🚗 Ontario Automobile Insurance: OAP 1, Fault Determination Rules and Accident Benefits

1. Under the Compulsory Automobile Insurance Act, it is an offence to:

1. Drive a vehicle registered in another province
2. Operate or permit the operation of a motor vehicle on a highway without a motor vehicle liability policy
3. Operate a vehicle without an endorsement for a second driver
4. Lend a vehicle to a licensed driver

Section 2 of the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25 makes it an offence for an owner or lessee to operate, or permit the operation of, an uninsured vehicle on a highway.

2. In addition to a fine, what consequences can follow a conviction for driving without insurance in Ontario?

1. Automatic placement with the Facility Association
2. A criminal record for fraud
3. Suspension of the driver's licence and impoundment of the vehicle
4. Cancellation of the vehicle registration for life

The Compulsory Automobile Insurance Act provides for licence suspension and vehicle impoundment in addition to substantial fines, which is why the offence is treated as serious even on a first conviction.

3. Which coverages must every Ontario automobile policy include?

1. Collision and comprehensive, which the Act requires for every vehicle registered here
2. Third party liability only, with each of the remaining coverages available on payment of an additional premium
3. Third party liability, accident benefits, uninsured automobile and direct compensation for property damage
4. Accident benefits and collision, with liability added where the vehicle is financed

OAP 1 combines the compulsory coverages required by the Insurance Act: liability in Section 3, accident benefits in Section 4, uninsured automobile in Section 5 and direct compensation property damage in Section 6.

4. What is the statutory minimum third party liability limit for an Ontario automobile policy?

1. $100,000
2. $200,000
3. $500,000
4. $1,000,000

The Insurance Act sets the minimum third party liability limit at $200,000, although $1,000,000 or $2,000,000 is the practical market standard and what most brokers recommend.

5. A client insists on carrying only the statutory minimum liability limit. What should the broker do?

1. Place a higher limit anyway and explain the difference when the invoice arrives
2. Refuse to place the policy at all, since a broker may not bind any limit that it has advised against
3. Explain the exposure created by a judgment exceeding the limit and document the client's decision
4. Say nothing, since the statutory minimum is lawful and needs no further comment

The minimum limit under the Insurance Act satisfies the law but not the exposure, and the advice and documentation duties in the RIBO Code of Conduct require the broker to explain the gap and record the instruction.

6. Which body provides automobile insurance to Ontario applicants declined by the voluntary market?

1. The Property and Casualty Insurance Compensation Corporation
2. The Motor Vehicle Accident Claims Fund
3. The Facility Association
4. FSRA

Because coverage is compulsory under the Compulsory Automobile Insurance Act, the Facility Association operates as the residual market so that no eligible applicant is left without insurance.

7. What is the role of the Motor Vehicle Accident Claims Fund?

1. To pay claims when an insurer becomes insolvent
2. To compensate victims of uninsured or unidentified motorists where no other insurance responds
3. To insure high-risk drivers who cannot obtain coverage
4. To fund road safety programmes

The Fund is a payer of last resort under the Motor Vehicle Accident Claims Act, standing behind the compulsory uninsured automobile coverage in OAP 1, Section 5 rather than replacing it.

8. A client says their vehicle is only driven on private property, so no insurance is needed. What is the accurate response?

1. Insurance is required only for vehicles over a certain weight
2. No insurance is needed in any circumstance
3. The Compulsory Automobile Insurance Act applies to private property as well
4. Liability exposure and lender or lessor requirements usually make coverage necessary even off-highway

The Compulsory Automobile Insurance Act attaches to operation on a highway, but liability at law, financing requirements and physical damage exposure normally make a policy essential regardless.

9. Which document proves that an Ontario automobile policy is in force?

1. The application for insurance
2. The declarations page only
3. The liability insurance card issued for the vehicle
4. The premium receipt

The Compulsory Automobile Insurance Act requires evidence of insurance to be carried and produced on demand, and the liability card is the prescribed evidence for that purpose.

