Industry jargon is confusing to those outside the field. Since most motorists concern themselves with car insurance only at renewal time, it’s easy to miss the peculiar terms that sometimes arise. Many people know that a rider is an add-on to an insurance policy. When it comes to car insurance in Ontario, an endorsement is simply the proper name for a rider. It’s a way of altering the terms of an auto insurance policy to more closely match the needs of the policyholder.
What is a car insurance endorsement?
In Ontario, car insurance must cover any vehicle using public roads. The provincial government created a standard auto insurance policy that provides a minimum of required coverage. The standard policy includes four sections.
- Third-Party Liability Insurance.
- Statutory Accident Benefits.
- Property Damage-Direct Compensation.
- Uninsured/Unidentified Motorist Coverage.
All cars must carry these four sections as well as protection in certain amounts. Together, these form the mandatory car insurance policy, in place since 2001 and most recently updated in June 2016.
Endorsements represent additions to the basic requirements. Perhaps the most common endorsement is collision coverage. Collision as well as comprehensive coverage feature in most motorists’ policies, even though Ontario requires neither for legal driving access. Since a car represents a major investment, most drivers want assurance that they have financial protection in case of damage or loss.
Collision and comprehensive endorsements may also be required by financing companies when a motorist borrows money to purchase a vehicle. This ensures financial protection for the lending agency as well as the car owner.
Types of endorsements in insurance
Many changes to the basic Ontario auto insurance policy are known by OPCF numbers. This stands for Ontario Policy Change Form, and an even a more formal name for a rider, or endorsement. Private companies supply the insurance industry in Ontario and each has its own way to conduct business. While overseen by the Financial Services Commission of Ontario, each company has considerable freedom to operate as it chooses.
This freedom extends to endorsements. Every company decides which it will offer. Some common endorsements are popular enough with auto insurance consumers that these are nearly universal. The OPCF endorsements for which the FSCO provides forms include:
- Providing Coverage When Named Persons Drive Other Automobiles or Rent or Lease Other Automobiles, OPCF 2: extends coverage to other vehicles for those named in the endorsement.
- Permission to Rent or Lease Automobiles and Extending Coverage to the Specified Lessee(s), OPCF 5: used when the policyholder leases a vehicle as well as establishing the policy acts as issued only to the policyholder, not the leasing agent.
- Permission to Rent or lease (unspecified lessees- short term leases only), OPCF 5C: as above, but with conditions.
- Coverage for Transportation Replacement, OPCF 20: covers the cost of renting a car after an insurable incident.
- The alteration, OPCF 25A: used to change the terms of an auto policy already in effect.
- Liability for Damage to Non-Owned Automobile(s) and Other Coverages When Insured Persons Drive, Rent, or Lease Other Automobiles, OPCF 27: extends the terms of personal auto insurance to other vehicles the policyholder drives.
- Reducing Coverage for Named Persons, OPCF 28: limits insurance provisions for some drivers named on the policy.
- Excluded Driver, OPCF 28A: Names drivers for whom policy provisions do not apply, that is, drivers who cannot drive the insured vehicle. This may be used to exclude certain high-risk drivers in a household, for example.
- Additional Coverage For Named Person(s), OPCF 29: Adds insurance coverage only to the drivers listed on the endorsement.
- Removing Depreciation Deduction, OPCF 43: also known as replacement value coverage, it’s typically added to new cars in the first few years of ownership.
- Family Protection Coverage, OPCF 44R: protection against uninsured and underinsured motorists and hit and run situations.
Less Common Endorsements
- Drive Government Automobiles, OPCF 3
- Suspension of Coverage, OPCF 16
- Reinstatement of Coverage, OPCF 17
- Monthly Basis Reporting Fleet (Applicable to Ontario licensed automobiles), OPCF 21A
- Blanket Fleet Coverage for Ontario Licenced Automobiles, OPCF 21B
- Business Operations – Liability for Damage to Non-Owned Automobile(s) in Your Care, Custody or Control, OPCF 27B
- Agreed Limit for Automobile Electronic Accessories and Equipment, OPCF 38
- Fire Deductible, OPCF 40
- Removing Depreciation Deduction for Specified Lessee(s), OPCF 43A
- Agreement not to Rely on SABS Priority of Payment Rules, OPCF 47
- Added Coverage to Offset Tort Deductibles, OPCF 48
Insurance endorsement: Additional Insured
In-car insurance terms, an Additional Insured is someone other than the policyholder whose name is added to a policy. This could be a spouse, child, or anyone who regularly uses the insured vehicle for non-business use, in the case of a personal car insurance policy. Commercial fleet policies may feature any number of additional insureds. These are employees with insurance permission to operate a company’s vehicles in the line of their jobs. In some cases, they may have a vehicle permanently assigned.
Commercial insurance endorsements
Commercial endorsements are simply changes to standard commercial vehicle insurance policies. Each business has its own unique needs and endorsements help customize policies to match features and prices desirable to the client company. For example, endorsements could restrict the use of company vehicles, excluding employee personal use. A pizza delivery company may have multiple drivers using a single car throughout the week, so offering a “company car” to an employee is a different situation from a business with a team of field technicians.
Other Discounts and Endorsements
Adding endorsements usually adds to the cost of an auto insurance policy. It’s not always the case, though, as some endorsements remove features, rather than adding them. Another cost-saver for many motorists come in the form of discounts. These may not technically be endorsements, since the terms of a policy aren’t changed by them.
Nevertheless, discounts create significant savings when an insurer offers these to its customers. Multi-line discounts come when a driver buys both car and home insurance through a single company. Additional insurance, such as boats, motorcycles, and RVs, may also qualify for multi-line discounting, depending on the insurance company.
Older drivers and motorists who use the same insurer over a period of time may earn maturity and loyalty discounts. Young drivers completing approved driver training may also earn lower rates. Seasonally using winter tires is yet another discount many insurers now offer. Once again, the options available to a driver depending on the individual insurer in question. Not all companies offer the same discounts.