to buy larger liability limits of coverage for himself 2.2.4 Collision and Other than Collision - this policy provides coverage for damage to the PH’s own vehicle, under collision and other than
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 7

Chapter 2 - ACTSC 363 Chapter 2 P/C Coverage 2.2 Auto...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online