General-PE-Rules-Mar06 - Facility Association · under each coverage (All Perils, Collision, Comprehensive, Specified Perils) Deductible Amount applicable to the coverage under which

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Section A - General Rules & ProceduresFACILITYASSOCIATION

Rule 1: Filed Underwriting Rules

Underwriting RulesA. The Insurer’s rules for declining to issue,terminating or refusing to renew a contract are:

1. The risk does not meet the object of the Facility Association which is to ensure the availability of automobile insurance, asrequired by law, in those provinces and territories of Canada inwhich the Association operates, to the owners and licenseddrivers of motor vehicles who would otherwise have difficultyobtaining such insurance.

2. The applicant does not have an insurable interest in the vehicle.

3. The vehicle is registered in a jurisdiction other than one inwhich the application for coverage is being completed or thevehicle is not operated at any time in a jurisdiction in which theAssociation operates. If the vehicle is registered in anotherjurisdiction in which Facility Association operates, the vehiclemay be insured through an Agent/Broker and Servicing Carrierlicensed in that jurisdiction.

For example: The vehicle is registered in Prince Edward Island butthe application is being completed in Alberta. The vehicle must beregistered in Alberta or an Agent/Broker in Prince Edward Islandmust complete and submit the application for coverage in PrinceEdward Island.

4. The driver of the vehicle does not hold a valid operator’slicence. If the licence of the only driver is suspended, FacilityAssociation shall provide a policy covering Comprehensive orSpecified Perils cover only until there is a driver holding a validoperator’s licence. See Rule 31: Suspension of Operator’sLicence and Rule 14: Minimum Coverage.

5. The application is incomplete, has not been signed by theapplicant, or has not been bound by the Agent/Broker.

6 The Applicant/Agent/Broker refuses to provide the sufficientvalid information to write the risk. “Sufficient valid informationto write the risk” includes data to properly rate the risk and toreport the risk information in accordance with the AutomobileStatistical Plan.

7. The vehicle is not in the possession of the applicant (i.e., hasbeen stolen or cannot be located). This restriction is notintended to be used as a denial of a valid theft claim.

8. A certificate of mechanical fitness and road worthiness has notbeen provided in accordance with the Manual of Rules andRates e.g. home made vehicles, rate group listed as A.

9. Non-payment of premium for the current policy period (forpurposes of termination only).

B. Rules for refusing to provide or continue acoverage are:

1. Physical damage coverage shall not be provided where anapplicant or any person who is a regular or frequent operator ofthe vehicle, has, within the immediately preceding thirty-sixmonths:

i) When making a previous application for automobile insurance,given false particulars of an automobile to be insured to theprejudice of the insurer;

or

ii) Knowingly misrepresented* or failed to disclose in anapplication any fact required to be stated therein;

or

iii) Has contravened a term of an insurance contract or beenconvicted of fraud in relation thereto;

or

iv) Wilfully made a false statement in respect of a claim.

* Misrepresentation means an applicant has either had a policycancelled by registered letter for material misrepresentation or hashad a claim denied for material misrepresentation.

2. Physical damage coverage shall not be provided where anapplication for a branded vehicle (salvage or rebuilt) issubmitted without a current safety certificate and currentinspection with photographs.

NOTE: No policy shall be written for vehicles branded ‘non-repairable’.

3. Where a vehicle is licensed for road use and is used on roads aswell as used for race or speed tests, physical damage coverageshall not be provided.

The Servicing Carrier shall refer all refusals or non-continuance to the Facility Association prior to decliningcoverage.

Prince Edward Island - 1 March 2008

Rule 1: Filed Underwriting Rules (continued)

C. Minimum Deductibles

Physical damage insurance shall be provided at the followingminimum deductible amounts:

ANY HIGHER MINIMUM DEDUCTIBLE PROVIDED FORIN THIS MANUAL SHALL OVERRIDE THESE AMOUNTS.

Refer to individual sections in this manual for the minimumdeductibles applicable to each type of vehicle or class of business.

Note: Higher deductibles shall only be imposed when there havebeen a sufficient number of claims under any given coverage towarrant such application. For example one Collision loss and threeComprehensive losses in the previous 12 months will result in theapplication of a $1,000 deductible on Comprehensive only. Only ifthe insured has sustained three Collision losses as well, would $1,000deductible be applied to the Collision coverage.

D. Vehicles insured for Comprehensive/Specified Perils only shallbe renewed once and then lapsed at the next renewal if there isno other vehicle with Liability coverage on the policy.Vehicles insured for Comprehensive/Specified Perils only shallnot be written as new business.

E. Certain endorsements require a signature. Where no signature isobtained, the policy may be cancelled in accordance with theStatutory Conditions or issued without the endorsement or theendorsement may be deleted and the policy re-ratedaccordingly. See Rule 15: Endorsement Forms.

F. a) Private Passenger Automobiles/Recreational Vehicles

Physical damage coverage shall not be provided or continuedfor Private Passenger or Recreational vehicles (excluding motorhomes) valued at $325,000 or more.

b) Commercial Vehicles/Public Vehicles/Motor HomesPhysical damage coverage shall not be provided or continued forMotor Homes, Commercial or Public Vehicles valued at $500,000 ormore. Physical damage coverage shall not be provided or continuedfor buses valued at $750,000 or more.

Physical damage shall not be provided for Off-RoadCommercial Vehicles. e.g. logging trucks used solely in thebush.

Rule 2: Premium Quotations

The Agent/Broker is responsible for calculating premiums inaccordance with this manual, including the “base” premiumsapplicable to experience (fleet) rated risks. Experience rated riskpremiums are calculated at Driving Record 0.

Where there is any doubt on the matter, the Servicing Carrier will bepleased to assist in establishing risk classifications, but the ServicingCarrier shall not make premium quotations except where the manualdoes not provide for the particular coverage required..

The Servicing Carrier shall require clarification from theAgent/Broker if the information on the application contradicts thequoted premium.

Rule 3: Risks Not Specifically Provided For

For any type of vehicle, coverage or use that is not specificallyprovided for in this manual, Agents/Brokers must contact theirServicing Carrier and provide details in writing when requested to doso. Where the Servicing Carrier requires assistance in these circum-stances, the Servicing Carrier shall contact FA Head Office.

Note:“Excess Automobile Liability Insurance”(POL 7) or “Lessor’s Contingent Insurance”(POL 8) are not available through FacilityAssociation.

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Section A - General Rules & Procedures FACILITYASSOCIATION


Number of Automobile Insurance Claimsunder each coverage (All Perils, Collision,Comprehensive, Specified Perils)

Deductible Amountapplicable to thecoverage underwhich the claimswere made

In prior 12months

In prior 36months

In prior 60months (fireand/or total theft)

3 - 2 $2,500

- 3 - $1,000

- 4 - $2,500

- 5 ormore

- 5% of LPN(minimumdeductible $5000)

3 or more no coverage

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Rule 4: Method of Rating for More ThanOne Use

Whenever there are two or more uses of a vehicle, or it is possible torate the use or type of risk in two or more ways, rate for the use withthe highest percentage of exposure. It should be noted thatcommercial classes anticipate a certain percentage of personal use.Where specific instructions are given elsewhere in this manualconcerning rating of vehicles in these circumstances, thoseinstructions shall take precedence. Exception: Vehicles carryinghazardous goods are always rated for hazardous exposureregardless of percentage of use.

Note: With Slip Tanks (removable tanks to carry combustible fuel),if the principal use of the vehicle is not the carriage of petroleumproducts, the vehicle must be rated according to its principal use andClass 48 may not be used.

How to calculate premiumWhere it is necessary to calculate premium for comparison purposesit shall be done in the following manner. The total premium for eachuse or method of rating must be calculated separately and thencompared and the highest total premium will be used.

Examples

a) The insured is over 25 and has a light pickup truck used forcourier purposes. The insured has no other vehicle. The vehicleis used 60% for courier purposes and 40% for pleasure. Rate thevehicle as though used for courier delivery.

b) The insured is over 25 and has a light pickup truck. During theday he uses it to make business calls to clients of the companyhe works for as a salesman. During the night he works foranother company delivering pizza. The vehicle is used 60% forbusiness calls, 30% for pizza delivery and 10% for pleasure.Rate the vehicle as though used for business calls (Class 07).

c) The vehicle is used 80% of the time for driver training and 20%of the time for pizza delivery. Rate the vehicle as though usedfor driver training.

d) The insured has a light van and no other vehicle. Insured is over25 and principal operator, with a 19 year old son as occasionaldriver. The van is used in the insured’s painting business -commercial class 35. The vehicle is used 55% for pleasure and45% of the time in the painting business. Rate the vehicle asthough used for pleasure (Class 01 + 06).

It should be noted in example d), that were the insured to haveanother vehicle and be rated as the principal operator for pleasureuse, insured through FA or elsewhere, then the commercial rate classwould automatically be used. The name of the insuring company andpolicy number for the pleasure use vehicle must be provided to theServicing Carrier at the time of new business and on subsequentrenewals as required by the Servicing Carrier.

Rule 5: Manual Rates

The rates published in this manual are for annual policy terms.

For six-month policies charge 52% of the annual premium except forMotorcycles/Mopeds, Snow Vehicles and Antique Vehicles. See theRecreational Vehicle section for rating instructions on these vehicles.

Fleets as defined in Rule 38 are not eligible for six month policies.

Rule 6: Premium Rounding

The premium for each coverage shall be rounded to the nearestwhole dollar. A premium that includes 50 cents or more shall berounded up to the next whole dollar. e.g. 46.56 will be rounded upto $47.00 and 46.44 will be rounded down to $46.00.

This applies to all premium transactions, including refunds exceptwhere the policy is cancelled by registered letter at the request of theAgent/Broker or by the Servicing Carrier. In that event, the returnpremium shall always be rounded up to the next whole dollar ($45.10will be rounded up to $46.00).

Rule 7: Minimum Premium/MinimumRetained Premium

Unless otherwise stated in any other section of this manual, theminimum premium for any automobile policy or renewal and, theminimum retained premium in the event of cancellation of the policy,is $25, regardless of the term of insurance. The minimum retainedpremium must be stated on the declaration page of the policy.

Note: The minimum premium and minimum retained premium forgarage policies (POL 4) is $250.00

Prince Edward Island - March 2006

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Rule 8: Policy Term

Every policy or renewal shall be issued for a term of either one yearor six months. See also Rule 33 – Purchasing Vehicles inJurisdictions Where FA Does Not Operate.

