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As Easy as ABC: The Standard Owner’s Automobile Insurance Policy (S.P.F. No. 1)

You may not be entirely aware about what your automobile-insurance policy covers until you find yourself involved in a motor vehicle accident. In Alberta, the current automobile insurance system is tort-based, which means the “at-fault” driver bears the greater financial responsibility for a motor vehicle accident. Liability insurance is provided by private insurers, but automobile insurance is regulated by our provincial legislation. You can find Alberta’s Standard Automobile Policy, called an SPF No 1 here. This blog post is intended to be a simple introduction to the basics of the SPF No 1.

Section A – Third Party Liability Coverage

It is mandatory for every vehicle which is being operated on public roads to have third party liability insurance. Your Section A coverage is intended to indemnify injured parties if you cause damage to others in an accident arising from the ownership, use or operation of your insured automobile. This section indemnifies you for both bodily injuries and property damage or loss that you have caused to others. Your Section A insurance will also extend to cover anyone who you give permission to drive your vehicle.

Your insurer provides you with coverage up to your policy limits. In Alberta there is a required minimum policy limit of $200,000, as per the Insurance Act, s 571, however, you can purchase a higher policy limit. If you are sued above your policy limits, you could be liable for the amount that exceeds your insurance coverage. For that reason, many people choose to purchase more coverage than the minimum.

Section B – Accident Benefits (sometimes referred to as “First Party Benefits”)

Section B benefits are benefits that insurance companies pay to their own insured in the event of an injury, regardless of who is at fault. This section of the SPF No 1 is also mandatory by law. Your Section B benefits will extend to any occupant of your vehicle during an accident. If you hit a pedestrian, the pedestrian may be able to claim Section B benefits under your policy.

The policy rationale behind Section B benefits is to provide you with quick access to the benefits you require to get back on your feet after an accident. The scope includes medical expenses, funeral/death expenses, and disability benefits. Examples of common Section B medical benefits include, but are not limited to, the cost of an ambulance, chiropractic care, physiotherapy, massage therapy, and medications for up to two years post-accident.

If you should pass away in a motor vehicle accident, there will be some money available to pay for your funeral, and benefits for your dependents, including a sum for grief counselling. The sum available for your dependents, depends on your age and household status on the date of the accident. There will also be disability benefits available to help compensate you for loss of income. Section B benefits are capped at $50,000.

Section C – Loss or Damage to Insured Automobile (sometimes referred to as “Collision and Comprehensive Coverage”)

Section C is the only optional section of the three sections. This is coverage you can choose to purchase in order to indemnify you for accidental loss or damage to your vehicle. There are different levels of coverage available, subject to policy exclusions. The different subsections of coverage are listed below:

  • All perils;
  • Collision or upset;
  • Comprehensive (any peril other than by collision with another object or by upset); or
  • Specified perils (fire, lightning, theft or attempt thereat, earthquake, hail, explosion, riot or civil commotion, falling or forced landing of aircraft or of 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). 

When making a claim under this section, you will likely need to pay a deductible, which is the amount in the contract that you have agreed to pay before triggering the insurance company’s obligation to pay. The damage to your vehicle must exceed the amount of your deductible, before your insurance policy will indemnify you. If you have a higher deductible, the insurance premiums that you pay will likely be lower because you are responsible for more of the loss if your car is damaged. For example, if you have a $500 deductible and $1500 worth of damage to your vehicle, you will pay $500, and your insurance company will pay $1000. On the other hand, if you have a lower deductible, your insurance premiums will be higher, because the insurance company is responsible for more of the loss in the event of a loss. For example, if you have a $1000 deductible and $1500 worth of damage to your vehicle, you will pay $1000 and the insurance company will pay $500.

If you have been injured in a motor vehicle accident, and would like legal assistance, or have questions about your auto-insurance policy feel free to contact us here for a free consultation.

By Vanessa Fiorillo