Personal auto premiums are rated against a small set of variables that brokers must capture accurately at application and at every renewal.
- Rating basis, Ontario allows insurers to use approved rating variables: territory (postal code), use of the vehicle (pleasure, commute, business), kilometres driven annually, driving record (convictions, at-fault claims), the principal driver of each vehicle, and the listed occasional drivers. Variables not approved by FSRA may not be used.
- Principal vs. occasional driver disclosure, every regular driver must be listed. Misrepresenting a principal driver as occasional (to obtain a lower rate, classically a parent named as principal driver of a vehicle actually driven by a young household driver) is material misrepresentation, voiding the policy and triggering E&O exposure for the broker who knew or ought to have known.
- Newly acquired vehicle (replacement or addition), most insurers grant automatic coverage on a newly acquired vehicle for a limited period (commonly 14 days) under OAP 1's "newly acquired automobile" provision, provided the insured already has a policy with that insurer covering at least one vehicle. The insured must report the acquisition within the specified period to retain coverage.
- Out-of-province move, when an insured moves out of Ontario, the policy must be reissued in the destination jurisdiction's standard form; Ontario coverage does not follow the insured indefinitely.
Common mistake: assuming a teen driver added "after the fact" to a policy is a routine endorsement. If the teen has been the de facto principal driver for weeks before being added, the insurer may rescind back to inception for non-disclosure. The broker should capture intended driving patterns at application.
⚠️ Trap: The automatic newly-acquired-vehicle coverage applies only to vehicles acquired during the term of an existing policy with that insurer. A first-time buyer with no policy in force has no coverage until a new policy or binder is in place.
Recall: Why is principal-vs-occasional driver disclosure so heavily policed? What does automatic newly-acquired-vehicle coverage require?