A short term policy may be issued in the event that the vehicle/itemis in transit in or through the jurisdiction, i.e. a single trip from alocation within a jurisdiction in which Facility Association operatesto another location within a jurisdiction in Canada or the continentalU.S.A. The Servicing Carrier may accept an application for a shortterm policy and issue the policy accordingly or accept an applicationfor a 6 or 12 month term and a cancellation voucher signed to providecoverage for only the shortened term.

The premium for the policy shall be calculated using the highestrated territory of the originating jurisdiction and the applicable shortterm table in this manual, subject always to the minimum retainedpolicy premium.

Policies subject to Rule 38: Fleets, cannot be issuedfor a term of 6 months.

Rule 9: Liability Limits

If it is necessary to provide a Liability limit that falls between twolimits for which premiums or limit factors are indicated in thismanual, the premium or limit factor applicable to the higher of thosetwo limits shall be used.

Limits of Liability in excess of $1,000,000 may only be providedunder certain circumstances. See Coverages in the PrivatePassenger, Commercial, Public and Recreational sections. Where itis required and permissible to provide a higher Liability limit, theincreased limit factors can be found in those sections. If the manualdoes not provide the necessary increased limit factor, contact yourServicing Carrier.

Rule 10: All Perils Coverage

The premium for All Perils coverage is calculated by adding theCollision premium to a specified percentage of the Comprehensivepremium. See rate pages.

When a rule, surcharge or discount applies to aCollision/Comprehensive coverage/premium, it also applies to therespective Collision or Comprehensive portion of the All Perilscoverage/premium.

Rule 11: Binding Coverage – New Policies

A. Requirements/Procedures for binding newpolicies

1) The Agent/Broker must have a fully completed applicationsigned by the registered owner(s) of the vehicle(s) detailing allinformation on the risk. Supplementary questionnaires, ifrequired, must be completed and signed by the applicant. If theServicing Carrier is required to have a driver’s permission toobtain a Driver Record Abstract, that written authorization mustaccompany the application

2) Before binding coverage the Agent/Broker must either

a) Collect or assume responsibility for the full indicatedpremium (experience rated risks at Driving Record 0 or, ifestablished, the promulgated fleet rating)

Or

b) Obtain a fully completed premium finance contract together with the full down payment required and promptly send that contract to the finance company office.

Notes:

1. If, within the past 5 years, there is an outstanding premiumfor the same Insured owing to any Servicing Carrier on apreviously cancelled FA policy, full applicable premiumon the new policy in the form of certified cheque or moneyorder must accompany the application.

2. In such information regarding an outstanding premium forthe same insured owing to any Servicing Carrier on apreviously cancelled FA policy surfaces after the policy isissued, full payment shall be required within 30 days. Iffull payment is not received, the policy shall be cancelledby registered letter.

3) The insurance shall take effect as of the time and date thecoverage is bound. Under no circumstances may coverage beshown as effective prior to the date and time of completion ofthe application form. Therefore coverage may not be bound asof 12:01 am on the date the application is signed. However,except when the binding time is 12.01 a.m. of a future date, thepolicy shall be shown as effective at 12.01 a.m. on the dayfollowing the date coverage was bound. The premium rates to beapplied are those in effect on the binding date.

For example: a) Coverage is bound at 1:00 p.m. on June 1. The application is

signed on June 1. The policy will be issued showing an effectivedate of 12:01 a.m. June 2. However, the coverage is in effect asof 1:00 p.m. on June 1.

b) Coverage is bound as of 12:01 a.m. June 1. The application wassigned on May 29. The policy will be issued showing aneffective date of 12:01 a.m. June 1.

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Rule 11: Binding Coverage - New Policies

A. Requirements/Procedures for binding newpolicies (continued)

4) If the application form cannot be sent to the Servicing Carrieron the date on which coverage was effected, it must be sent thenext working day.

5) The Servicing Carrier shall normally issue the policy within 30days of the effective date. If the Agent/Broker does not receivethe policy and the full term liability card within that time, afurther temporary liability card must be issued by theAgent/Broker and the Servicing Carrier must be contactedimmediately to determine the status of the policy.

6) Before physical damage coverage can be bound, a vehiclebranded as ‘salvage’ or ‘rebuilt’ must be inspected at theapplicant’s cost and a copy of the completed inspection reportwith photographs as well as a safety certificate must besubmitted with the application.

B. Term of binding new policies

The term of binding and of the temporary liability card is 30 days.The temporary liability card may not be amended to indicate a longerperiod. If a short-term policy is to be issued, the temporary liabilitycard shall be amended to indicate a shorter period.

Rule 12: New Policies

A. Application Form

Every application for insurance must be made on a current approvedStandard Application Form and must be fully completed and signedby both the applicant and Agent/Broker where required or asprescribed under Rule 12:H. Computer Generated ApplicationForms.

Commercial, Garage, Public, Experience-rated and some specially-rated risks will require completion of supplementary questionnaires.

A copy of the ownership of all owned vehicles being insured,regardless of vehicle type or use, will be required with theapplication. Where the vehicle is newly-purchased, a copy of theownership is required within 30 days of binding coverage.

B. Owners Policy (APP 1)

A current approved Standard Application Form (APP 1) is required.The Agent/Broker must indicate the time and date that coverage isbound.

C. Garage Policy (APP 4)

A current approved Standard Garage Automobile Application Form(APP4) and the Facility Association Garage Rating/UnderwritingSupplement are required.

D. Driver’s Policy (APP 2) and Non-owned Policy(APP 6)

The Servicing Carrier’s own application forms shall be used andmust be clearly marked ‘Facility Association’.

Refer to Rule 701:POL 2 – Driver’s Policy and Rule 702:POL 6 –Non-Owned Automobile Policy for information required on theseapplications and details of the policies.

NOTE: The temporary and permanent liability cards for the Driver’sPolicy must show under vehicle “Driver’s Policy”.

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Rule 12: New Policies (continued)

E. POL 7– Excess Automobile Liability Insurance is not available

F. POL 8 – Lessor’s Contingent Automobile Policyis not available

G. Faxed Applications

Fully completed and signed current approved Standard ApplicationForms submitted by fax are acceptable in lieu of originalapplications. Where required, these applications must beaccompanied by the appropriate questionnaires or supplements.Where the original application has been submitted without signature,a signed and faxed copy of the application is acceptable to completethe signature requirement.

H. Computer Generated Application Forms

These application forms are acceptable but must be in the standardformat approved by the applicable regulatory authority and mustinclude all information that is required to be provided on the currentapproved Standard Application Form.

The computerized application must be signed and dated by theapplicant as well as the agent/broker.

I. Applicant’s Signature

The applicant’s signature shall be provided on the FacilityAssociation manual application form or the computerized applicationform at the time of binding whenever possible.

If the applicant’s signature cannot be obtained at the time of binding,the Servicing Carrier shall allow the Agent/Broker 30 days to obtaina signature on the original application provided the Agent/Brokerassumes responsibility for the full indicated premium. In themeantime, the Agent/Broker must send a copy of the completed butunsigned application to the Servicing Carrier.

If a signed copy of the application is not received by theServicing Carrier within the 30 day time period, theServicing Carrier shall immediately cancel the policy byregistered letter. The Agent/Broker shall be responsible forthe full indicated earned premium for the time on risk.

J. Name of the Insured

Insurance contracts must be made with individuals who have boththe capacity to contract and are legal entities. If the applicant is notan individual(s), the name(s) appearing on the policy must be that ofa legal entity i.e., a limited company or partnership.

The name of the insured must include or be the same as the name onthe vehicle registration. For garage and non-owned risks, the name ofthe business registered with the appropriate municipal, provincial orfederal authority must be used. For example: The vehicle isregistered to Pat Doe who is operating Pat’s Garage. The name of theinsured may be shown as Pat Doe o/a Pat’s Garage.

Two or More Names as Registered Owner of the Vehicle:Where an application is received for vehicle(s) registered in twonames, such as husband’s and wife’s names, the application must besigned by both parties. In the event the policy is to be cancelled at theinsured’s request, both signatures are required on the request forcancellation.

Two or More Vehicles Registered to Different Names:If the applicant has vehicles leased from different leasing companiesor, one vehicle registered for example in the father's name and one inthe son's name, separate policies must be maintained.

If the vehicles are separately registered to an applicant and his or herspouse only, they may be insured under the same policy. Both mustsign the application and any subsequent request to cancel a policy ordelete a vehicle or coverage.

If the applicant has vehicle(s) leased from the same leasing companyand owned vehicle(s), separate policies may not be necessary.

Where it is discovered in the middle of the policy term, thata single policy has been issued with two (or more) vehicles,one registered in one name and one in another name, bothsignatures shall be required on any subsequent request forcancellation of the policy or deletion of a vehicle orcoverage.

Separate policies must be issued at the time of next renewal.

K. Other Insurance

If there is any other insurance in force in respect of a risk:

a) Binding shall not be made effective before the expiry of thatother insurance.

b) If that other insurance is to be cancelled, a liability card may notbe prepared before the insurer concerned has issued the noticeof cancellation, or the insured has signed the request for cancel-lation.

L. Variation in Coverage

To conform with the Insurance Act, the insured must be advised if thecoverage provided by the policy is not as requested in theapplication.

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M. Verification of Driving History

In order to verify the driving history, the Servicing Carrier is requiredto obtain the following before confirming the premium:

a) Driver Record Abstract obtained from the appropriategovernment department in each Canadian or U.S. jurisdiction inwhich the driver has been licensed in the previous three years.On experience (fleet) rated risks, the abstract is only required ifvehicles on the policy that carry Collision or All Perils coveragedo not qualify for fleet rating of that coverage. The abstract shallthen be required to establish the Collision or All Perils premium.Driver Record Abstracts are not to be obtained for the operatorsof any Snow Vehicles, Dirt Bikes, All Terrain Vehicles orAntique Vehicles to be insured.

b) Previous Insurance History must be obtained on the applicantand all drivers shown on the application or added to an existingpolicy. This may be an electronic report ordered from a serviceprovider, letters from previous carriers or telephone calls toprevious carriers (which must be properly documented on fileincluding name of persons spoken to, date, time etc.).

Insurance history is not required for Snow Vehicles, Dirt Bikes,All Terrain Vehicles or Antique Vehicles. See specialinstructions under Fleets and the Garage section.

c) If the information received is different from that reported on theapplication, to the extent that the premium requires amendment,the policy shall be issued at the revised premium and coverageor the Servicing Carrier shall promptly issue a correctingendorsement.