10. Ontario's automobile system is best described as:

1. A government-run monopoly operated on behalf of the province
2. A pure tort system in which every claim is brought against the driver at fault
3. A pure no-fault system with no right to sue under any circumstance recognised by the Act
4. A no-fault first party benefit scheme combined with a restricted right to sue

Accident benefits under O. Reg. 34/10 are paid regardless of fault, while the Insurance Act, s. 267.5 preserves a limited tort action subject to a threshold and a deductible.

11. Which section of OAP 1 contains third party liability coverage?

1. Section 3
2. Section 4
3. Section 6
4. Section 7

OAP 1 places liability coverage in Section 3, accident benefits in Section 4, direct compensation property damage in Section 6 and optional physical damage coverages in Section 7.

12. Which section of OAP 1 contains the optional loss or damage coverages?

1. Section 5
2. Section 3
3. Section 7
4. Section 6

Section 7 of OAP 1 contains Specified Perils, Comprehensive, Collision or Upset and All Perils, all of which are optional additions to the compulsory coverages.

13. How long does an insured have to notify the insurer of a newly acquired automobile in order to keep automatic coverage?

1. 7 days from the date of purchase
2. 30 days
3. 14 days
4. 60 days

OAP 1 extends coverage to a newly acquired automobile provided the insurer is notified within 14 days of delivery, and the terms available depend on what is carried on the described automobile.

14. A temporary substitute automobile is covered under OAP 1 when:

1. The insured simply prefers to drive another vehicle for convenience on any given day without a mechanical reason
2. The described automobile is temporarily out of use for repair, servicing or breakdown
3. The insured has sold the described automobile
4. The vehicle is rented for a holiday

OAP 1 covers a temporary substitute automobile used while the described automobile is out of use for repair, servicing, loss, destruction or breakdown, and the substitute must not be owned by the insured.

15. A corporation owns the vehicle described in an OAP 1 policy. Why does the coverage for driving other automobiles not assist its employees?

1. The coverage applies only to leased vehicles
2. Corporations cannot buy automobile insurance
3. That coverage extends to an individual named insured and their spouse, not to a corporation's staff
4. The coverage requires an additional premium in all cases, payable annually in advance by the corporation

OAP 1 grants coverage for other automobiles to an individual named insured and spouse; a corporate named insured has no spouse, which is why a non-owned automobile policy is written for the business.

16. Under OAP 1, who is generally covered to drive the described automobile?

1. Only drivers listed on the declarations page by name, with no exceptions permitted
2. The named insured only
3. The named insured and anyone driving with the named insured's consent
4. Only licensed drivers over twenty-five

OAP 1 extends coverage to persons driving with the consent of the named insured, subject to exclusions such as an excluded driver under OPCF 28A or a driver not authorised by law.

17. The declarations page of an Ontario automobile policy shows:

1. The Fault Determination Rules, which the adjuster applies after a collision
2. The full set of statutory conditions, printed in the form that the Insurance Act prescribes
3. The named insured, described automobiles, coverages, limits, deductibles and endorsements
4. The insurer's filed rating algorithm and the underwriter's internal risk score used to calculate the premium

The declarations identify the particular contract, while OAP 1's approved wording supplies the coverage terms and O. Reg. 668/90 supplies the fault rules.

18. A client asks the broker to explain the difference between the described automobile and a newly acquired automobile. Which statement is accurate?

1. A newly acquired automobile is never covered until an endorsement has been issued naming it on the declarations
2. They are exactly the same thing, the two expressions being used interchangeably throughout OAP 1 to describe any vehicle to which the policy applies
3. The described automobile is listed on the declarations, while a newly acquired automobile is covered temporarily pending notice to the insurer
4. A described automobile is any vehicle the insured drives at any time, whether owned, leased or borrowed from a friend or family member on any given day of the week

OAP 1 defines the described automobile by its appearance on the declarations page, while the newly acquired automobile provision gives temporary protection if the insurer is notified within 14 days.

