Automobile Insurance Explained
This endorsement protects the renewal premium from increasing as a result of an at fault accident involving the vehicle to which the endorsement applies.
Not all drivers qualify for this endorsement which is why it is not typically added automatically to automobile policies. This can usually be added for a small fee subject to the driver being eligible. We recommend that you speak with your broker should you wish to add this endorsement to determine whether it is an option that is available to you.
Should you have one at fault accident, your driving record would be downgraded; depending on what level it is downgraded to, this could affect (increase) your premium for the following year.
Commercial Umbrella Liability
Definition
A Commercial Umbrella Liability policy is designed to provide liability protection above and beyond that provided by standard Commercial General Liability policies. Therefore, Commercial Umbrella Liability policies will not come into effect until such time as the limits on a standard liability policy have been exhausted.
For example, if a business’ liability limit is $1,000,000 and a claim occurs where they are held liable for $1,500,000, the standard policy would be responsible for covering the first $1,000,000 and the Umbrella policy would pay anything above and beyond the $1,000,000 subject to that policy’s own liability limits.
Functions of a Commercial Umbrella Liability policy:
- Provides liability limits over and above the Commercial General Liability and auto liability policies.
- Provides certain additional coverages which are typically excluded under the standard Commercial General Liability policy as these coverages are normally underwritten by specialty markets. For example, advertising liability, non-owned watercraft and non-owned aircraft, oral contracts and more.
In addition, some coverages already provided under the Commercial General Liability policy are broadened under the Umbrella policy. These additional coverages are called drop down coverages and are typically included at no extra cost however, a self-insured retention or deductible of $10,000, for example, will often apply for losses which are not covered under the Commercial General Liability policy. The Umbrella policy will also often provide coverage for related defense costs; even if a suit is groundless.
- Supplements a reduced or exhausted aggregate (collection of claims made in a certain period) limit under a Commercial General Liability policy. The products / completed operations section of the Commercial General Liability policy as well as several extensions typically contain an aggregate limit of liability; if the limit is reduced or exhausted, the Umbrella will drop down to the remaining amount. If exhausted, the Umbrella will usually pay any subsequent claims from the first dollar, with no deductible applied.
Commercial General Liability policies typically have a $2,000,000 limit; depending on the activities your business undertakes, the liability risk could more than exceed the $2,000,000 limit. Umbrella policies often offer additional levels of $1,000,000 or $2,000,000 on top of the standard Commercial General Liability policy.
Examples of business activities which could increase your business’ liability risk:
- Extensive travel (especially to the USA)
- Larger businesses
- Ownership of 2 or more properties
- Ownership of recreational vehicles (high hazard) – ATVs, Snowmobiles etc.
As an organization, you must review your activities as well as consider what risk you are willing to take on in respect of potential liability claims. Smaller businesses may suffer more from a single claim; while larger businesses would suffer more from multiple claims and would be more exposed to multiple claims as well.
We strongly recommend that you review your business’ liability limits as well as the types of activities your business performs in order to determine whether an Umbrella liability policy with its enhanced coverage would be appropriate.
This endorsement provides limited coverage for all glass on a vehicle and, in addition, vandalism to windows other than the front windshield.
This coverage, as it limits or restricts what is covered under your traditional automobile insurance policy, will reduce your automobile insurance premium.
WFG recommends this coverage for drivers who want to keep their premiums down and prevent increases in premium caused by multiple glass claims.
This coverage is not automatically included in car policies and is not available for certain types of automobiles; it is also not typically available with Comprehensive coverage where the deductible is greater than $250. This coverage must be requested when you set up your insurance policy or at renewal.
If you choose not to take the limited glass waiver, your premium will be higher to reflect the enhanced coverage.
If you choose to add this endorsement to your policy, you may wish to purchase a separate glass insurance policy. These policies have been developed by insurers and tend to be offered at a lower rate than if it were to be covered on a standard car policy. Any claims made on a separate glass policy would not affect your car insurance claims free discount. We recommend that you speak with your broker to see what options are available to you.