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Rule 13: Not Applicable

Rule 14: Minimum Coverage

Policies are required to provide at least the statutory minimumcoverage applicable to the jurisdiction in which the vehicle isregistered except as indicated below:

ExceptionWhen an automobile is temporarily out of use and in storage:

(a.) Coverages other than Comprehensive or Specified Perils maybe suspended by means of END 16, for those vehicles that aretemporarily laid up. This endorsement does not suspendcoverages that relate to “driving other vehicles”. Theendorsement may be used in respect of most private passengerand commercial-type vehicles. In no event shall a refund begranted for any cancellation period of less than sixty (60)consecutive days.

Suspended coverages are reinstated by means of END 17.

Notes: END 44 may remain on a policy where ‘moving’coverages have been suspended by means of END 16.

(b.) In the case of an existing policy that includes All Perils orComprehensive or Specified Perils coverage, coverages otherthan Comprehensive or Specified Perils may be deleted.

Note: Neither (a.) nor (b.) above is applicable for the following:

• Vehicles for which proof of insurance is issued or filed.

• Recreational vehicles to which the Recreational section applies.

• Vehicles that were never intended to be driven (e.g. vehicles in a collection).

• Vehicles for sale whether or not on an auto dealer’s lot.

• Experience rated risks

If Liability and Accident Benefits coverages are removed orsuspended more than twice in one year, then removal of thosecoverages a third time will not be permitted until the followingrenewal. It is not necessary to remove the licence plate from thevehicle while coverage is removed or suspended.

Rule 15: Endorsement Forms/ Wordings

Changes to standard approved forms are not permitted.

The Endorsement Section provides certain details and ratinginstructions for approved endorsement forms. The descriptions arebrief and reference must be made to the actual wordings of theseforms to ascertain the full provisions and restrictions.

Certain endorsements require a signature. Where no signature isobtained, the policy may be cancelled in accordance with theStatutory Conditions or the endorsement may be deleted and thepolicy rerated accordingly.

If a vehicle is registered in both the husband’s name and the wife’sname, endorsements that require signature must be signed by bothhusband and wife. If it is discovered that a policy is covering twovehicles (one registered in the husband’s name and one in the wife’sname), both signatures shall be required on any endorsements thatrequire signature.

Provided the endorsement form does not indicate the expiry date ofthe policy and continues to refer to a particular vehicle (policyvehicle item number did not change), once an endorsement form hasbeen signed, it need not be signed again on subsequent policyrenewal terms.

Rule 16: Policy Changes

A. A change to a policy shall not be processed if:

a) The change is substantial e.g. the insured is covered under POL1 and now requires POL 4 or 6 instead. A new policy may benecessary. If in doubt, the Agent/Broker should contact theServicing Carrier for direction. If a new policy is required, anew application must be submitted. The existing policy shall becancelled pro rata.

b) There is a change of the jurisdiction in which a vehicle isregistered and the vehicle must be registered in the newjurisdiction. The insurance on the vehicle must be cancelled.The refund shall be calculated on a pro-rata basis, subject to theminimum retained premium.

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Rule 16: Policy Changes (continued)

B. Name of Insured When Adding or Deleting Vehicles

Leased Vehicles• Where the insured has a leased vehicle and is returning the

vehicle to the lessor and replacing it with an owned vehicle,provided there is no change in the name of the insured (theperson who actually applied for the insurance), the change toremove the lessor’s name from the policy and the vehicle substi-tution may be made by endorsement. A release of the lessor’sinterest must be obtained or comparable notification of thechange must be sent to the lessor by registered mail.

• Where an insured has an owned vehicle, and is now obtaining aleased vehicle and disposing of the owned vehicle, the changeto the vehicle and name of insured may be made byendorsement, provided there is no change in the name of theapplicant, other than to add the lessor’s name to the policy.

• In situations where the insured has an owned vehicle and aleased vehicle, separate policies may not be necessary for eachvehicle. Where an insured has two or more vehicles leased fromdifferent leasing companies, a separate application is requiredfor each vehicle.

Owned VehiclesTwo or More Names as Registered Owner of the Vehicle:Where an application is received for vehicle(s) registered in twonames, such as Pat and Drew Doe, the application must be signed byboth parties. In the event the policy is to be cancelled at the insured’srequest, both signatures are required on the request for cancellation.If the situation is other than the applicant and spouse, refer to theServicing Carrier prior to quoting or binding to verify the rating.

Two or More Vehicles Registered to Different Names:If the applicant has vehicles leased from different leasing companiesor, one vehicle registered for example in father’s name and one inson’s name, separate policies must be maintained. Separateapplications must be submitted for each policy.

C. Amending or Deleting Coverage on Vehicles with Lessors or Lienholders

Where physical damage coverage is being amended or deleted on aleased vehicle or a vehicle on which there is a lienholder, theServicing Carrier must send a notice to the lessor or lienholder toadvise of the coverage being amended or deleted and the effectivedate of the transaction.

D. Binding Coverage - Policy Changes

If the change involves a vehicle for which proof of insurance hasbeen filed or is required, see Rule 27: Proof of Insurance.Before binding coverage the Agent/Broker must collect or assumeresponsibility for any indicated additional premium.

Procedure of notification1) The Agent/Broker’s procedure for reporting changes to the

Servicing Carrier must be acceptable to the Carrier. The requestfor change must be made in writing and specify the effectivedate and the effective time.

2) Faxed or mailed policy change requests are acceptable.

3) If the policy change request cannot be sent to the ServicingCarrier on the date the insured makes the request, it must be sentto the Servicing Carrier on the next working day.

4) The Servicing Carrier shall normally issue any requiredendorsement, updated Certificate of Insurance (if required) andpermanent liability card (if required) within 30 days of theeffective date of the change.

5) Coverage may not be shown as effective prior to the date andtime that the request was received by the Agent/Broker from theinsured, except when contractual coverage exists automaticallyunder the policy and notice is given within the time permitted.A permissible policy change is in effect as of the time and daterequested.

E. Deletions of Vehicles and Coverages

a) If the request for deletion is received by the Servicing Carrierwithin 30 days of the date the deletion is to be effected, thedeletion shall take effect at 12:01 a.m. on the date that it wasrequested to be effective. In the event that the deletion was specif-ically requested to be effective at a time other than 12:01 a.m., thedeletion shall be effected at 12:01 a.m. the following day.

For example: The insured requests deletion of the vehicle/coverageto be effective September 5. The deletion request is received by theServicing Carrier on September 20. The Servicing Carrier will issuethe endorsement effective 12:01 a.m. September 5. If the insuredrequested the deletion to be effective at 3:40 p.m. on September 5,the Servicing Carrier will delete the vehicle/coverage effective12:01 a.m. on September 6.

b) If the request for deletion is received by the Servicing Carrier morethan 30 days after the date the deletion was requested to beeffected, the deletion will take effect at 12:01 a.m. on the date thatthe deletion request is received by the Servicing Carrier.

For example: The insured requests deletion of avehicle/coverage to be effective September 5. The deletionrequest is received by the Servicing Carrier on October 10. TheServicing Carrier will delete the vehicle/coverage effective12:01 a.m. October 10.

c) In the event that the vehicle has been sold, and a copy of the billof sale satisfactory to the Servicing Carrier is produced, the vehicleshall be deleted the day after the vehicle is sold regardless of whatthat date might be.

For example: The vehicle was sold June 5. The ServicingCarrier does not receive the request to delete until September 5.If the insured can produce a satisfactory bill of sale, theServicing Carrier will delete the vehicle effective 12:01 a.m.June 6.



Rule 16: Policy Changes (continued)

E. Deletions of Vehicles and Coverages

d) In the event that a vehicle has been written off in a claim,deletion shall not be effected prior to the day after the lossoccurred. If the request for vehicle deletion is received morethan 30 days after the date of loss, the deletion shall be effected:

i) The day after the salvage is signed over to the insurer; or

ii) The date the policy is no longer under the temporarysubstitute auto provision, if that date is later than the datesalvage was signed over.

For example: The vehicle has been written off in a claim June1. On September 1 the Servicing Carrier receives a request todelete the vehicle effective June 1. Upon checking with theclaims department, the Servicing Carrier ascertains thatsalvage was signed over to the claims department on June 15.However, the insured had a rental vehicle covered under thepolicy’s temporary substitute auto coverage until June 20.The Servicing Carrier will delete the vehicle effective 12:01a.m. June 21.

e) In the event the insured has placed coverage through thevoluntary market, upon receipt of a copy of the replacing policydeclaration page or permanent liability card, the ServicingCarrier shall delete effective the date that the replacementcoverage took effect.

Servicing Carriers shall proceed with deletion as outlined in a) orb) unless the Servicing Carrier is aware or is made aware, that thecircumstances outlined in points c), d) or e) exist.

F. New or Replacement DriverIf the change includes an additional or replacement driver, theServicing Carrier shall be required to verify the driving history byordering:

a) Driver Record Abstract obtained from the appropriategovernment department in each Canadian or U.S. jurisdiction inwhich the driver has been licensed in the previous three years.On experience (fleet) rated risks, the abstract is only required ifvehicles on the policy that carry Collision or All Perils coveragedo not qualify for fleet rating of that coverage. The abstract shallthen be required to establish the Collision or All Perils premium.Driver Record Abstracts are not to be obtained for the operatorsof any Snow Vehicles, Dirt Bikes, All Terrain Vehicles orAntique Vehicles to be insured.

b) Previous Insurance History must be obtained on the additionalor replacement driver(s). This may be an electronic reportordered from a service provider, letters from previous carriers ortelephone calls to previous carriers (which must be properlydocumented on file including name of persons spoken to, date,time etc.).

Insurance history is not required for Snow Vehicles, Dirt Bikes,All Terrain Vehicles or Antique Vehicles. See specialinstructions under Fleets, Commercial and Garage Sections.

If the information is different from that reported, to the extent that thepremium or coverage requires amendment, the Servicing Carriershall promptly issue a correcting endorsement

G. Not Applicable

H. Midterm Policy Change Premium Calculation

In regard to the period licensed, period of ownership, the period sincethe date of an accident, the period since the date of a conviction, therating is always based on the position as at the effective date of thepolicy period, (or, in the case of a subsequent addition/substitution ofa driver or addition of a vehicle as at the addition/substitution date).Mid-term rerating is NOT permissible in respect of changes thatoccur in regard to those matters during the period of insurancemerely because of the lapse of time. Mid-term change due to age ispermissible, provided a request is received by the Servicing Carrierwithin 30 days of the birthday. If the request is received after 30days, then the change will be effective at 12.01am following the datethe Servicing Carrier receives the request, and back dating will notbe permissible.

Rates to be used

Addition of a vehicle:Rates in effect at the effective date of the transaction.

Addition of a coverage or other mid-term transactions:Rates in effect at the start of the policy period.