19. Which vehicle would generally NOT be insured under an OAP 1 owner's policy?

1. A vehicle used to carry passengers for compensation without appropriate endorsement
2. A privately owned passenger car
3. A light commercial pickup used by a sole proprietor to visit job sites during the week
4. A leased sport utility vehicle

OAP 1 restricts use for compensation, so ride-sharing or livery operation requires an appropriate endorsement or a different policy, a point that regularly appears on the RIBO Blueprint.

20. An insured leases a vehicle for four years. Who should appear on the policy?

1. The lessor alone, since the vehicle remains registered in the leasing company's name
2. The lessee as named insured, with the lessor's interest recognised by endorsement
3. The dealership, which retains title until the final payment under the lease is made
4. The financing bank as named insured on every leased vehicle policy issued in Ontario

OAP 1 treats a long-term lessee as the owner for insurance purposes, and OPCF 5 and OPCF 23A are the endorsements that recognise the lessor's interest and obligations.

21. Which form is the standard Ontario owner's automobile policy?

1. OAP 2
2. OAP 1
3. OAP 4
4. SPF 6

OAP 1 is the approved owner's policy under the Insurance Act; OAP 4 is the garage automobile policy and SPF 6 is the standard non-owned automobile form.

22. Which policy would a business use to insure liability arising from vehicles it does not own but that are used in its operations?

1. OAP 4, which insures vehicles a business does not own while they are being driven by its staff
2. OAP 1, which extends to any vehicle a business directs its employees to use
3. A non-owned automobile policy, SPF 6
4. A garage policy purchased separately by every dealership and repair shop in the province

Source: Ontario Automobile Policy (OAP 1). SPF 6 responds to the business's vicarious liability for vehicles it uses but does not own, filling the gap left by the commercial general liability form's automobile exclusion.

23. A car dealership needs coverage for customer and inventory vehicles it operates. Which policy is designed for this?

1. SPF 6
2. OAP 1 with additional endorsements attached
3. OAP 4, the garage automobile policy
4. A commercial general liability policy

OAP 4 is the standard Ontario garage policy, structured for businesses whose operations involve vehicles in their care, custody or control as well as owned units.

24. Under OAP 1, coverage applies to accidents occurring:

1. Anywhere in the world, including international waters and foreign countries
2. In Ontario only, unless the insurer has agreed in writing to extend the territory
3. In Canada, the United States and on vessels plying between their ports
4. In Canada only, with a separate card required for travel into the United States

OAP 1's territorial provision covers Canada, the United States and vessels travelling between their ports, which is why brokers must warn clients travelling to Mexico to arrange local coverage.

25. A client is driving in the United States and is involved in an accident. What does OAP 1 provide?

1. Coverage limited to accident benefits for the occupants of the vehicle
2. There is no coverage outside Canada at all, unless the insurer has agreed otherwise in writing before the trip
3. Coverage only if a special endorsement is purchased before crossing the border each and every time the vehicle leaves Canada
4. Coverage applies, and the liability limit is treated as at least the minimum required in that jurisdiction

OAP 1's territory includes the United States and its out-of-province provision responds to higher compulsory minimums elsewhere, so the Ontario insured is not left below a foreign statutory limit.

26. Third party liability coverage under OAP 1 Section 3 responds to:

1. Damage to the insured's own vehicle, however that loss came about during the period for which the policy was in force in Ontario
2. The insured's legal liability for bodily injury or property damage arising from the use or operation of the automobile
3. The insured's medical expenses following a collision on a highway in the province
4. Loss of the insured's personal effects left inside the vehicle at the time of the covered incident, subject to a modest sub-limit

OAP 1, Section 3 covers legal liability to others for bodily injury and property damage arising from the ownership, use or operation of the automobile, along with the insurer's duty to defend.

