Québec's current automobile insurance program came into effect on March 1, 1978. The Automobile Insurance Act (CQLR, c. A-25) etablishes a distinction in how bodily injury and property damage resulting from an automobile accident are treated and sets out the framework governing the various parties.
Compensation for bodily injury caused by the use of an automobile in Québec is assumed by the State and is provided on a no-fault basis. This program is administered by the Société de l'assurance automobile du Québec (SAAQ).
Compensation for other damage is the responsibility of private insurers, which provide the public with compulsory insurance coverage as stipulated by law as well as other optional protection. The private insurance sector is overseen by the AMF.
Automobile insurance contract
Automobile insurance contract
The risks covered by private insurers are prescribed in a standard insurance contract. The wording of the contract, designated by the initials Q.P.F. (Québec policy form), must be approved by the AMF under section 422 of An Act respecting insurance (R.S.Q. c. A-32).
In its broadest form, namely, that for automobile owners (Q.P.F. No. 1), the contract consists of two sections: Section A - Civil liability, and Section B - Loss of or damage to an insured automobile. The coverage offered in section A is compulsory. The owner of any automobile driven in Québec must carry civil liability insurance for at least $50,000. While section B coverage is not compulsory, most automobile owners select this coverage. Section B provides the following coverage: all perils, collision or upset, comprehensive (excluding collision or upset) and specified perils. Each of these guarantees is defined as follows:
This automobile insurance guarantee covers property damage to third parties as a result of the insured's liability. Since 1978, property damage to an insured's vehicle resulting from a collision where the insured is not liable and which is subject to the Direct Compensation Agreement is also covered under this guarantee. Such accidents, which account for nearly all damages covered under this guarantee, are commonly called "no-fault" accidents and are subject to the Direct Compensation Agreement. Lastly, this guarantee covers civil liability in respect of bodily injury or property damage outside Québec.
(section B, subsection 1)
This automobile insurance guarantee covers all property damage to an insured's vehicle (except damage specifically excluded from the policy). It mainly covers damage set out in subsections 2 and 3 of this same section.
Collision or upset
(section B, subsection 2)
This automobile insurance guarantee covers property damage to an insured's vehicle resulting from a collision for which the insured is liable. Hit and run accidents are also covered under this guarantee because they involve a collision. Accidents covered under this guarantee are considered "at fault" accidents.
(section B, subsection 3)
This automobile insurance guarantee covers property damage to an insured's vehicle that is not caused by a collision or upset (except damage specifically excluded from the policy). Coverage under this guarantee includes fire, theft, vandalism and plate glass. These events do not entail the insured's liability.
(section B, subsection 4)
This automobile insurance coverage is similar to that in section B, subsection 3, except that it covers only those perils specified in the policy. For example, malicious mischief is not covered under this guarantee, whereas it is included under section B, subsection 3.
Direct Compensation Agreement
Direct Compensation Agreement
To simplify and accelerate the settlement of claims while reducing costs, the Automobile Insurance Act (R.S.Q., c. A-25) provides for a system of direct compensation from insurers for the benefit of the insured.
Under section 173 of the Automobile Insurance Act (R.S.Q., c. A-25), the Groupement des assureurs automobiles (GAA), the umbrella organization representing all automobile insurers in Québec, is required to establish a direct compensation agreement for property damage to the vehicle of an insured. Under this agreement, which has been in force since May 1, 1978, an insured who incurs property damage in an accident involving the liability of another driver is compensated by his own insurer and not that of the driver at fault.
The agreement covers all property damage caused by an accident in Québec involving the collision of at least two vehicles where the owners have been properly identified. Each insurer compensates its own insured under the civil liability guarantee based on a degree of no-fault liability and according to a tabulation included in the Direct Compensation Agreement. Any insured may dispute the liability assigned by the insurer.
The following example illustrates how this agreement works. Let's consider the case of an accident where the damage to the insured's vehicle was evaluated at $1,500. If the insured is deemed to be 75% at fault for the accident, he will receive, under section A, compensation equal to 25% of the loss ($375, i.e. 25% X $1,500). The remaining 75% for which he is liable will only be compensated to the insured if he purchased optional "collision or upset" coverage. If such is the case, the insured's deductible will only apply to the 75% of the claim for which he is compensated by virtue of the "collision or upset" coverage. More specifically, if the insured has "collision or upset" coverage with a $250 deductible, he will receive compensation in the amount of $937.50 [($1,500 x 75%) - ($250 x 75%)], under section B, for a total reimbursement of $1,312.50 ($375.00 + $937.50).
The agreement, which is binding on all automobile insurers operating in Québec, also stipulates that insurers agree not to exercise their right of subrogation between them.
Classification and rates
Insurers are free to adopt the classification criteria and to establish the premium levels they deem are adequate. However, without imposing or prohibiting the use of certain rating practices, the AMF may assess the merits of the system and suggest improvements.
In fact, under section 182 of the Automobile Insurance Act (R.S.Q., c. A-25), the AMF must report each year to the Minister of Finance the results of its analyses. This report is available on our website under Publications.
To enable the AMF to analyze the rating and classification practices of automobile insurers and report to the Minister of Finance, section 180 of the Automobile Insurance Act (R.S.Q., c. A-25) requires that all insurers operating in Québec file their rate manual with the AMF. Under sections 177 and 181 of the Act, the AMF may also require that insurers furnish any information it deems useful in analyzing their practices as well as proof supporting any item in their rate manuals.
Since 1981, insurers have been required to provide the AMF with data on their automobile insurance experience in Québec with respect to premiums, losses, and operating expenses, according to the form prescribed under the Québec Automobile Statistical Plan. The GAA administers this plan under a mandate assigned by the AMF pursuant to the Automobile Insurance Act (R.S.Q., c. A-25).
Lastly, the Automobile Claims Database provides insurers licensed to operate in Québec with data on all insurance claims involving Québec drivers. Information in this database enables insurers to verify statements make by clients when underwriting new risks. For more information on this database, see the Automobile Claims Database.