Method of premium calculation:Premiums for midterm policy changes are calculated (pro-rata) byusing the Day Table except in the case of Snow Vehicles,Motorcycles/Mopeds and Antique Vehicles. For those vehicles, ShortTerm tables 3 and 4 are to be used for all coverages exceptComprehensive/Specified Perils for which the Day Table is used.

Minimum premiums for midterm changes:A minimum additional premium of $5 shall be charged for anytransaction that includes one or more of the following, regardless ofthe period of insurance:

• addition of a vehicle or a coverage• increase of a Liability limit• decrease of a deductible

Note 1: Any additional premium of less than $5 may be waived bythe Servicing Carrier unless mentioned above. Return premiums maynot be waived.

Note 2: When a vehicle, not newly acquired, is substituted foranother on the policy or added to the policy for less than 7 days, therewill be a $50 charge for each such transaction in excess of 2 in a 30day period or more than 12 in a 12 month period.

A14 Prince Edward Island - 1 March 2008

Rule 17: Renewals

A. Before issuing a Renewal:

If the renewal involves a vehicle for which proof of insurance hasbeen filed or is required – see Rule 27: Proof of Insurance.

Experience Rated, Garage and Commercial Risks may require theAgent/Broker to determine whether the information on record and/orcoverages need revision or updating.

A Driver Record Abstract must be obtained for those risks whereeligibility or rating is dependent upon driving history. These must beordered on all drivers prior to every renewal (for six month policiesevery other renewal).

Renewals shall only be offered on policies for annual or six monthterms.

B. Not Applicable

C. Accidents Occurring Between RenewalProcess Date & Effective Date

Once a renewal or offer to renew has been processed, and theServicing Carrier receives notice of an at fault loss that occurredprior to the renewal’s effective date, the Servicing Carrier shallamend the renewal rating accordingly.

D. Renewal Processing

1. Other than Direct Billing

Servicing Carrier ResponsibilitiesThe renewal documents shall be issued by the Servicing Carrier andmust reach the Agent/Broker’s address no later than 30 days prior tothe policy’s current expiry date.

Agent/Broker ResponsibilitiesBefore releasing any renewal documents the Agent/Broker mustcollect or assume responsibility for the full renewal premium. In thecase of experience (fleet) rated risks, where renewals may be late dueto missing information, the Agent/Broker is responsible for thepremium calculated at Driving Record 0. For other than experiencerated risks, if the Servicing Carrier is unable to issue renewals in therequired time period, the Agent/Broker must issue a temporaryliability card to the insured and collect a downpayment based on theestimated annual premium for the upcoming renewal term.

or

Obtain a fully completed premium finance contract together with thefull downpayment required and promptly send that contract to thepremium finance company.

Renewal not acceptedIf the renewal is not accepted by the insured, the Agent/Broker mustpromptly return all the renewal documents (including liabilitycards) to the Servicing Carrier. A written request from the insuredacceptable to the Servicing Carrier, for cancellation effective renewaldate shall be accepted in lieu of renewal documents.

If the documents are received by the Servicing Carrier within 15 daysof the renewal’s effective date, a full refund shall be credited to the

Agent/Broker’s Facility Association account. If the documents arenot received within 15 days, the renewal shall be cancelled on a pro-rata basis effective the date it is received by the Servicing Carrier.The Agent/Broker shall be responsible for earned premium orminimum retained premium whichever is greater.

Renewal documents that have been returned to the Servicing Carrierfor cancellation, may not be reissued unless the Servicing Carrierreceives instructions no later than the renewal’s effective date and theAgent/Broker collects or assumes responsibility for the full premiumas outlined above. If the renewal date has passed and the insurance isagain required, there must be a new application and a new policyissued.

A15



Rule 17: Renewals

D. Renewal Processing (continued)

2. Direct Billing Renewals

Servicing Carrier Responsibilitiesa) For each policy an offer to renew shall be issued by the

Servicing Carrier. The offer to renew must reach the insured’slast known address no later than 30 days prior to the policy’scurrent expiry date.

b) The payment due date must be clearly indicated on the offer torenew and must be the same as the policy’s current expiry date.

c) If the required premium is received by the Servicing Carrier nolater than 15 days after the payment due date, the ServicingCarrier shall promptly issue the appropriate renewal documentsto the Insured.

Payment Not ReceivedIf the required payment is not received by the Servicing Carrierwithin 15 days of the payment due date, the policy shall be treated asthough it has expired and the Servicing Carrier shall advise theAgent/Broker accordingly within the following 10 days.

Rule 18: Cancellations

A. Cancellation - Effective Date

1. Received by Servicing Carrier within 30 daysIf the request for cancellation is received by the Servicing Carrierwithin 30 days of the date the cancellation is to be effected, and noeffective time is requested, the cancellation shall take effect at 12:01a.m. on the date it was requested to be effective. In the event that thecancellation was specifically requested to be effective at a time otherthan 12:01 a.m., the cancellation shall be effected at 12:01 a.m. thefollowing day.

For example: The insured requests cancellation of the policy to beeffective August 5. The cancellation request is received by theServicing Carrier on August 20. The Servicing Carrier shall cancelthe policy effective 12:01 a.m. August 5. If the insured requestedcancellation to be effective at 3:40 p.m. on August 5, the ServicingCarrier shall cancel the policy effective 12:01 a.m. on August 6.

2. Received by Servicing Carrier after 30 daysIf the request for cancellation is received by the Servicing Carriermore than 30 days after the date the cancellation was requested to beeffected, the cancellation shall take effect at 12:01 a.m. on the datethat the cancellation request is received by the Servicing Carrier.

For example: The insured requests cancellation of the policy to beeffective September 5. The cancellation request is received by theServicing Carrier on October 10. The Servicing Carrier will cancelthe policy effective 12:01 a.m. October 10.

3. Received by Servicing Carrier after 30 days and vehicle sold

In the event that the vehicle has been sold, and a copy of the bill ofsale satisfactory to the Servicing Carrier is produced, the policy shallbe cancelled the day after the vehicle is sold regardless of what thatdate might be.

For example: The vehicle was sold June 5. The Servicing Carrierdoes not receive the request to cancel until September 5. If theinsured can produce a satisfactory bill of sale, the Servicing Carrierwill cancel the policy effective 12:01 a.m. June 6.

4. In the event of a total lossIn the event that a vehicle has been written off in a claim, cancel-lation shall be effected:

a) The day after the salvage is signed over to the insurer,

or

b) The date the policy is no longer providing coverage on a rentalvehicle under the temporary substitute auto provision, if thatdate is later than the date salvage was signed over.

For example: The vehicle has been written off in a claim June 1. OnSeptember 1 the Servicing Carrier receives a request to cancel thepolicy effective June 1. Upon checking with the claims department,the Servicing Carrier ascertains that salvage was signed over to theclaims department on June 15. However, the insured had a rentalvehicle covered under the policy’s temporary substitute autocoverage until June 20. The Servicing Carrier will cancel the policyeffective 12:01 a.m. June 21.

5. Coverage placed in Voluntary MarketIn the event the insured has placed coverage through the voluntarymarket, upon receipt of a copy of the replacing policy declarationpage or permanent liability card, the Servicing Carrier shall cancelthe policy effective the date that the replacement coverage tookeffect.

Servicing Carriers shall proceed with cancellation as outlined inpoints 1 or 2 unless the Servicing Carrier is aware or is madeaware, that the circumstances outlined in points 3, 4 or 5 exist.

B. Policies with Lessors or Lienholders

If the policy is being cancelled at the insured’s request, a release ofinterest must be obtained from the lessor or the lienholder. In theevent the Servicing Carrier does not receive a release of interest fromthe lessor, a notice is sent to the lessor by registered mail to advisethat the policy is being cancelled and the effective date of cancel-lation. If no release is received from the lienholder, a notice is to besent to the lienholder (registered mail is not required) to advise thatthe policy is being cancelled and the effective date of cancellation.

If the policy is being cancelled by registered letter at theAgent's/Broker's request or Servicing Carrier's initiative, a copy ofthe registered letter must be sent to the lessor or lienholder byregistered letter.

C. Where Proof of Insurance Has Been Filed

If proof of insurance has been filed, the notice period required by theauthority must expire before cancellation can be effected, thereforethe Servicing Carrier shall cancel the policy effective the date thenotice period expires – see Rule 27: Proof of Insurance.

A16



A17


Rule 18: Cancellations (continued)

D. Policy is Financed Through a Premium Finance Company

If a return premium is payable on a policy financed with a premiumfinance company, the gross refund is to be sent directly to thepremium finance company regardless of the reason for cancellation.The Agent/Broker’s account shall be debited with the amount of thepremium refund sent to the premium finance company.

E. Cancellation – Procedures

1. Cancellation at the request of the Insured or the Premium Finance Company – Broker Bill & Direct Bill

Cancellation requested by the insured or the premium financecompany under power of attorney must be made in writing in aformat suitable to the Servicing Carrier.

The Facility Association shall accept faxed signed and dated cancel-lation requests.

The return premium shall be calculated as follows:Motorcycles, Mopeds, Snow Vehicles, and Antique Vehicles useShort Term Table 3 or 4 for all coverages exceptComprehensive/Specified Perils and Short Term Table 1 or 2 forComprehensive/Specified Perils subject to any applicable minimumretained premium.

All other vehicles being placed in the voluntary market calculate ona pro rata basis using the Day Table subject to any applicableminimum retained premium

All other vehicles not being placed in the voluntary market use ShortTerm Table 1 or 2 subject to any applicable minimum retainedpremium.

If the policy is on Broker Bill, the Servicing Carriershall credit the Agent/Broker’s account with theunearned premium refundable unless the premium isfinanced through a premium finance company.

2. Cancellation at the request of the Agent/Broker – Broker Bill

When additional premium cannot be collected onoriginal quoteIf the Agent/Broker cannot collect the additional premium arisingfrom an increase to the premium originally quoted for new business:

a) The Agent/Broker must advise the Servicing Carrier of theamount of premium collected and request that a notice ofcancellation be issued to the insured,

or

b) The Agent/Broker must have the policy signed off. The FacilityAssociation shall accept faxed signed cancellation requests.

If the Agent/Broker reports non-payment of the additionalpremium within 45 days of receiving notice of thoseincreases, the earned premium for cancellation shall becalculated pro rata on the Agent/Broker’s originally quotedpremium. Otherwise, the earned premium shall be calculatedpro rata on the revised premium. If a subsequent applicationis submitted by the same Agent/Broker to the same ServicingCarrier for substantially the same risk within 30 days of theeffective date of cancellation of the first policy and, theAgent/Broker reports non-payment of additional premium,the earned premium shall be calculated pro rata on therevised premium.

