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CLAIMING
FOR DAMAGE TO YOUR AUTOMOBILE
In
Ontario, you claim for damage to your vehicle from your own insurance
company. What you recover will depend on several things:
in
the case of a car accident, whether you were at fault or partially
at fault;
what
optional insurance coverage you carry for your vehicle;
what the actual cash value of your vehicle was at the time of the
accident.
This
information sheet describes terms such as actual cash value, and
describes how your right to claim varies with your coverage.
Claiming
with mandatory coverage only
In
Ontario, your mandatory coverage includes Direct Compensation-Property
Damage, which means that if your vehicle is damaged in an accident,
you may recover directly from your own insurance company - to
the extent that you are not at fault - for the damage to your
vehicle, its contents and loss of use, less any deductible you arranged
with your insurance company. For example, if you were 75% at fault
for the accident - and therefore 25% not at fault - your company
will pay 25% of your loss, less any deductible under Direct Compensation-Property
Damage.
Under
a Direct Compensation-Property Damage claim, you can, to
the extent you're not at fault, recover for damage to the vehicle,
the cost of a temporary rental vehicle (transportation replacement
coverage) and for damaged personal contents carried in the car.
Contents carried for sale or delivery are not covered.
If
your accident is with a car from outside Ontario, Direct Compensation-Property
Damage does not apply unless the insurer of the out-of-province
car has signed an agreement with Ontario to settle claims under
the Direct Compensation-Property Damage rules. If an agreement
does not exist, you will have to sue the out-of-province vehicle
owner and the driver to recover your loss. Your insurance company
will know if the out-of-province insurance company has signed an
agreement.
If
your accident is with a vehicle that is uninsured, you claim under
the mandatory uninsured motorist coverage of your policy.
If you claim under this coverage, you must be able to identify the
other vehicle involved in the accident, and you will be covered
for damage to your vehicle and contents up to $25,000, less the
first $300 of the loss.
Claiming
with mandatory plus optional coverage
If
you purchased optional Collision coverage you may recover
from your insurance company for damage to your vehicle caused by
collision or upset, regardless of fault, less the deductible you
chose at the time you purchased the coverage. Coverage for transportation
replacement is not normally covered under the Collision coverage.
If
your vehicle is hit while parked and the responsible party does
not remain at the accident scene and cannot be identified, you will
be reimbursed for the repair costs only if your policy includes
Collision coverage.
Comprehensive
coverage is the other popular optional coverage for loss or damage
to your vehicle. It covers losses that are not covered by collision,
such as theft, vandalism or fire. Your agent or broker can advise
you on the full range of optional coverages.
Making
a claim
To
find out if you have particular coverage for a specific automobile,
check your certificate of automobile insurance to see if it lists
a premium paid for that coverage, or shows that the coverage is
provided at no cost. Your policy itself explains many details about
your insurance, your rights, and how your company and you can work
together. If you do not have a copy of your policy, ask your insurance
agent, broker or company for one.
If
you have a motor vehicle accident and are making a claim, your company
will want a written notice within seven days describing the accident
and the damage to the vehicle and property. Do not remove evidence
of damage or repair the car before your company has had a chance
to inspect the vehicle, verify the damage and estimate the cost
of repairs.
Insurance
companies often make payments to both you and the garage or shop
where the car is repaired; you should not have to pre-pay. Be sure
you and your insurance company agree in advance about what repairs
will be made and who will pay for them. As far as replacement parts
are concerned, the company is within its rights to repair an insured
car using parts the same age and condition as the car itself. Car
owners are responsible for repair costs that improve the vehicle
beyond its pre-accident state.
Deductible
You
can expect to pay your full deductible unless the accident was not
your fault or was only partially your fault. For example, where
an accident is 25% your fault, you will be covered by Direct
Compensation-Property Damage for the 75% that you were not at
fault.
Since
Collision coverage will apply only to the remaining 25%,
you are responsible for 25% of the deductible.
Actual
cash value
Insurance
companies set the value of most vehicles at the time of the accident.
They call this actual cash value (ACV) and base the amount largely
on the average retail selling price of cars in your region of the
same age, make, model and condition.
