In Alberta, the policy wordings governing automobile insurance are prescribed by legislation, giving rise to a standardized policy. Thus, the policy wording is the same for all motorists. The Standard Policy Form (SPF 1) is divided into three sections:
- Section A – Liability Insurance (mandatory)
- Section B – Accident Benefits (mandatory)
- Section C – Loss of or Damage to Insured Vehicle (optional)
Additionally, an insured can augment the standard policy by purchasing additional coverages by way of endorsements to the policy. Examples of such modifications include Glass Coverage Waiver, Waiver of Depreciation, Vehicle Replacement Endorsement and Family Protection Endorsement (SEF 44).
Section A: Third Party Liability (Mandatory)
Third party liability coverage is mandatory for all motorists in Alberta. Each automobile must be insured for liability to a minimum of $200,000.00.
Liability insurance is designed to protect the insured from financial ruin should he/she be responsible for a collision, and cause injury to others or damage to their property. Liability coverage is mandatory in order to ensure that accident victims have access to funds to compensate them for losses suffered in collisions. When an insured person is responsible for an accident, the liability insurer agrees to defend the insured against claims and to pay any amounts owing by the insured to the other party, up to the limit of insurance in place on the policy. In fact, the insurer is, pursuant to the terms of the SPF 1, deemed to be the agent of the insured for the purposes of defending claims. As such, the insurer has the power to settle claims made against the insured.
Thus, while an accident victim technically has a claim against the at-fault motorist (and if suing, must sue the at-fault motorist rather than the insurer), his/her counsel will most often deal with the at-fault motorist’s insurer in order to access compensation under Section A of the at fault motorist’s policy.