When outstanding premium cannot be collected in allother casesAgent/Broker ResponsibilitiesThe Agent/Broker must advise the Servicing Carrier of the amount ofpremium collected and request that a notice of cancellation be issuedto the insured.

Servicing Carrier ResponsibilitiesThe Servicing Carrier shall promptly issue a registered notice ofcancellation in accordance with the Statutory Conditions. The earnedpremium for cancellation shall be calculated pro rata on the full termpremium at the time of cancellation.

When the Servicing Carrier issues a registered letter of cancellation,any unearned premium shall be refunded directly to the insured(unless the policy is financed through a premium finance company)and the Agent/Broker’s account shall be debited for the amount of therefund and credited for the unearned premium.

3. Cancellation of Late Issued Renewals If the Servicing Carrier is unable to issue renewals in the requiredtime period, the Agent/Broker must issue a temporary liability cardto the insured and collect a downpayment based on the estimatedannual premium (or the estimated semi-annual premium for 6 monthpolicies) for the upcoming renewal term.

Once the renewal is issued, if the insured does not accept therenewal premium, the Agent/Broker shall advise the ServicingCarrier of the amount of premium collected and request thatnotice of cancellation be issued to the insured or shall have theinsured sign off the policy.

The Servicing Carrier shall then issue a registered letter of cancel-lation in accordance with the Statutory Conditions or issue thenecessary cancellation documents. The earned premium shall becalculated pro-rata based on the previous term premium.

4. Flat CancellationNew Policy Flat cancellation of a new policy is not allowed except as providedunder Rule 18: E.6 Flat Cancellation Exceptions.

Additional Premium Policy ChangeFlat cancellation of an additional premium policy change is notallowed.


Rule 18: Cancellations (continued)

RenewalIf renewal documents and liability cards are received by theServicing Carrier within 15 days of the renewal’s effective date, afull refund shall be credited to the Agent/Broker’s FacilityAssociation account. If the renewal documents are not receivedwithin 15 days, the renewal shall be cancelled on a pro-rata basiseffective the date it is received by the Servicing Carrier and theAgent/Broker shall be responsible for earned premium. A writtenrequest acceptable to the Servicing Carrier, for cancellation effectiverenewal date shall be accepted in lieu of renewal documents.

5. Cancellation of Renewals in Outlying AreasNo longer applicable

6. Flat Cancellation Exceptions1) Any policy returned to the Servicing Carrier complete with

liability cards, prior to the effective date of the policy, may becancelled flat.

2) If a cheque received for a new policy or renewal premium or,for the first installment thereof is not honoured by the bank, flat cancellation shall be allowed to the Agent/Broker provided that:

a) the cheque was dated and issued on or before the effectivedate of the policy period concerned; and

b) the cheque was immediately deposited; and

c) in the case of a first installment, the amount of the chequewas sufficient to cover two months pro-rata premium or iffinanced under a contract with a premium finance companythe full down payment required under the terms of thecontract; and

d) The return of the cheque by the bank is promptly reportedto the Servicing Carrier. A copy of the cheque front and back must be provided to the Servicing Carrier.

However, on the registered letter of cancellation to theinsured, the Servicing Carrier shall request payment ofthe full pro rata time on risk charge.

7. Cancellation initiated by the Servicing Carrier Non-Payment – Direct Bill

If premiums are paid directly to the Servicing Carrier, the ServicingCarrier may cancel an insurance policy for non-payment of premium.The earned premium shall be calculated pro-rata.

Other CircumstancesThe Servicing Carrier may not otherwise cancel an insurance policyunless approval of such action is contained elsewhere in this manualor is obtained in the manner prescribed by the Association’s Board ofDirectors.

F. Refund Calculation

1. Insured’s RequestFor a policy cancellation requested by or on behalf of the insured(e.g. requested by a premium finance company) the premium refundshall be calculated in accordance with the Short Term Tables, unlessa pro-rata cancellation is being allowed because the risk is beingplaced in the voluntary market.

2. Any Other ReasonWhere the policy is being cancelled for any other reason (e.g. byregistered letter) the premium refund shall be calculated on a pro-ratabasis using the Day Table.

Rule 19: Time on Risk Tables

A. PRO RATA

Calculation For Endorsements & CancellationsUsing the Day Table on the next page:

1. Determine the percent that corresponds to the policy’s expirymonth and day. For example March 26 is .233. Express thepolicy’s expiry date in a decimal format by combining the yearand the fraction. March 26, 1999 would become 1999.233.

2. Determine the percent that corresponds to the effective date ofthe policy change or cancellation and express that date in adecimal format. If the effective date of policy change isNovember 20, 1998 that would be expressed as 1998.888. Notethat if the effective date of change or cancellation is February29, it should be treated as February 28.

3. Subtract the second number from the first.

Policy expiry date 1999.233Policy change date 1998.888Refund/change percentage .345

4. Where the policy is a six month policy, double therefund/change percentage.

5. For a policy cancellation, the refund is calculated bymultiplying the policy premium as of the cancellation date bythe refund/change percentage. The policy premium is the fullterm premium for the coverage in force at the time of cancel-lation. Minimum retained premium must be taken into consid-eration.

6. For a policy change, the additional/return premium is obtainedby multiplying the full term premium for the change by therefund/change percentage.

A18



A21



SHORT TERM TABLE No.3 SHORT TERM TABLE No. 4Motorcycles & Mopeds and Antique Vehicles Snow Vehicles

Excluding Comprehensive/Specified Perils Excluding Comprehensive/Specified Perils

Period Percentage Period Percentage Period Percentage Period Percentage

of annual of annual of annual of annual

premium premium premium premium

January Nil July 20 January 25 July Nil

February Nil August 20 February 25 August Nil

March 5 September 10 March 15 September Nil

April 10 October 5 April Nil October Nil

May 10 November Nil May Nil November 10

June 20 December Nil June Nil December 25

Rule 19: Time on Risk Tables (continued)

D. Short Term Tables No. 3 and No. 4 (seasonal use vehicles)

These tables apply to all coverages except Comprehensive orSpecified Perils for Motorcycles, Mopeds, Snow Vehicles andAntique Vehicles. For Comprehensive or Specified Perils coverageuse Short Term Table No. 1 or No. 2 or a pro rata calculation,depending upon the circumstances.

1. For each full month that insurance was provided, charge thecorresponding “Percentage of annual premium” indicatedbelow.

2. For part of a month charge pro-rata of the percentage applicableto the complete month. For example, in respect of a motorcycleinsurance that commences on June 7th:

30 days minus 6 days = 24; 24 divided by 30 = .8;

.8 times 20% = 16% for the month of June.

3. The tables below apply to Canadian conditions. If there is useoutside Canada during a month where the table indicates thecharges as “Nil” there shall be an additional premium chargedfor that month equal to pro-rata of the annual premium. Thesurcharge for U.S. exposure is applicable, except where thevehicle is used for personal use only and proof of insurance isnot required.

For example: The insured has a motorcycle that he wishes totrailer down to Florida to use during the months of Novemberand December in addition to regular use for the year inCharlottetown. The annual premium is $1,250 excluding anypremium calculation for November and December. Using thePro Rata Day Table, calculate the pro rata fraction for themonths of November and December (.164) and apply that to thetotal annual premium. The additional premium charge forNovember and December will be $205.

A22



Rule 20: Reinstatements

A. A policy may only be reinstated if:

a) The Servicing Carrier receives instructions not later than theday before the cancellation takes effect. This includesinstructions from a premium finance company. Where theAgent/Broker has not forwarded payments to a premiumfinance company, the policy cannot be reinstated. Cancellationtakes effect at 12:01 am. e.g. If the policy is to be cancelledeffective July 1, the request for reinstatement must be receivedby the Servicing Carrier before midnight June 30. If the cancel-lation has taken effect, the policy cannot be reinstated and a newapplication must be completed. Any unpaid earned premiumunder the policy due to the Servicing Carrier must be paid withthe new application.

b) The policy was cancelled for non-payment, and the full requiredpremium is received (by cash, money order or certified chequefrom the insured) or there is written confirmation from theAgent/Broker assuming full responsibility for that premium.Where a refund cheque accompanied the registered letter, theamount of the refund cheque must also be obtained from theinsured (by cash, money order or certified cheque) or theAgent/Broker shall assume full responsibility for that amount.

B. When a policy is reinstated

When a policy is reinstated, the Servicing Carrier shall issue a noticeof reinstatement. If necessary, the Agent/Broker or Servicing Carriershall issue a temporary or permanent liability card. If proof ofinsurance was cancelled, the necessary proof of insurance shall be re-issued.


Rule 22: Commission Schedule

The commission rates are:Experience Individually

Rated Rated

1. Private Passenger VehiclesClass 10, 11, 12 7.5% 9%All other private passenger 7.5% 11%

For the purpose of determining Commission Rates only, theexpression 'Private Passenger Vehicles' includes Antique/Classicautomobiles and commercial type vehicles that are rated as PrivatePassenger. It also includes Driving School vehicles rated Class 07but excludes Police/Fire Department vehicles, vehicles rated in theCommercial or Public sections of the manual and short-term rentalvehicles.

Experience IndividuallyRated Rated

2. Commercial VehiclesLong haul vehicles (includingtrailers) Classes 51, 61, 99 6% 6%Classes 33-36, 43-48, 53-55 7.5% 10%

3. Public VehiclesPublic Bus

Classes 70, 73, 74 or 78 6% 6%School Bus Class 71 7.5% 10%Hotel & Country Club Bus

Class 72 7.5% 10%Private Bus Class 79 7.5% 10%Taxi, Limousine Class 77 6% 6%Van Pool Class 79 7.5% 10%Ambulance Class 76 7.5% 10%Funeral Vehicles Class 75 7.5% 10%Short Term Rental Class 79 7.5% 10%(regardless of the type of vehicle being rented)

4. Recreational VehiclesCabin or Home TrailersOther private type TrailersMotor Homes Camper Unitsa) Used for Pleasure purposes only: use Private Passenger

Vehicles commission ratesb) Used for Other purposes, use the commission rate

applicable to the class applicable to the use.

Motorcycles & Mopeds* 7.5% 7.5%All Terrain Vehicles* 7.5% 7.5%Snow vehicles* 7.5% 7.5%* Including use of the above vehicles for police/fire

department or commercial use.

5. Garage Policy Class 80-89 10%

6. Driver’s Policy Class 98 According to the rating.

7. Non-Owned Automobile Policy Class 91 10%

No other additional fee for service may be charged.