This endorsement is similar to Excluding Operation of Attached Machinery (SEF 30) however, it relates to any physical damage to the machinery. Therefore, this endorsement will remove any coverage for physical damage to attached machinery as specified in the policy.
This endorsement would typically be added to a policy where the machinery is more suitably covered under a separate equipment policy.
This endorsement relates to any liability for bodily injury or property damage caused by the operation of a particular piece of machinery (which will be specified in the policy).
As this endorsement excludes this type of activity, it limits what is covered under a typical business automobile insurance policy.
This coverage would only typically be added to a business automobile insurance policy when an insured vehicle has machinery attached to it (a crane for example). Should this endorsement be added to your policy, we recommend that you discuss the reasoning and consequences with your broker.
An insurer would typically add this endorsement automatically to a policy where operation (use) of the attached machinery is more suitably covered under a separate Commercial General Liability policy.
Consider the cost of such an endorsement, should it not be automatically included in your car policy, and whether you want to take on the potential future cost of compensation and / or payment for bodily injury should you not have this coverage.
This endorsement provides protection to the insured, their spouse and certain other relatives should they suffer bodily injury or death caused by an inadequately insured motorist. This endorsement is subject to a limit, based on the limits of your liability coverage as well as the other motorist’s limit of liability coverage; we, therefore, recommend that you speak with your broker should you have any questions regarding this endorsement.
Each province may have a slightly different definition of who will be covered under such an extension; it is, therefore, recommended that if you have this coverage, you speak with your broker to identify who it extends to.
While some insurers automatically include this coverage for car insurance policies, some will only do so at your request and for a small fee.
If you do not have this coverage and an accident with an underinsured motorist results in injury or death to you or one of your family members, there may only be a limited payment, if there is a payment at all, as a form of compensation.
The Third Party Liability section of your car insurance policy will cover injury or property damage to third parties only. The definition of a third party does not extend to include those passengers in the insured automobile; only the driver and passengers in any other automobile involved in the accident.
Consider the cost of such an endorsement, should it not be automatically included in your car policy, and whether you want to take on the potential future cost of compensation and / or payment for bodily injury should you not have this coverage.
A broker is an insurance professional that has access to sell the products offered by two or more insurance companies.
Your commercial broker will work with you to identify the insurer, coverage and policies available for your company’s insurance needs. Every business is unique and each requires special attention to ensure all areas of the business are insured to your requirements. Commercial brokers will also provide other services including claims assistance, loss prevention and any other services necessary to successfully manage your insurance needs.
You should treat your commercial broker as a source of knowledge and information and should contact them without hesitation should you have any questions or concerns regarding your insurance needs.
A broker is an insurance professional that has access to sell the products offered by two or more insurance companies.
Your personal lines insurance broker will work with you to understand your insurance needs in order to identify the insurer, policy and coverage available. Personal lines brokers are usually personal lines specialists and are a great resource should you have any questions regarding your coverage or personal lines insurance in general.
Your personal lines broker will provide continuing services regarding your policy including assistance with claims, processing of any changes, contacting you in advance of renewals to discuss options and any other services as necessary.
You should see your broker as a source of knowledge and information and should contact them without hesitation should you have any questions or concerns regarding your insurance needs.
This endorsement provides coverage for the legal liability for physical damage caused by the driver where that driver does not own the car, for example, a rental car.
It is a common misconception that one’s own automobile insurance policy will automatically provide coverage for driving other cars which are not owned by the driver; this is only the case if this endorsement is added to their insurance policy and, even then, it may be subject to certain restrictions such as the type of automobile which will be covered.
Some insurers will provide this coverage automatically; while others will charge a small fee to have this added.
If you cause damage to a rental car, for example, and you do not have this endorsement and have not paid for the rental car company’s own version of insurance (damage waiver for example), you will be responsible for paying for the cost of the damages; if the damage results in a total loss, you will be required to pay the entire amount.
This endorsement typically costs $30 per year, depending on the insurer whereas the cost for the damage waiver can cost $15 per day, depending on the rental car company.
This endorsement will waive any depreciation on repair or replacement of a new vehicle (subject to certain restrictions) should it suffer an insured loss. The term for which this coverage is offered varies with insurer (typically 24-30 months).