Companies
use actual cash value to decide whether to treat your car as a total
loss or whether to repair it. The amount you receive if your car
is a total loss (actual cash value, less deductible, with the company
assuming ownership of the car) may not be what you consider the
real value. One place to look for comparable values is the Red Book
used to determine sales tax on used cars. Your community library
will have a current copy and you should use it to check the retail
cost column.
Fault
Determination Rules
Insurance
companies must use the Fault Determination Rules from the Insurance
Act in assessing the percentage of fault after an accident.
If you disagree with the way your company has assessed the degree
of fault, you can argue the decision in court; the Act specifies
that the court can adjust fault according to ordinary rules of law.
What
happens to your insurance premium when you make a claim?
If
the accident is determined not to be your fault, your insurance
rating should not be affected. If you are found at fault for any
percentage of the accident, your premium may increase
What
are Collision Reporting Centres?
Some
jurisdictions have Collision Reporting Centres. If you are involved
in a minor accident in one of these jurisdictions and there are
no injuries, the police require that drivers attend one of these
reporting centre with their vehicles. At the reporting centre, the
drivers complete accident reports and in some cases, all the important
information is sent to the insurance companies involved in order
to start the adjusting of the claim.
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Motorists'
Rights
It's
your car - It's your choice!
- CHOOSING
A COLLISION AND REFINISH CENTRE
As
the owner of a motor vehicle damaged in an accident, you have the
right to choose the shop where you wish to have your vehicle repaired.
- DO
I NEED MORE THAN ONE ESTIMATE?
No.
Do not waste your time or that of several shops getting estimates.
Select a repair facility that you feel comfortable with, then notify
your agent or insurance company, or ask the shop to make the call
on your behalf. Your Insurance adjuster may have to inspect the
damage, This can be done at an insurance drive-in claim centre or
at the shop you have chosen.
- NOTIFY
YOUR INSURANCE COMPANY
Before
authourizing any repairs, notify your insurance company or agent,
and tell them where the damaged vehicle can be inspected.
Most
collision and repair centres guarantee their collision work to some
degree, which may not include the paint job. Ask to see a copy of
the shop's guarantee and have any information you do not understand
clarified.
- QUALIFIED
COLLISION AND REFINISH CENTRES
Look
for signs that indicate repair technician training and certification.
Membership in professional trade associations and the Better Business
Bureau indicate the shop is keeping up with the latest repair procedures.
Make
sure the shop you choose:
- Maintains
a reliable, professional reputation.
- Is
properly equipped and organized to meet today's more technical
repairing needs.
- Has
technicians that are thoroughly trained and certified.
Check the appearance of the repaired area.
- Examine
the paint for color match, texture and overspray.
- Take
a test drive to check mechanical repairs.
- Check
that the vehicle is clean.
- If
you are not satisfied, mention your concerns right away. As the
owner of a motor vehicle damaged in an accident, you have the
right to choose the shop where you wish to have your vehicle repaired.
This is the LAW!
Examine
the paint for color match, texture and overspray.
- Take
a test drive to check mechanical repairs.
- Check
that the vehicle is clean.
- If
you are not satisfied, mention you concerns right away.
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IBC
Says Auto Insurance Costs Continue Upward Spiral
Tuesday,
July 17, 2001, Collisionweek Magazine
The
Insurance Bureau of Canada (IBC) yesterday released its most recent
Atlantic region figures for 1999 and 2000, confirming the steadily
worsening losses being incurred on automobile insurance.
"Our
actuarial estimates confirm the trends we've seen in recent years
are continuing," said Don Forgeron, regional vice-president of the
IBC. "Costs continue to increase significantly, all of which will
soon negatively impact motorists in every province in the region."
In
2000, losses incurred by the auto insurance industry in Atlantic
Canada were about $190 million. In 1999, the industry increased
its original loss estimate to $150 million from $100 million. Analysts
predict a continued rise in costs unless changes are made to the
current auto insurance products offered.
"For
several years, the average cost per claim rose while the frequency
of claims and accidents fell," said Mr. Forgeron. "In recent years,
the frequency of claims has started to rise again, creating the
worst possible scenario, a higher average cost per claim and more
of them."
