AMF rules gap coverage guarantees are “insurance products” when not offered by vehicle creditors, lessors

Gap coverage insurance — which guarantees the difference between an outstanding loan balance on a vehicle and its value at the time of a total loss — counts as an “insurance product,” depending upon whom offers the product, Quebec’s insurance regulator has ruled.
Gap coverage guarantees count as “insurance products” if offered by someone other than a vehicle creditor or lessor, the Autorité des marchés financiers (AMF) said in one of two recent notices pertaining to motor vehicle insurance products.
“However, where a creditor or lessor waives its right to claim the gap in a contract, such waiver is in favour of the purchaser or lessee and therefore not considered to be insurance coverage.”
In late March 2009, the AMF published a notice announcing that replacement guarantees would constitute insurance products subject to AMF oversight.
As part of its analysis of replacement guarantees, the AMF noted that other motor vehicle products might also be considered insurance products.
In a May 2010 bulletin, the AMF stated its position on gap coverage guarantees.
The notice also spells out a definition of what the provincial insurance regulator deems to be a motor vehicle insurance product.
“Rather than making a determination in respect of each existing or future motor vehicle insurance product, the AMF elected to establish what it deems an insurance product to be,” the AMF says in its notice.
The AMF considers a motor vehicle insurance product to be:
•    a product offered at the time of sale or lease of a motor vehicle or a component or accessory thereto; and
•    a product providing for payment of an indemnity on the occurrence of an event resulting from a specified risk (loss, theft, accident, vandalism) in consideration of payment of its purchase price.