Actuarial Notes

What do the coverages mean?

By Financial Services Commission of Ontario · 2014

Study guide: Exam 6C

An FSCO brochure page, written to the policyholder, defining the coverages and benefits of an Ontario automobile insurance policy. It is a glossary in two parts: the coverages themselves — accident benefits, the physical damage coverages, third party liability, uninsured automobile and the tort deductible — and a short list of general insurance terms. The CAS copy is a three-page print of the Financial Services Commission of Ontario's web page, filed on that site under Automobile Insurance › Brochures.

On the syllabus

  • Exam 6C — objective A1; the whole document.

What do the coverages mean?

  • Accident Benefits — what an insured may receive if injured or killed in an auto accident, which may include income replacement; medical, rehabilitation and attendant care; and funeral and death expenses. Optional benefits can be bought above the standard accident benefits.
  • All Perils coverage — Collision or Upset and Comprehensive combined, plus theft of the vehicle by someone living in the insured's home or by an employee who drives, uses, services or repairs it.
  • Attendant Care Benefit — expenses for an aide or attendant to look after an insured seriously injured in an auto accident.
  • Caregiver Benefit — reimburses the cost of hiring someone to care for dependants when a catastrophic injury stops the insured from providing that full-time care.
  • Catastrophic injury — a serious, life-threatening injury defined in regulation, which may involve the loss of use of limbs or complete loss of eyesight; Ontario pays a higher level of benefits for a catastrophic injury, determined on assessment.
  • Collision or Upset coverage — losses when the vehicle collides with another object, including another vehicle, or rolls over.
  • Comprehensive coverage — losses from certain perils, such as falling or flying objects, and vandalism.
  • Death and Funeral Benefit — a lump sum to the spouse and dependants, and a lump sum for funeral expenses.
  • Dependant Care Benefit — additional expenses to care for dependants when an employed insured is injured and is not receiving the Caregiver Benefit.
  • Direct Compensation-Property Damage (DC-PD) — damage to the insured's vehicle or its contents caused by an at-fault other person, collected directly from the insured's own insurer; the accident must occur in Ontario and both drivers must be insured by an insurer licensed in the province. See Direct Compensation Property Damage.
  • Family Protection Coverage (OPCF 44R) — the difference between the at-fault driver's third party liability limit and the insured's own, when someone with less liability coverage injures the insured.
  • Housekeeping and Home Maintenance expenses — reasonable and necessary additional expenses for someone to do the insured's usual duties after a catastrophic injury.
  • Income Replacement Benefit — basic weekly benefits of up to $400 when the insured cannot work because of an auto accident, commencing after one week.
  • Indexation Benefit — the automatic adjustment of the income replacement, non-earner, attendant care or medical and rehabilitation benefit by the Consumer Price Index for Canada.
  • Medical and Rehabilitation Benefit — reasonable and necessary expenses (e.g. physiotherapy, prescriptions) listed in the Statutory Accident Benefits Schedule and not covered by OHIP or a disability plan; other expenses may be covered if the insurer agrees they are essential to recovery.
  • Specified Perils coverage — fire; theft or attempted theft; lightning, windstorm, hail or rising water; earthquake; explosion; riot or civil disturbance; falling or forced landing of an aircraft or its parts; and the standing, sinking, burning, derailment or collision of a transport carrying the vehicle.
  • Third Party Liability — pays claims from lawsuits when someone else is killed or injured or their property is damaged, up to the policy limit, and the costs of settling them; the legal minimum is $200,000.
  • Tort Deductible — the amount deducted from a settlement or court award for pain and suffering (see Tort Threshold and Deductible).
  • Uninsured Automobile coverage — protects the insured and family if injured or killed by a hit-and-run driver or an uninsured motorist, and covers vehicle damage caused by an identified uninsured driver. See Uninsured Automobile Coverage.

What do the terms mean?

  • Coverage — the scope of protection provided under an insurance policy.
  • Deductible — the amount the insured pays for covered losses before insurance payments begin; a higher deductible means contributing more to a loss but can mean a lower premium.
  • Endorsement — any change to an existing auto policy that expands or restricts coverage.
  • Exclusions — items or conditions the contract does not cover.
  • Minor Injury — sprains, strains, contusions, lacerations or whiplash; after a minor injury, medical and rehabilitation benefits are capped at $3,500 regardless of optional increased benefits purchased (see Minor Injury Guideline).
  • Premium — the amount paid for the insurance policy.
  • Risk Classification — a grouping of risks with similar characteristics to determine rates, typically by type and use of vehicle, driving record, the drivers' age, gender and marital status, and territory (see Classification Ratemaking).
  • Tort — a wrong committed by one person that causes injury to another, intentional or unintentional; liability insurance mainly covers unintentional torts (see Tort Law).
  • Underwriting — the process of selecting or rejecting risks for insurance.

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