Research
shows that the types of claims with the greatest increase in cost
are soft tissue injuries such as neck strains and sprains. Most
the claims that are paid in these cases do not compensate the victim
for what has been lost, but rather for pain and suffering. Research
is now underway to help the industry determine the reasons why costs
continue to rise, confirm the types of injuries that are contributing
most to the current high costs, and look at the distribution of
these costs. The bureau is also surveying public opinion to find
out the level of understanding of industry issues and the tolerance
for changes to auto insurance products.
"As
consumers feel the effects of these rising costs over the next six
to 18 months, government and industry leaders will be called upon
to respond," added Mr. Forgeron. "In addition to meeting with government
officials to ensure that they fully understand the problem, we're
working to provide a range of solutions."
The
bureau is working with governments to develop various options to
reform the current auto insurance product so that costs remain stable
and accident victims can be fairly compensated and in a way that
is consistent with the views of Atlantic Canadians. Consumers can
contact the bureau's consumer information center in Halifax if they
have questions about their home or car insurance. The center can
be reached at (902) 429-2730 or toll-free at 1-800-565-7189.
The
Insurance Bureau of Canada is the national trade association of
the private property and casualty insurance industry. It represents
about 200 companies that provide more than 90 per cent of the non-government
home, car and business insurance sold in Canada.
Copyright
2001 by CollisionWeek. All rights reserved. No part of this publication
may be reproduced or transmitted by any means without permission
in writing from the publisher.
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DIMINISHED
VALUE-A CONTROVERSIAL ISSUE !
First
of all, what is "diminished value" or that which is sometimes called
"accelerated depreciation". Diminished value is the reduction in
the true value of a vehicle after it has been damaged. Suppose your
car has an ACV value of $16,000 and you are involved in an accident
that requires repairs of $10,000. The car is repaired and looks
"as good as new". Unfortunately, because of the repairs the vehicle
may not be worth the $16,000 to sell or trade. This further reduction
is the value following the accident is the diminished value.
In
Ontario, whether you trade a car in to a dealer or sell it privately
you must declare if the car has been in a serious accident and has
had repairs made. As an example, let us suppose that there are two
identical cars for sale. They both are the same year, have identical
mileage , same features, etc. One of these vehicles has been in
an accident and the other similar vehicle has not been dent! If
you were buying one of these vehicles would you be prepared to pay
the same price for the one that sustained damages as compared to
the other ? Not likely. This reduced value is the issue.
An
article in the Toronto Star last September recalled some background
into this issue and commenced a barrage of questions to broker and
insurers. The Ontario auto policy (OAPC 1) limits coverage under
the Loss or Damage section to direct damage. However the Direct
compensation section states " We will pay the cost of damage to
the automobile…." Both sections limit coverage to the actual cash
value of the vehicle at the time of the accident. But the actual
cash value may have been reduced as a result of the accident. The
Toronto Star article, in following the above differences, suggest
that any payment for diminished value will only apply to the extent
that you are not at fault, i.e.- Direct Compensation.
Insurers
are not prepared to accept claims for diminished value. Part of
the reason is trying to determine what a fair indemnity settlement
would be. If the owner of the repaired vehicle continues to drive
the vehicle "until the wheels fall off", then there would be no
diminished value. Similarly, if the vehicle were to be sold two
years after being repaired the diminished value would be less than
immediately after being repaired. With our current proscription
period for physical damages, insurers could deny the claim if presented
after one year.
In
the USA, the insurance departments of 33 states and the District
of Columbia have adopted legislation that allows insurers to write
policies that exclude diminished value. But this has back-fired
to some degree. If a person bought a policy or had a vehicle repaired
before the diminished value exclusion, it has been interpreted that
insurance companies in effect acknowledged that diminished-value
coverage had previously been an element of previous policies and
prior claims !
There
is no answer to these scenarios and as a broker you might want to
get the opinion of your insurers as to their opinion and stance
on a possible diminished value claim. Better to be prepared for
your client's questions and understand the situation, than to be
caught in the dark.
