Part VI of the Insurance Act and OAP 1's statutory-conditions section impose binding rules on both the insured and the insurer. Brokers must explain them at policy delivery.
- Material change in risk, the insured must promptly notify the insurer of any change material to the risk (new driver in the household, change in vehicle use from pleasure to commercial, out-of-province move). Failure to notify can void coverage for losses caused by the unreported change.
- Authority to drive, coverage applies to the insured automobile while it is being driven by a person with the insured's consent and who is qualified to drive (e.g., legally licensed). A driver operating the vehicle without consent, or while unlicensed/disqualified, may trigger an exclusion or a recovery right against the driver.
- Misrepresentation, false statements made by the insured (or on behalf of the insured) that are material may void the contract. Reinforces the uberrimae fidei duty from the General Insurance module.
- Cancellation by the insurer, the insurer may cancel for cause on prescribed notice (commonly 15 days by registered mail in Ontario, shorter for non-payment); the insured may cancel at any time, subject to short-rate premium calculation.
- Notice of loss / claim, the insured must give prompt written notice of an accident or loss and complete a Proof of Loss within the time specified, and cooperate in the investigation. Failure may bar the claim.
- Reinstatement after cancellation for non-payment, strict conditions on what coverage exists between cancellation and reinstatement; many losses in that window are uninsured.
Common mistake: a client who tells the broker about a household change "next time we talk" instead of immediately. Material-change notice is not optional; the broker should document the date the change was reported.
🧠 Memory hook, "Tell, Drive, Truth, Cancel, Notice": material change, authority to drive, no misrepresentation, cancellation rules, prompt notice of loss.
Recall: How quickly must the insured report a material change in risk? What does "authority to drive" require of any driver of the insured vehicle?