Quebec insurers simplify auto insurance policy language

The Groupement des assureurs automobiles (GAA), an industry group in Quebec, has announced a new plain language auto insurance policy to take effect March 1.

In 2010, GAA and Autorité des marchés financiers (AMF), the provincial regulator, began reviewing policies Q.E.F. No. 1 and 5, and their endorsements, so that consumers would find them easier to read and to understand.

A 2011 poll of 1,000 Quebec residents found that 58% found the terms in auto insurance policies to be unclear, and that the legal language used was much too complex to understand without years of schooling.

“The automobile insurance policy is one of the most important contracts in Quebec, not only given the number of policyholders, but also because it provides peace of mind when we get behind the wheel. It was crucial for the insurance industry to simplify the policy so that consumers could easily understand it,” Line Crevier, supervisor of technical affairs and IBC-GAA Information Centre noted in statement.

The new policy also include shorter sentences and bulleted lists, along with simplifying legal language.

Policyholders will receive the new policy language upon renewal.

For example, the term “financial consequences” replaces the term “pecuniary consequences”, while “additional coverages” replaces “additional agreements” and “motor vehicle used for personal purposes” replaces “automobile of the private passenger type.”

“When the policyholder receives the new policy we hope that he or she will find it a straightforward document that is easy to read and understand,” Crevier noted. “As for insurers, the plain language document will also make it easier to explain the coverages and rights, as well as the policy terms and conditions in the event of a loss.”