Thanks
to the Insurance Brokers Association of Hamilton newsletter and
author James. E. Bonnay, Insurance Consultant Phone 905-333-1727
Fax 905-333-0683 jebonnay@spectranet.ca
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ALLSTATE
WANTS SHOP DISCOUNT
Company
declines comment-says agreements confidential
March
26, 2001
Allstate
Canada Insurance needs more savings. Evidently not content with
the $14 million profit it made on $470 million (year 1999) in premiums,
the company is approaching shops in Ontario and New Brunswick and
strongly recommending discounts from the retail prices of parts
with the anticipation that if the shop wants to continue being part
of the Allstate "PRO" preferred shop program, they must sign a new
agreement.
Complaints
from Allstate's preferred shops about the company's aggressive behaviour
led to the Hamilton District Autobody Repair Association's (HARA)
inquiries.
HARA
asked Allstate to comment on concerns from shops over an unannounced
Allstate claims policy. HARA noted that shops are being asked to
provide Allstate with a 10% discount from list price on domestic
parts and a further 5% discount on foreign parts.
Allstate
was also asked about complaints from Allstate PRO preferred shops
who complained that they were being told that if a customer refuses
to allow the shop to repair the vehicle, that the discounted parts
must stay on the estimate that the customer receives in order for
the customer to take the estimate with the lowered pricing to another
shop.
In
response to a request for confirmation or denial, Allstate responded
with a curt "Agreements we have with any of our vendors are confidential"
and that customers are free to choose any facility to complete repairs.
"Our
fear is that this new policy of obligating shop discounts to cut
Allstate's costs will simply mean that shops will just "cost shift",
meaning shops will find other ways on the invoice in order to recapture
any losses they incur on this program" says John Norris of the Association.
Asking
for supplier discounts has become popular after companies such as
Daimler Chrysler, facing massive losses, started demanding discounts
from suppliers. This appears to be the first time, however, where
a major company is demanding supplier discounts while still being
profitable.
Allstate
Canada also made the news recently when the company successfully
went to court against the City of Toronto in an attempt to force
Collision Reporting Centres in the City to allow insurance companies
working in the buildings to recommend "preferred" shops to consumers.
Under the City by-law that Allstate Canada Insurance and other insurers
successfully defeated, the insurers could not recommend "preferred"
shops, but must offer all shops for repair opportunities that met
an industry accreditation standard for equipment, compliance and
licensing. Toronto City Council has voted to appeal that court decision.
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To
All Ontario Insurers,
Special
Bulletin: Toronto towing By-law capped
tow rates.
Apply to all motor vehicle accidents no matter where
the vehicle is towed.
January
22, 2001
Schedule
6 to The City of Toronto By-law No. 574-2000 states:
-
This section applies to the towing, removal or conveyance of motor
vehicles with a gross weight of 6,000 pounds or less from the
scene of a motor vehicle accident.
-
Where an owner or driver is hired to perform services to which
this section applies:
(a)
subject to clause
(b)
of this subsection, no owner or driver shall charge or request
a fee exceeding $130.00 for such services; (b) despite clause
(a) of this subsection, where a motor vehicle is towed, removed
or conveyed from the scene of an accident on the Queen Elizabeth
Way, the Fredrick G. Gardiner Expressway, the Don Valley Parkway,
Highway No. 400, Highway No. 401, Highway No. 4 Don Valley Parkway,
Highway No. 400, Highway No. 401, Highway No. 404, Highway No.
427, or Highway No. 407, no owner or driver shall charge or
request a fee exceeding $150.00 for such services;
The
Toronto Police Service and The Toronto Municipal Licensing and Standards
Division have confirmed that this section applies to all motor vehicle
accident scene tows within the City of Toronto, whether or not they
are towed to a Collision Reporting Centre as the first tow. As a
result, you should not be charged more than the capped rates for
your accident scene towing in Toronto. Please make sure that your
staff are aware of this and that you are not overpaying for your
towing.
Bob
Gutwein, Vice President Sales and Operation
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eAutoclaims,
Royal & SunAlliance Sign 5-Year Claims Management Contract
eAutoclaims
has signed a 5-year contract with Insurance Company Royal & SunAlliance.
The contract makes EACC the core service provider for Royal & SunAlliance's
new Guaranteed Repair Solution (GRS).
