If you've ever purchased car insurance in the past, you're most likely familiar with the term endorsement.
But, if you're new to buying car insurance, you may not know what an endorsement is or why they're useful. Here's a crash course — an insurance endorsement (also known as an add-on or rider) is a type of separate coverage that a driver can choose to include in their policy. Having the ability to purchase endorsements gives drivers additional flexibility and protection on the road.
There are several different car insurance endorsements that drivers can choose from, one of the lesser-known being the Family Protection Endorsement (often shortened to SEF 44 or OPCF 44 depending on your location), which is available in a handful of provinces, including Ontario and Alberta.
If you'd like to learn more about SEF 44 and OPCF 44 and why it's beneficial for Canadian drivers, be sure to continue reading.
Family Protection Endorsement Alberta — what is it and why should drivers use it?
The insuring agreement for the SEF 44 Family Protection Endorsement in Alberta is as follows:
"In consideration of the premium charged and subject to the provisions hereof, it is understood and agreed that the Insurer shall indemnify each eligible claimant for the amount that such eligible claimant is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury or death sustained by an insured person by accident arising out of the use or operation of an automobile."
This is a lot of information to digest, so we can understand if this appears confusing at first glance.
In layman's terms, family protection coverage financially safeguards you and your family member if said parties are involved in an accident and the at-fault driver's (in this case, the other party) policy limits are less than your family protection coverage limits.
So, if you or a family member happens to get into an accident and the other driver doesn't have a significant liability insurance limit, your family protection coverage will cover all (or a portion) of the remaining expenses.
*Although the wording is slightly different, OPCF 44 provides drivers in Ontario with a similar level of coverage.*
**We also recommend always speaking to a licensed advisor to make sure this coverage is right for you. **
How does family protection coverage work?
Family protection coverage financially covers you if you are involved in an accident in which the at-fault driver's policy limits are less than your liability insurance limits.
However, drivers should be aware that there are some coverage stipulations. The stipulations under the Family Protection Endorsement are as follows:
"a. The Insurer's maximum liability under this endorsement, regardless of the number of eligible claimants, or number of insured persons injured or killed, or number of automobiles insured under the policy shall be the amount by which the Limit of Family Protection Coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person jointly liable therewith.
b. Where this endorsement applies as excess, the Insurer's maximum liability under this endorsement is the amount determined in accordance with paragraph 3(a) less the amounts available to eligible claimants under any first loss insurance as referred to in paragraph 7 of this endorsement."
Simply put, your family protection coverage will pay for expenses that aren't covered by the at-fault driver's policy and fall within the your SEF 44 coverage limits.
Are you feeling confused? We can't blame you — understanding the nitty-gritty details of insurance endorsements can be tricky, especially SEF 44. That's why we've put together a handful of simple examples.
The following examples will explain when your family protection coverage will entirely, partially, and not compensate you for your total loss.
When would your family protection coverage cover the entirety of your total loss?
You will be fully compensated if your total loss is more than the at-fault driver's limit and less than your family protection coverage limit.
For instance, imagine that you get t-boned by another driver and are not deemed at-fault. After all is said and done, a court awards you with $1,000,000 for your injuries. The other driver has $500,000 in liability insurance, and you have $1,000,000 worth of family protection coverage. In turn, you'll receive $500,000 from the at-fault driver and $500,000 from your family protection coverage. You can then sue the at-fault driver for the $500,000 that they’re policy doesn’t not cover. *Payouts can also differ on a case by case basis.
When would your family protection coverage cover some of your total loss?
You will be partially compensated if your total loss is more than the at-fault driver's limit and less than your family protection coverage limit.
After getting t-boned by another driver, the court awards you $1,500,000 for injuries. The at-fault driver has $500,000 in liability coverage, and you have $1,000,000 in family protection coverage.
In this scenario, you would still receive a total of $1,000,000 ($500,000 from the at-fault driver’s liability coverage and $500,000 from your family protection coverage). You can then sue the at-fault driver for the remaining $500,000 that they’re liability insurance doesn’t cover.
Although you don't receive the entire amount initially, it's much better than receiving the bare minimum.
When would you receive no additional compensation from your family protection coverage?
You won't receive any additional payment if both parties have the same coverage limit.
We'll use our t-bone example one more time. After getting t-boned by another driver, the court awards you with $2,000,000 for injuries. The at-fault driver has $1,000,000 in liability coverage, and you have $1,000,000 in family protection coverage. Since your family protection coverage does not exceed the at-fault driver's liability limit, you don't receive any additional coverage.
Where can you get family protection coverage in Ontario?
Car insurance companies in Canada aren't legally required to offer the Family Protection Endorsement.
If you're interested in purchasing family protection coverage, the first thing you should do is reach out to a Surex insurance advisor.
Our team of top-notch insurance brokers can not only answer any questions that you have about family protection coverage, but they can also help you save on car insurance!
We can provide you with upwards of ten cheap, personalized car insurance quotes.
Chat with one of our advisors to learn how we can help you save 25% or more by bundling your policies with one of our providers.
Want to learn more about family protection coverage?
If you want to learn more about the rules regarding family protection coverage Ontario and Alberta have in place, don't hesitate to reach out to one of our advisors.
Contact us today to learn more!