Not all insurers will include this coverage automatically; but, if asked to do so, will often add this for a small fee.
Should you suffer a total loss within 1 year, for example, of purchasing your car, your insurance company will take depreciation into account when calculating the claim settlement. Depending on the purchase price, this could reduce the value by thousands of dollars. It is usually one’s intention to replace a total loss with the same or a similar car; in the case of a new car, owners tend to want a new replacement. When depreciation is taken into account, the owner will be left with the cost of the difference between the claims settlement and the actual cost of the same new car.
Loss of Use (SEF 20)
Definition
This endorsement provides coverage for the rental of a vehicle while yours is out of use following an insured loss. This enhances the loss of use by theft coverage which is included in most standard automobile policies.
Not all insurers add this endorsement automatically however, for a small fee you may be able to add this coverage.
If it is not automatically included or if you choose not to add Loss of Use to your policy, you will be liable for all costs incurred when you rent a car while yours is being repaired. Depending on the extent of the damage and the availability of parts, this period can be quite lengthy and the costs can add up quickly.
Consider alternative substitute car options:
- Second Car - do you have another vehicle which you own that can be used while the damaged one is being repaired?
- Courtesy car (often a per KM charge).
- Car pool - if driving to work is the main use for your vehicle.
Public Transport - Do you have access to public transport? This could be a suitable alternative for some people depending on their daily needs.
A Personal Umbrella liability policy is designed to provide liability protection above and beyond that provided by a standard house and car insurance policy. Therefore, umbrella liability policies will not come into effect until such time as the limits on your house or car insurance policy have been exhausted.
Personal Umbrella Liability policies should be considered by everyone; in particular, anyone who travels regularly to the USA or overseas, or who has property in the USA or overseas. If you own more than one vehicle, it may be less expensive to purchase a Personal Umbrella Liability policy as this would extend the liability coverage for all named vehicles as well as your house as opposed to extending the coverage on each individual car insurance policy and your house insurance policy, all of which would carry separate additional premiums.
You can pay your insurance premium through your Western Financial Group broker using the option that best suits you:
- In full
- Cash
- Cheque
- Online payment
- Direct payment to your insurer*
- In installments using Premium Finance
- Three payments using your credit card
- Monthly pre-authorized chequing draft
- Post-dated cheques
- Direct payments to your insurer*
*Direct payments to an insurer are not always available; please speak with your broker to determine whether this is an option available to you.
Third Party Liability
Definition
Third Party Liability will provide cover when you are held legally responsible for paying compensation to another person (third party) who you have injured or caused damage to their property following an automobile accident. Third Party Liability also extends to include defense costs if someone seeks compensation through legal means.
All insurers provide Third Party Liability coverage in automobile insurance policies. However, the required limit is $200,000; for a small fee insurers will often increase the limit to $1,000,000 or, what we recommend, $2,000,000.
With the cost of litigation today, liability cases often exceed $1,000,000. If you have $1,000,000 coverage and the total cost of defending an action and compensation exceeds $1,000,000 you would be responsible for paying any amount in excess.
- Consider purchasing an extra liability policy for example, auto extension policy or Personal Umbrella Liability policy.
- Consider increasing your limit to $2,000,000 at a minimum.
- Drive safely.
- Drive the speed limit.
- When driving for a long time, take regular breaks and do not drive when you are tired.
- Do not talk or text on your cell phone or use other handheld mobile devices when driving.
Without knowing what a quote has included and excluded, it is not possible to offer an opinion as to why one policy is cheaper than another. As you will see throughout this section, insurers vary in practice when it comes to including certain cover as well as the limits of cover they will provide. Insurers will offer different discounts, which also contributes to the final premium. We can work with you to identify which of our providers offers you the most comprehensive cover for your needs.
This is never more true a statement than with respect to insurance policies. If you get the cheapest policy, you are likely excluding certain covers which are added to the more expensive policies; make sure you know what risks you are willing to take on yourself (i.e. what you will not insure and will pay for should there be a loss) before deciding which policy is best for you.
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