A23

Section A - General Rules & ProceduresFACILITY ASSOCIATION


Rule 24: Definition of Accident

A. What Is A Chargeable Accident

A chargeable (at fault) accident is an occurrence resulting in damageto persons or property arising out of the ownership, use or operationof a vehicle, in consequence of which:

1. An amount has been paid or would have been paid but for theexistence of provincial Direct Compensation laws oragreements,

or

2. A loss remains unsettled or unpaid,

or

3. A civil suit is pending in respect of Liability, Collision or theCollision portion of All Perils coverage

A chargeable accident is always taken into account in rating even ifthere was no insurance in effect or the loss was repaid to the insurerby or on behalf of the insured or if the insured chose not to presentthe claim.

B. What Is Not A Chargeable Accident

An occurrence shall not be regarded as a chargeable accident if:

1. The insured’s degree of fault is determined as zero under therelevant provincial fault determination laws or agreements ordispute resolution mechanism.

2. Damage to the applicant’s vehicle

a) resulted from the vehicle being struck by an unidentifiedvehicle and is reported to the police within 24 hours;

b) occurred while the vehicle was legally parked and isreported to police within 24 hours;

c) resulted from collision with a wild or domestic animal;

d) is legally recoverable from the owner or driver of anuninsured or unidentified automobile.

Note: The words “loss(es)” and “claim(s)” where used in this manualare considered to have the same meaning as the word “accident.”

The words “at fault” and “chargeable” where used in this manual areconsidered to have the same meaning.

C. How To Allocate Chargeable Accidents

No accident shall be used more than once in determining thepremium for vehicles insured in FA with the same Servicing Carrierwhether or not on the same policy.

A chargeable accident will affect the rating of both the Liability andCollision coverages.

When an occasional driver (including male or female under age 25)is responsible for a chargeable accident, the accident must beincluded for rating purposes. If the occasional driver is removedfrom the policy, the accident shall be assigned to the vehicle onwhich it occurred.

At new business, where there are multiple vehicles and multipledrivers insured on a policy, any claims shall be assigned first to thevehicle for which the responsible driver is principal operatorregardless of which vehicle was involved in the claim. If theresponsible driver is principal operator of more than one vehicle, theclaim shall be assigned first to the vehicle involved in the claim andif this is not possible, to the vehicle which that person principallyoperates that produces the highest premium. At renewal, any at faultaccidents which occurred during the policy term shall be assigned tothe vehicle on which they occurred.

For example: A new application is received. Applicant is principaloperator of vehicle 1 and has had 2 losses on vehicle 1 and 1 loss onvehicle 2. Spouse is principal operator of vehicle 2 and has had 1loss on vehicle 1 and 1 loss on vehicle 2. For purposes of allocatingaccidents, the 3 accidents the applicant has had will be allocated tovehicle 1 and the 2 accidents the spouse has had will be allocated tovehicle 2.

The term ‘vehicle’ includes ‘one for which it has been substituted’.

A24

Section A - General Rules & Procedures FACILITY ASSOCIATION

Prince Edward Island - 1 August 2008

Rule 24: Definition of Accident

C. How to Allocate Chargeable Accidents (continued)

The following table illustrates how chargeable accidents are to beapplied in the rating of other types of vehicles if they cannot beassigned to the vehicle actually involved

Note: “Type of vehicle” means the section of the manual in whichthe vehicle was or would have been rated.

For example: A car is rated as a private passenger vehicle and theinsured had an at fault accident. The insured is now going to beginusing the vehicle as a taxi. The accident that occurred while thevehicle was rated for personal use will continue to be applied whenthe insured begins using the vehicle as a taxi.

Where an at-fault is being charged against a vehicle showing on thepolicy and that vehicle is deleted from the policy or mandatorycoverage on that vehicle is removed or suspended, the at-faultaccident shall be re-assigned on the following basis:

– to a remaining vehicle with active mandatory coverage i.e. notdeleted or suspended

– to the vehicle that produces the highest premium where there ismore than one remaining vehicle

– effective the date coverage on the original vehicle was deletedor suspended

Rule 25: Accident and ConvictionSurcharges

These surcharges are applicable to Liability (including PassengerLiability) and Collision. These surcharges are not to be applied tocoverages which are experience (fleet) rated.

A. Accidents

Accident surcharges are assessed in accordance with the SurchargeSchedule for chargeable accidents that occurred during the 36months immediately preceding the effective date of thecommencement of the insurance.

1. At New Business:No accident shall be used more than once in determining thesurcharges for vehicles insured in FA by the same Servicing Carrier,whether or not on the same policy.

As long as there is a Class 05 or Class 06 premium charged on thepolicy, accidents relating to Class 05 or Class 06 drivers shall only beused to calculate surcharges on the Class 05 or Class 06 premium. TheClass 05 or Class 06 premium develops its own surcharge independentof the underlying class.

If the only vehicle(s) on the policy are private type trailers asdescribed under Recreational Vehicles, surcharges shall be assessedon the Collision premium only.

Accidents arising from the ownership of any vehicle other than thedescribed vehicle are not to be considered.

For example: The insured owns a business in which three vehiclesare driven by employees. Two of the vehicles are insured in thevoluntary market, the other is insured in FA. There have been twoaccidents on each of the vehicles in the voluntary market none ofwhich arose from the use or operation of the vehicle by the insuredhimself. There have been three accidents on the vehicle insured inFA. The accidents that occurred on the vehicles insured in thevoluntary market are not used to calculate the accident surcharge onthe vehicle insured in FA, as long as they are rated under anotherinforce automobile policy.

Where the term ‘described vehicle’ is used, it includes a vehiclesubstituted for it.

Type of vehicle involved in theaccident

Type of vehicle to which theaccident can be applied

Private Passenger Private Passenger, Motorhome,Light Commercial, Taxi orGarage

Light Commercial Commercial, Private Passenger,Motorhome or Garage

Commercial Commercial, Garage

Public (excl Taxi) Public (excl Taxi)

Taxi Taxi or Private Passenger

Motorhome Motorhome, Private Passengeror Light Commercial

Motorcycle Motorcycle

Garage Garage

All Terrain or Snow Vehicle All Terrain or Snow Vehicle

A25



Rule 25: Accident and Conviction Surcharges(continued)

Accidents arising out of the use or operation of other vehicles forwhich another listed driver is responsible shall not be considered ifthe other listed driver is being charged with the accident as theprincipal operator of another vehicle.

(a) One vehicle on the policyConsider accidents that involved the described vehicle and accidentsarising out of the use or operation of any other vehicle by theapplicant, spouse or any other listed operator (excluding any otherlisted operator currently being charged with the accident as principaloperator of another vehicle).

For example: Husband has had 1 at fault accident on the describedvehicle and 1 accident on the neighbour’s car. Wife had 1 at faultaccident on her own vehicle insured elsewhere but has now sold thatvehicle. All accidents shall be allocated to the described vehicle and asurcharge shall be applied.

(b) One driver and two or more vehiclesAccidents that involve one of the described vehicles shall beassigned to that vehicle. Accidents arising out of the use or operationof any other vehicle by the applicant, spouse or any other listedoperator (excluding any other listed operator currently being chargedwith the accident as principal operator of another vehicle) shall beassigned to the vehicle that produces the highest premium before theapplication of any accident or conviction surcharge.

For example: Two vehicles on the policy, husband is the onlyoperator. There has been one accident on vehicle 1 and one accidenton vehicle 2. Applicant also had two accidents on his companyvehicle insured elsewhere. The premium for vehicle 2 is higher thanthe premium for vehicle 1. As the applicant is principal operator ofboth vehicles, the claims are rated on the vehicle on which theyoccurred. A surcharge applies to vehicle 2 as a result of the twoaccidents on the company car and the one accident that occurred onvehicle 2.

(c) Two or more drivers and two or more vehicles Each driver is to be assigned as principal operator on the vehiclehe/she most frequently drives. Accidents that the principal operatorhad on any vehicle are to be considered. Accidents that occurred onthe assigned (described) vehicle that cannot be assigned to theprincipal operator of another vehicle on the policy are to beconsidered. Accidents that arose from the use or operation of anyother vehicle by any other listed driver who has not been chargedwith the accident as a principal operator of another vehicle, shall beallocated to the vehicle which develops the highest premium beforethe application of any accident or conviction surcharges.

For example: Applicant is principal operator of vehicle 1 and has hadone accident on vehicle 1, two accidents on vehicle 2 and 1 accident onhis company car. Spouse is principal operator of vehicle 2 and has hadno accidents. The daughter has had one accident on vehicle 2. Theapplicant’s four accidents will be rated against vehicle 1. The daughter’saccident is rated on vehicle 2. A surcharge for the applicant’s fouraccidents applies to vehicle 1 as the applicant is principal operator ofvehicle 1.

2. At Renewal (for surcharge only)At the time of renewal, the accident record shall be updated. Anyaccidents that occurred more than 36 months prior to renewal dateshall be excluded and all accidents that occurred during the expiringterm that involved the following shall be added:

a) The described vehicle (regardless of driver).

b) Other vehicles but were the subject of claims under this policy.

B. Convictions

Conviction surcharges shall be assessed for traffic offences (ashereinafter described) for which the insured was convicted in the 36months immediately preceding the commencement of the period ofinsurance.

1. How to apply conviction surcharges:No conviction record shall be used more than once to determineconviction surcharges for vehicles insured in FA by the sameServicing Carrier, whether or not insured on the same policy.

If convictions for impaired driving and failure or refusal to take abreath or blood test relate to the same occurrence, they shall beconsidered as one conviction.

Convictions for road offences shall not be used in the rating of off roadvehicles (e.g. Snow Vehicles, All Terrain Vehicles) and vice versa.

As long as there is a Class 05 or Class 06 premium charged on thepolicy, the conviction records relating to Class 05 or Class 06 driversshall only be used to calculate surcharges on the Class 05 or Class 06premium. The Class 05 or Class 06 premium develops its ownsurcharge independent of the underlying class.

Surcharges shall not be assessed on private type trailers as describedunder Recreational Vehicles.

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Rule 25: Accident and ConvictionSurcharges

B. Convictions (continued)

One vehicle and more than one driverThe conviction record of all persons who are listed drivers of thevehicle shall be reviewed to establish which conviction recorddevelops the highest surcharge percentage in accordance with theSurcharge Schedule for convictions and/or the lowest driving record.That conviction record shall be used to determine the applicabledriving record and calculate the conviction surcharge.

More than one vehicle and more than one driverEach driver shall be allocated to the vehicle they drive most and thatdriver’s conviction record shall be considered in relation only to thatvehicle.

One driver and more than one vehicleThe driver’s conviction record shall be applied to the vehicle thatproduces the highest premium prior to the application of any accidentor conviction surcharges.

C. Accident/Conviction Surcharge Table

Maximum Surcharge to be applied for accidents, serious, major andminor convictions is 250%.