27. Under Section 3 of OAP 1, defence costs are:

1. Shared equally between insurer and insured regardless of who caused the accident
2. Deducted from the limit of liability
3. The insured's responsibility
4. Paid by the insurer in addition to the limit of liability

OAP 1 obliges the insurer to defend and to pay the costs of defence in addition to the limit, which is a meaningful difference from many liability forms where defence erodes the limit.

28. An insured is sued for an amount exceeding the policy limit. What is the insurer's obligation?

1. To decline the defence once the claim exceeds the limit stated on the declarations page
2. To pay the full judgment regardless of the limit
3. To defend the action and pay up to the limit, leaving the excess to the insured
4. To require the insured to fund the defence

OAP 1, Section 3 caps indemnity at the limit purchased while the duty to defend continues, which is the practical reason brokers press clients to buy more than the statutory minimum.

29. An insured breaches a condition of the policy, for example by driving while not authorised by law, and injures a third party. What happens?

1. The insurer must still respond to the injured third party and may seek recovery from the insured
2. The third party has no claim against the insurer under any circumstance recognised by current Ontario insurance law and regulation
3. The policy is void from inception, so that no one recovers anything at all
4. The Facility Association pays the claim and recovers from the insured

Section 258 of the Insurance Act preserves the third party's right of recovery notwithstanding the insured's breach, while allowing the insurer to recover from its own insured afterwards.

30. Which of the following is excluded from Section 3 liability coverage?

1. Damage to another motorist's vehicle
2. Injury to a pedestrian struck by the insured automobile while crossing at a marked crosswalk
3. Damage to property carried in or on the insured automobile
4. Injury to a passenger in another vehicle

OAP 1, Section 3 excludes damage to property carried in or on the automobile, along with property owned or in the care, custody or control of the insured.

31. A person injured by an Ontario motorist may sue the insurer directly because:

1. The Compulsory Automobile Insurance Act creates a trust fund administered jointly by RIBO and FSRA
2. OAP 1 names all Ontario residents as insureds
3. Section 258 of the Insurance Act gives a claimant a direct right of action against the insurer
4. The Fault Determination Rules require it

Section 258 of the Insurance Act allows a judgment creditor to proceed against the insurer, an important protection where the insured is unwilling or unable to respond.

32. An insured lends their vehicle to a friend who causes an accident. Whose liability policy responds first?

1. The driver's policy only
2. The vehicle owner's policy, with the driver's own policy available in excess
3. Neither, since the driver was not a named insured on the owner's declarations page
4. The injured party's own policy

Automobile liability follows the vehicle in Ontario, so the owner's OAP 1 responds first for a driver operating with consent, and the driver's own policy sits in excess.

33. Ontario law makes a vehicle owner responsible for the negligence of a person driving with consent. This is an example of:

1. Strict liability for hazardous activity
2. Vicarious liability imposed by statute
3. Contractual liability
4. Absolute liability without defence of any kind

The Highway Traffic Act imposes vicarious liability on the owner for the negligence of a consent driver, which is why OAP 1 responds under the owner's policy.

34. An insured's liability limit is $1,000,000 and a court awards $1,300,000 plus costs. What does the insured face?

1. A reduction of the award to the policy limit
2. No personal exposure because the insurer defended the action through to judgment
3. Automatic coverage by the Facility Association
4. Personal responsibility for the amount exceeding the limit

OAP 1, Section 3 indemnifies only to the limit purchased, so the balance is a personal judgment against the insured, which is the core argument for higher limits or an umbrella policy.

35. Why does an umbrella policy matter to an automobile client who already carries $2,000,000?

1. It removes the statutory deductible on pain and suffering awards in every Ontario tort claim regardless of the underlying automobile policy
2. It replaces the need for automobile liability coverage
3. It provides excess limits across automobile and personal liability exposures in one contract
4. It covers the insured's own vehicle damage

An umbrella sits above scheduled underlying policies including OAP 1, Section 3 and personal liability, giving one excess limit for catastrophic judgments.