Royal
& SunAlliance is launching the new Internet-based auto claims management
system this month. The new program will begin service in New York
and North Carolina first. The Program is scheduled to go nationwide
over the coming months. eAutoclaims has incorporated other service
providers into the application, such as rental car providers like
Alamo Rental Car. EACC has built additional interfaces to expand
the systems real-time claims reporting. The Internet Claims application
has been under development for a number of months.
EACC
is providing their network of collision repair facilities and the
Internet claims application the service will run on. ``eAutoclaims
has taken our core service application, the 'Bricks to Clicks' Internet
Claims Application, and customized it to meet the service requirements
of the Royal & SunAlliance program,'' stated eAutoclaims President
& CEO, Eric Seidel. ``The new application incorporates much of our
next generation technology and will further reduce cycle time for
Royal & SunAlliance and their policyholders.''
``Our
Guaranteed Repair Solution represents a fundamental change in our
approach to claims settlement,'' said Mike McGinley, chief claim
officer for Royal & SunAlliance. ``We offer our customers a complete,
seamless solution to their loss, helping to get their lives back
to normal much faster than before. And our customers can have total
confidence in the system because we guarantee satisfaction with
all repair work.''
eAutoclaims.com,
Inc. generates revenue from administrative fees and discounts earned
by processing collision & glasswork through its system.
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When
the Claim Occurs
Jim's
Corner, Insurance Brokers Association of Hamilton, January 2001
Over
the past several weeks I have frequently been told of charging an
incorrect deductible on an automobile claim. Insureds may not understand
the Direct Compensation Property Damage section of their policy
particularly when there is a claim in which the insured is partially
at fault. As an example and if the "fault chart" assesses
your insured to be only 25% at fault, the DCPD will pay 75% of the
damage to his auto (assuming 0 deductible DCPD). The other 25% will
come from his collision section.
The
error occurs when the claims examiner deducts the full collision
deductible instead of pro-rating the deductible in the same proportion
as the fault determination.
In
other words, if the damages were $4000, the collision would be paying
25% or $1000. If the insured carries collision with a deductible
of $300 then the collision claim should be $1000 less 25% of
his deductible or $75. The collision claim is thusly $925. The
examiner may review the policy and apply the full $300 deductible.
The insured, not understanding the policy, gets charged an excess
amount of $225!
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Canada's
Liberty Mutual Hit with Lawsuit Aftermarket Parts Class Action suit
in Canada Claims 1/4 Billion Dollars
Jan
31, 2000
Only
days after class action suits were started in Quebec against insurers
AXA Canada and ING Canada, Liberty Mutual Insurance in Canada became
the next victim of the aftermarket parts legal fever sweeping North
America.
With its American parent having a class action suit filed against
it previously in the U.S., Liberty Mutual Insurance, the twelfth
largest auto insurer in Ontario, was named in a notice of action
filed with the Supreme Court of Justice.
More
and more insurance companies are feeling the impact of the U.S.
aftermarket parts class action trial that ended October 8th in Marion,
Illinois with a $1.18 billion(US) award against State Farm Insurance.
The plaintiffs had accused State Farm of failing to perform its
obligations under its contract with insured motorists and violating
the terms of its policies by using non-original equipment manufacturer
(OEM) parts or "aftermarket" crash parts to repair their insureds'
vehicles instead of restoring vehicles to original "pre-loss" condition
as promised in the company's insurance policies.
In
the Toronto action, Court File #99-CV-182436, against Liberty Mutual
Insurance, and reported by a new lobbying organization called "The
Consumers Fight Back Group," the plaintiff, Terrance O'Brien, claims
on his own behalf and on behalf of the members of the class of persons
in Canada as defined herein whose motor vehicles were involved in
accidents or otherwise damaged and, in breach of the policy of insurance
issued by the defendant to the plaintiff, were not repaired, rebuilt,
or replaced by the defendant with parts of "like kind and quality"
compared to their original, pre-damaged parts.
The
plaintiff is requesting an order enjoining Liberty Mutual Insurance
from using or requiring the use of parts manufacturerd other than
by the original equipment manufacturer where the defendant has selected
the vehicle repair shop, damages in the sum of $250 million or other
sum as the Court may deem appropriate, and punitive, exemplary and
aggravated damages in the amount of $10 million.
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