Events in the preceding Surcharge:36 months

Chargeable Accidents:2 10%3 30%

Each additional 15%

Major Convictions1 15%

Each additional 15%

Minor Convictions2 5%3 15%4 25%

Each additional 15%

Serious Convictions1 100%

Each additional 100%

D. Conviction Definitions

a. MajorConvictions for any of the following offences under any Actgoverning highway traffic or for any offence substantially the samewhether committed within or outside Canada:

Exceeding the speed limit by 50 km/h or more

Failing, in the event of an accident, to give name and licencenumber to the police or any other person entitled to suchinformation

Failing to obey school crossing stop sign

Failing to report an accident

Failing to report damage to highway property

Failing to stop on request of or obey directions of a police officer

Graduated Licence (where applicable):Accompanying driver has excess blood alcoholDrive at unlawful hour Drive motorcycle on prohibited highwayDrive motorcycle with passengerDrive on prohibited highwayDrive with excess passengersDrive with front seat passengerDriver unaccompanied by a qualified driverPermit novice driver in contravention of cond/rest

Improper passing in a school or playground zone

Improper passing of a school bus

Improper speeding in a school or playground zone

b. MinorConvictions for any moving traffic offence (offences related to theoperation of a vehicle), other than those listed as Serious or Major,under an Act governing highway traffic or for any offence substan-tially the same committed whether within or outside Canadaincluding, but not limited to:

Fail to notify police

Fail to make written report

Backing up/unsafe/illegal/improper: any type

Brakes/none/inadequate/improper: any type

Crowding driver’s seat

Door opening/illegal/obstructing traffic: any type

Emergency vehicle/operating with no regard for safety

Driving imprudently

Driving off roadway (including shoulder/sidewalk/median): anytype

Flagman/disobeying

Following too closely (including tailgating)

Headlights/parking lights/improper/lack of use: any type

Lack of control of vehicle: any type

Motor-assisted bicycle carrying passengers

Motorcycle/operating with only an instruction permit

Motorcycle/failure to wear helmet

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Passing infraction: any type except school bus orschool/playground zone

Pedestrian crossing violation: any type

Radar warning device in motor vehicle: if illegal inprovince/territory

Railway crossing: any type

Safety zone violation: any type

Seatbelt: any offence

Signaling offences: any type

Slow driving/endangering other: any type

Smokescreen device on vehicle

Speeding: any type, except when listed as major or serious

Squealing tires

Stopping/illegal/improper: any type

Stunting

Tires/defective/worn: any type

Towing/prohibited/unsafe: any type

Traffic signals/regulating lights: any type

Traffic signs/disobeying any legal sign except parking regulations

Trailer: improper attachments/improper towing

Turns/illegal/improper: any type

Unlicensed driver: any type including improper licence class

(Driving without a subsisting licence)

Unsafe move

Unsafe vehicle: any type

Wrong side of road/wrong way: any type

Yield, failing to: any type

Note: This is a generic list and will not, in all cases, match the exactwording printed on the Driver Record Abstract.

c. SeriousConvictions for any of the following offences under the CriminalCode of Canada or any conviction which appears on a Driver Recordabstract identified as a Criminal Code conviction.

Criminal negligence committed in the operation or use of a motorvehicle

Manslaughter committed in the operation or use of a motorvehicle

Driving while licence under suspension

Racing

Careless driving

Driving without due care and attention

Driving without insurance

Dangerous driving

Impaired driving

Failure or refusal to submit to a breath or blood test

Failure to pass a breath or blood test

Failure to stop/remain at the scene of an accident

Learner/Level One driver fail/refuse breath sample

Learner/Level One driver with alcohol in blood

Notes:

Where a conviction shown above is not recorded on the DriverRecord Abstract as a Criminal Code Conviction but is shown underany Act governing highway traffic or any other Act within Canada orany offence substantially the same committed within or outsideCanada, that conviction is considered a "Major" conviction.

If convictions for impaired driving and failure or refusal to take abreath or blood test relate to the same occurrence, they will beconsidered one conviction.


Rule 27: Proof of Insurance

1. The Servicing Carrier must make all filings. The Agent/Brokeris not permitted to do so.

2. The Agent/Broker must promptly advise the Servicing Carrier ifproof of insurance (e.g. a financial responsibility certificate)must be issued or filed with a local, provincial, federal or U.S.A.authority.

3. Once the proof of insurance is issued, a copy should be suppliedto the Agent/Broker for their records.

4. Proof of insurance may not be issued or filed on a “blanketbasis” i.e. without specifying the insured vehicles - unless theauthority concerned permits no alternative. In that case, theFacility Association’s form of ‘Indemnification and HoldHarmless Agreement’ must be fully completed (including thesignatures of the applicant and a witness) and provided to theServicing Carrier.

5. Parties cannot be added as additional named insureds on thepolicy. The certificate showing proof of insurance guarantees tothe party that the vehicle is insured. This is the full extent of theguarantee.

6. In most cases, the Servicing Carrier’s standard certificate ofinsurance is acceptable and is the preferable option. Should theServicing Carrier have any concern with the coverages or limitsbeing guaranteed when asked to use a certificate prescribed bythe organization or authority with whom the certificate is beingfiled, the Servicing Carrier should contact Facility AssociationHead Office.

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Prince Edward Island - 1 April 2007

Rule 27: Proof of Insurance (continued)

A. Financial Responsibility Certificate

A temporary liability card may be issued for an applicant whorequires the filing of a financial responsibility certificate beforehe/she may be licensed to drive, provided a fully completed andsigned application is submitted for the applicant at the time thetemporary liability card is issued. Details of the licence subsequentlyobtained must be reported promptly to the Servicing Carrier.

B. Renewal or Offer to Renew

If a renewal or offer to renew is issued where proof of insurance hasbeen issued or filed and the renewal is not required, the ServicingCarrier must be notified in sufficient time to file a notice of cancel-lation in accordance with the applicable authority’s requirements.Otherwise the Agent/Broker/Insured shall be responsible for time onrisk charges.

C. Policy Cancellation, Vehicle Deletion, Suspensionor Deletion of Liability Coverage

1. Registered Letter Where proof of insurance has been issued or filed and the policyis to be cancelled, the cancellation of coverages to which theproof of insurance relates shall be processed in accordance withthe Statutory Conditions.

The notice of cancellation for the authority concerned mustbe issued on the same day as the notice of cancellation to theinsured. However, as a result of the authority’srequirements the effective date of cancellation may bedifferent.

For example: The registered letter of cancellation for the policyis issued on June 1 for both the insured and the provincialauthority. For the insured, cancellation shall take effect 15 daysfrom the date the registered letter is received at the post office towhich it was addressed. Let’s say June 19. The provincialauthority requires 30 days notice of cancellation. The effectivedate of cancellation for the authority shall be June 30. If theinsured had a Comprehensive loss on June 25, the policy wouldnot respond. If however, the insured had a Liability loss on June25, the policy may have to respond as the proof of insuranceprovides that Liability coverage is in effect until cancelled onJune 30.

2. Insured’s RequestWhere proof of insurance has been issued or filed, and thevehicle is to be deleted from the policy or the policy is to becancelled, the cancellation of coverages to which the proof ofinsurance relates shall be processed after taking into consid-eration the period of notice required by the authority.

The effective date of cancellation or deletion shall be thesame for both the insured and the authority concerned.

For example: The insured requests cancellation of the policy to

be effective June 1. The provincial authority requires 30 daysnotice of cancellation. The notice to the provincial authority issent on June 5. The effective date of cancellation for the insuredwill be July 5.

D. Filing Liability LimitsThe filing should always be made for the limit required by laweven if the policy actually shows a higher limit.

Where a vehicle requires filings in multiple jurisdictions, thefiling should be made showing only the limits required in thatjurisdiction. The policy should be written with the lowest limitsnecessary to meet all requirements.

For example: In one jurisdiction a filing for a vehicle requires asplit limit of $1,000,000 road hazard and $1,000,000 passengerhazard. A filing for a $5,000,000 combined limit is alsorequired in another jurisdiction for the same vehicle. The policymust be issued with a $5,000,000 inclusive limit. One filingshould be made showing the split limits of $1,000,000 and$1,000,000. The other filing should be made showing the$5,000,000 limit.

Where a filing is to be made for a leased vehicle, the filingshould be made in the name of the lessee only.

E. Processing Fees for FilingsPlease contact your Servicing Carrier for a schedule of feeswhich will be charged on a 100% cost recovery basis.

Any charge required by the authority concerned shall be inaddition to, and separate from, the Processing Fees.

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Rule 28: Outside Prince Edward IslandExposure

A. Outside Prince Edward Island ExposureSurcharge

Any vehicle registered in Prince Edward Island and operated in theU.S. or another Canadian jurisdiction (excluding Nova Scotia, NewBrunswick or Newfoundland and Labrador) is subject to asurcharge. This surcharge shall apply to all classes of vehicles whereproof of insurance is required and/or where the vehicles are used forbusiness, commercial purposes or are carrying passengers.

The surcharge does not apply where the vehicle is used for personaluse only and proof of insurance is not required.

The insured must advise the Agent/Broker the percentage of totalmileage that the vehicle will be used outside Prince Edward Islandand the jurisdiction(s) into which the vehicle is and will be driven.Refer to Rule 33 and the relevant section of the manual.

If this exposure is 5.0% or less of the total mileage, the surchargeshall be waived unless proof of insurance is required by authorities.In this case a 5% surcharge will apply to Liability (Road Hazard andPassenger Hazard), Accident Benefits, Uninsured Automobile andEND 44 premiums.

Liability, Accident Benefits, Uninsured Automobile,END 44 For each percentage point of use in the U.S. or other applicablejurisdiction, surcharge 1% of the applicable premium.

For example:

Outside Prince Edward Island Exposure Applicable Surcharge

5% (proof of insurance required) 5%

10% 10%

25% 25%

50% 50%

Physical Damage

For each percentage point of use in the U.S., or other applicablejurisdiction, surcharge .50% of the applicable premium.

For example:

Outside Prince Edward Island Exposure Applicable Surcharge

5% (proof of insurance required) 2.5%

10% 5%

25% 12.5%

50% 25%

B. Currency Differential Surcharge

Whenever proof of insurance is required by U.S. authorities, acurrency differential surcharge is added to the Liability premium toprovide for the potential additional loss arising from the payment ofa claim in U.S. dollars.

The currency differential is the rate of exchange being charged forthe US dollar, to the nearest cent, as at the date the premium iscalculated for policy issuance. The Servicing Carrier shall obtain therate of exchange from a chartered bank at the location where thepremium is calculated.

