Accident Forgiveness
Most insurance companies offer accident forgiveness. It can be added to your insurance policy if you are eligible. This may protect your insurance costs in the event of a loss.
For example, when you have accident forgiveness coverage and have your first at-fault accident, this may protect your current driving record. It may also keep your insurance costs from going up due to the accident.
Accident forgiveness eligibility and rating vary by insurance company. Ask your insurance agent or broker about this, as not all insurance companies offer it.
Actual Cash Value (ACV)
Actual cash value is the current market cost to repair or replace a vehicle, less its depreciation (how the vehicle has aged, deteriorated or has become obsolete over time). This term is often used when discussing a total loss.
Accident
An automobile accident arises from the use or operation of an automobile.
Agent vs. Broker
An insurance agent sells insurance for a specific insurance company.
An insurance broker sells insurance for many different insurance companies.
Cancelling Your Insurance
An insurance company can cancel your insurance during the policy term but must provide you with registered written notice with specific reasons.
You can also cancel your policy anytime, but you must always have valid insurance if you drive. Be sure to ask if there is any penalty for cancelling your active policy before it is up for renewal.
Claim
An insurance claim is a formal request by a policyholder to your insurance agent or broker for compensation for a covered loss. Filing a claim does not necessarily mean you will receive a payment. The reason for the loss must be covered under the policy and its terms met.
Claim Settlement Terms
Repair or Replace
If you have collision coverage, your insurance company will pay for the repair or actual pre-collision cash value of your vehicle (including original equipment but not contents.) You are responsible for the deductible. Whether your vehicle is repaired or rebuilt, it should be in the same condition it was before it was damaged.
Betterment
Your insurance company is only responsible for paying to restore your vehicle to its condition prior to sustaining damage.
For example, suppose a rusty door panel dented in a collision were to be replaced with a new door. In this case, you may be expected to contribute financially toward the “betterment” of your vehicle.
Write Off
If the estimated cost to repair your vehicle exceeds its cash value before being damaged, your insurance company may treat the car as a write-off rather than repair it. You would receive the actual cash value of your vehicle minus your deductible, and your insurer would keep the salvage (damaged vehicle or parts).
Used or Reconditioned Parts
In repairing your vehicle, used or reconditioned parts may be utilized as long as they are of the same kind and quality as the originals and do not adversely affect the operation or safety of your car.
After Market Parts
If your vehicle is in its first production year, original equipment manufacturer (OEM) parts will likely be available to repair. These parts are new. New parts may also include “after-market” replacement parts, which can be an overrun from makers of original parts or made by manufacturers specializing in replacement vehicle parts. After-market parts approved by the Certified Automotive Parts Association meet or exceed OEM specifications and are suitable replacement parts. Safety-related replacement parts are usually new.
Commuting
Commuting considers the distance you drive to work, school or a public transit parking lot.
For example, if the distance from your home to your work is 10 km, your roundtrip commute would be 20 km per day.
Deductible
Insurance companies use deductibles to share the cost of any claims with the policyholder. When you file an insurance claim, a deductible is the amount of money you are responsible for paying, as outlined in your policy.
For example, if your policy’s deductible is $500 and you have a covered loss under your policy totals $10,000, you’ll pay $500, and your insurance company will cover the remaining $9,500.
Demerit Points
Drivers in Alberta who are caught failing to follow road rules can have demerit points applied to their driving record. They range from two points added for minor offences (e.g. speeding, improper turns) to seven points for more serious traffic offences (e.g. impaired driving, fleeing the scene of a collision).
When calculating your Alberta vehicle insurance premium, your insurance company considers the type and class of conviction you received. Factors determining your insurance costs include any minor, major or criminal convictions you have been charged.
For example, if you are convicted of exceeding the speed limit by 16 to 29 km/h, you will have three demerit points added to your driver’s license.
Depreciation
Depreciation considers how the value of an item has decreased over time — usually due to everyday wear and tear (e.g. ageing, deterioration, and obsolescence).
For example, your brand-new vehicle will depreciate (or decrease) in value over time, depending on how many kilometers you have driven and how well you’ve maintained the vehicle.
First Notice of Loss
When you experience a loss, you must let your insurance company know. This first step in the claims process is called a First Notice of Loss.