The surcharge percentage is calculated by means ofthe following formula:

Currency differential x U.S. exposure surcharge

For example:The rate of exchange for the U.S. dollar is 1.3085 Canadian. Therefore the currency differential is 0.31. The U.S. exposure surcharge is 25%. Currency differential surcharge:

0.31 X 25% = 7.75%

The Currency differential surcharge is1. Applied only to the Liability premium (Road/Passenger Hazard)

2. Subject to a minimum of 2.5% regardless of the current rate of exchange

3. Additional to but not compounded on the U.S. exposure surcharge.

Example:

The Liability premium is $1,000U.S. Exposure Surcharge is 25%The Currency Differential Surcharge is 7.75%Base Premium 1,000U.S. Exposure $1,000. X .25 250Currency Differential $1,000. X 7.75% = 77.50 78.

Total Liability premium 1,328.

4. In addition to the Servicing Carrier’s fee for filing proof of insurance.

5. Payable only when proof of insurance is required by U.S. authorities.

6. The combined dollar value of the currency differential surcharge and the U.S. exposure surcharge is subject to a minimum of $50 per policy term.

For example: Using the example above, the dollar value of the U.S.exposure surcharge is $250 and the dollar value of the currencydifferential surcharge is $78. The total combined dollar value is$328, well exceeding the minimum required.

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Rule 29: Claims

Every accident, loss or claim that comes to the knowledge of theAgent/Broker in regard to his Facility Association policies mustimmediately be reported in the manner prescribed by the ServicingCarrier.

1. Snow Vehicles and All Terrain Vehicles (with or without END 9) on Ice/Water

The following scenarios shall be considered Comprehensivelosses:

An insured drives a Snow Vehicle or All Terrain Vehicle on a frozenlake and hits open water.

An insured drives a Snow Vehicle or All Terrain Vehicle on a frozenlake. The ice cracks and the Snow Vehicle or All Terrain Vehiclesinks to the bottom.

A Snow Vehicle or All Terrain Vehicle is parked on ice. The icecracks under the machine and it sinks to the bottom.

2. Collision with AnimalsLosses involving Collision with animals, both wild and domestic,shall be paid under Comprehensive coverage. If the policy does notafford Comprehensive coverage but does provide Collision coverage,the loss shall be paid under Collision coverage and be regarded as notat fault.

Rule 30: Suspension and Reinstatementof Coverages – END16/17

Liability, Accident Benefits, Uninsured Automobile (whereapplicable), Collision and Collision portion of All Perils as theyrelate to the use and operation of the described vehicles, newvehicles or temporary substitute vehicles may be suspended bymeans of END 16. This endorsement leaves in place Comprehensiveor Specified Perils coverage if present on the policy as well as thecoverages mentioned above as they relate to the ownership of thevehicle. This means that END 16 does not suspend coverages relatedto ‘drive other vehicles’; while a pedestrian; or while the vehicle isin storage. This endorsement is available on private passenger andcommercial vehicles. Coverage is reinstated by means of END 17.

No refund is allowed in respect of Comprehensive and SpecifiedPerils.

If Liability and Accident Benefits coverages are removed orsuspended more than twice a year, then removal of these coveragesis not permitted until the following renewal. It is not necessary toremove the licence plate from the vehicle while these coverages areremoved or suspended.

END 16/17 is not available for the following:1. Vehicles for which proof of insurance is issued or filed.2. Experience rated risks.3. Recreational vehicles rated in the Recreational Vehicle section.4. Vehicles that were never intended to be driven.5. Vehicles held for sale whether or not on an auto dealer’s lot.

Rating

The refund for the period of cancellation is calculated according tothe table printed on the END 16 form.

In no event shall a refund be granted for any suspension period ofless than sixty (60) consecutive days.

Rule 31: – Suspension of Operator’sLicence – Use of END 28/78

The following provisions apply in the event of the suspension,cancellation or lapse of an operator’s licence, or where a driver isunlicensed. These provisions apply whether END 28/78 is beingadded to the policy at the request of the insured or by the ServicingCarrier because of the above mentioned circumstances.

A. If there is no other driver of the vehicle

1. An application for insurance of the vehicle shall be declined bythe Agent/Broker.

2. If the situation is discovered after the policy has been issued, theServicing Carrier shall cancel the policy by registered letter. Theearned premium for cancellation will be pro rata of the premiumapplicable to the risk as submitted.

3. If the situation is discovered as a result of enquiries prior to therenewal date, the Servicing Carrier shall issue a notice of non-renewal.

Note: Where the insured’s licence is suspended, the insured shall bepermitted to place the vehicle in storage and suspend or removemoving coverages. See Rule 14: Minimum Coverage.

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Rule 31: Suspension of Operator’s Licence(continued)

B. If there is another licensed driver of the vehicle

(It is assumed that the person concerned will not drive without avalid licence.)

1. The Servicing Carrier shall issue END 28/78 (Reduction ofCoverage As Respects Named Persons) restricting coverage tominimum statutory requirements and excluding physicaldamage where provided, for that person. END 8a shall be usedin conjunction with END 28/78 except where END 28/78applies to the named insured.

2. If that person being a driver affected the rating of the insurance,the insurance shall be re-rated to remove that person as a driverbut any accidents that occurred while that person was drivingshall continue to be taken into account in rating.

C. If the person concerned does drive without a valid licence

If discovered after the policy has been issued, END 28/78 shall bedeleted. The insurance shall be rated as if that person does drive thevehicle where:

a) Subsequent to the current suspension becoming effective orduring the 36 months immediately preceding the policy periodeffective date, the person involved is/was convicted of theoffence of driving while licence suspended, cancelled or lapsed.

b) It is established that the person involved has been driving e.g.by being convicted of any other driving offence or by beinginvolved in an accident.

D. Unsigned END 28/78

If END 28/78 is not signed, END 28/78 shall be deleted and thepolicy shall be re-rated as though there was no END 28/78.

E. Completion of END 28/78

END 28 or END 78 is to be completed showing the minimumstatutory limit under Section A – Limits and Amounts and the word“Insured” in the Insured/Not Insured column. In any jurisdictionwhere Accident Benefits and Uninsured Automobile are mandatorywhen Liability coverage is provided, the word “Insured” must beshown against Section B and Section D in the Insured/Not Insuredcolumn.

Rule 32: “Home-Made”Vehicles/Reconstruction

The following provisions apply to any vehicle that has beenconstructed, reconstructed or restored other than by a recognizedmanufacturer of such a vehicle.

A. Liability, Accident Benefits

No coverages are permissible until a certificate of road worthiness ormechanical fitness certificate acceptable to the Servicing Carrier isprovided.This Certificate must accompany the application to the ServicingCarrier.

B. Physical Damage Coverage

a) No physical damage coverage will be available until theconstruction, reconstruction, restoration has been completedand the mechanical fitness and value of the vehicle have beensubstantiated by a certificate from an independent appraiser or arecognized authority on such matters, acceptable to theServicing Carrier.

b) The premium is based on the appraised amount.

c) The insurance shall be subject to END 19 (Limitation ofAmount) which must be attached to the policy and a copysigned by the insured. END 19a (Valued Automobile) is notavailable.

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Rule 33: Vehicles Used OutsideJurisdiction of Registration

The Filed Underwriting Rules require that the vehicle must beregistered in the jurisdiction in which the policy is issued. “If thevehicle is registered in another jurisdiction in which FacilityAssociation operates, the vehicle may be insured through anAgent/Broker and Servicing Carrier licensed in that jurisdiction.”

When an insured takes up residence in another jurisdiction, theinsured is required to register the vehicle in the new jurisdiction. Theexisting policy must be cancelled (pro rata) and new insuranceobtained in the new jurisdiction.

However, there are circumstances under which the vehicle may beused for a period of time in another jurisdiction where vehicleregistration in that jurisdiction is not required.

For example: The insured resides in Prince Edward Island and thevehicle is registered in that jurisdiction however the insured will betravelling the western provinces for the next year.

Regardless of where the vehicle is registered, Facility Associationshall not provide insurance for vehicles which are never operated inthe jurisdiction in which they were registered.

When a vehicle is registered in one jurisdiction but used in another,the following is to be used as a guide for rating purposes.

1. The vehicle must be insured on a policy from the jurisdictionwhere it is legally registered, even if the vehicle is chiefly usedin another jurisdiction.

2. If the vehicle is operated outside Prince Edward Island, PrinceEdward Island rates and a surcharge apply. Refer to Rule 28A.

3. Surcharges do not apply to private passenger vehicles that areused for personal use only and where proof of insurance is notrequired.

4. If the out of province exposure is 5.0% or less of total mileage,the surcharge shall be waived unless proof of insurance isrequired by authorities. In this case a 5% surcharge will apply toLiability (Road Hazard and Passenger Hazard), AccidentBenefits, Uninsured Automobile and END 44 only.

At the Servicing Carrier’s discretion, a copy of fuel taxinformation may be required to verify mileage and travelledjurisdictions.

5. If the vehicle is being used in the U.S., it must be rated in theterritory in which it is registered. For example: The insuredlives in Charlottetown, is on a sabbatical in California and thevehicle is registered in Prince Edward Island. Prince EdwardIsland rates apply.

Rule 34: Purchasing Vehicles in Juris-diction Where FA Does Not Operate

When an insured acquires a new vehicle and all vehicles owned bythe insured are covered under a POL 1, coverage is automaticallyprovided for the newly acquired vehicle if the insurer is notified ofthe acquisition within 14 days.

When the insured:a) acquires a vehicle in the U.S. and brings it to Canada to

a jurisdiction in which FA operates, or

b) acquires a vehicle in a jurisdiction in Canada in which FA does not operate;

FA shall if necessary, issue a short term policy to provide coveragewhile the vehicle is in transit (under a transit authority permit) beforeit is registered in the jurisdiction of residence. The short term policyshall only be provided for a period of time sufficient to allow thevehicle to be driven from the point of purchase to the residence of theowner. This should correspond to the period of time the transit permitis valid.

When the insured comes through Customs, the vehicle must bedeclared and the insured will be provided with the appropriate formsto complete and submit to the provincial registry so that the vehiclemay be registered. A new application can then be submitted for a 6or 12 month policy if required.

Where an individual or company has a business that includes thepurchasing of vehicles in the U.S. or jurisdictions where FA does notoperate for shipment back to a Canadian FA jurisdiction for resale,coverage must be provided by means of a garage policy forAutomobile Dealers.


Documents

General-PE-Rules-Mar06 - Facility Association · under each coverage (All Perils, Collision, Comprehensive, Specified Perils) Deductible Amount applicable to the coverage under which