Liability Insurance
Liability insurance covers you for claims where you are required by law to pay a third party for bodily injury and property damage. Bodily injury coverage covers the claim if another person is injured or killed, and you are deemed responsible. Property Damage coverage will cover the claim if someone else’s property is damaged due to an accident.
Misrepresentation
Suppose you provide false information to an insurance company or leave out certain facts to receive a benefit to which you are not entitled. In this case, the insurance company may void, deny your claim, or cancel your coverage.
Occasional Driver
An occasional driver or secondary driver on a car insurance policy is a person who is not the primary or principal driver of the insured vehicle. This person could be a spouse, child or relative.
Pleasure Driving
Pleasure driving means you only use your vehicle for personal or leisure activities, not for commuting or business purposes.
Policy Term
A policy term outlines the length of time you are covered. It states the date and time your policy begins and ends.
Policyholder
A policyholder, also known as the named insured, has an insurance policy with an insurance company and is the vehicle’s registered owner.
Premium
An insurance premium refers to how much your insurance policy will cost, generally paid monthly or annually.
Your premium is calculated by many factors, including but not limited to the following:
- The type of vehicle you drive
- Your driving history, age and gender
- How you use your vehicle (driving to work, business or commercial use, or pleasure driving only)
- Number of kilometres you drive a year
- Any accidents or driving convictions
- Any additional coverages chosen by the policyholder
- Where you live
These and other factors can affect how much you pay for insurance.
Proof of Insurance
A standard proof of insurance card (also called a Pink Slip) is the proof of insurance you receive from your insurance company once you have purchased coverage. The Pink Slip is designed to prove automobile third-party liability insurance.
Many insurance companies now offer an electronic version accessible on your smartphone.
Proof of Loss
You make this formal statement under oath to an insurance company regarding the details of a loss.
Replacement Cost
Replacement cost is the vehicle’s actual cash value at the time of loss.
Registered Owner
A registered owner is a person who owns a vehicle and is responsible for insuring it.
Reportable Claim
You must report an accident if the damage to both vehicles combined is greater than $2,000. You must also report if someone is injured, if property is damaged, or if it involves a driver who doesn’t have auto insurance.
Standard Owners Automobile Policy (SPF 1)
The SPF 1 is your automobile policy. It explains the rights and responsibilities of the insured (you) and the insurance company. The SPF 1 outlines your automobile coverage and the terms.
Telematics
Telematics for auto insurance refers to technology monitoring your driving behaviour to provide an objective real-time picture of your driving habits.
Usage based insurance (UBI) monitors driving habits using a device in your vehicle. A plug-in device or an app is used to track your driving habits. This type of insurance may offer you savings on your insurance at renewal for your safe driving.
Pay-as-you-go insurance allows you to buy insurance for the distance you drive. Unlike UBI, which records how you drive, pay-as-you-go insurance only uses the distance driven to determine how much you pay. Your kilometers are tracked through a device in your vehicle. You can monitor how much you drive through a smartphone app.
Total Loss
A total loss occurs when the vehicle’s repair cost exceeds the Actual Cash Value (ACV). It is not always practical to repair a vehicle, even if the repair cost is less than its actual value. Factors such as vehicle safety, quality of the repair, costs and vehicle values are all considered in determining if a vehicle is repairable.
Depending on your insurance company, the value of your vehicle is determined based on factors such as the vehicle’s pre-accident condition, the number of kilometers on the odometer, the options available on the vehicle and any existing damage before the accident. An insurance company reserves the right to deem your vehicle a total loss.
Underwriters/Underwriting
Underwriting is the practice of collecting information and assessing risk. This information is analyzed based on the insurance company’s underwriting guidelines to decide whether an insurance company will accept the risk by offering you coverage.
Vehicle Repairs
Depending on which costs the least, insurance companies will pay either the Actual Cash Value of the vehicle, or the cost to repair or replace it (with a similar kind and quality).
Waiver of Depreciation
A Waiver of Depreciation endorsement may be available for new vehicles and will vary by an insurance company.
Suppose you experience a total loss due to theft or an accident, and you are the owner or lessee of the vehicle. In this case, you will be reimbursed for the full replacement value — not the vehicle’s depreciated value.
A Waiver of Depreciation can be added to your insurance policy at time of purchase.