June 12, 2017 by Canadian Underwriter
The Alberta Insurance Council (AIC) has announced that its General Insurance Council (GIC) has approved the issuance of a restricted certificate of authority authorizing both vehicle and equipment dealerships to sell gap insurance.
Gap insurance is property insurance that covers all or a portion of the difference between the recovery received on primary automobile insurance in the event of a total loss and the manufacturer’s suggested retail price of a current year replacement vehicle or the difference between the recovery on a primary automobile insurance policy and an outstanding loan or lease obligation in the event of total loss.
Since 2001, AIC has issued restricted insurance agent licences to prescribed businesses that authorize them to sell certain types of insurance, the council explained in a press release late last week. Periodically, the Government of Alberta, through regulation, has expanded the list of businesses that are eligible to apply for this restricted form of licence.
While the provincial government determines the types of businesses that are entitled to apply for these licences, the GIC and Life Insurance Council (LIC) have the delegated authority to determine the types of insurance that can be sold under the restricted license and the conditions under which these products are marketed and sold, AIC explained.
In 2015, industry stakeholders sought the GIC’s approval to sell gap insurance through vehicle dealerships and equipment dealers.
After considering the proposals in depth, the release said, the GIC has approved the issuance of a restricted certificate of authority authorizing both vehicle and equipment dealerships to sell gap insurance. This will require motor vehicle dealerships and equipment dealerships wishing to become engaged in the sale of gap insurance to obtain a certificate of authority authorizing the sale of the product. In addition to the terms and conditions found in the Insurance Act and regulations, the GIC prescribed certain licensing conditions that will appear on the licences, the release explained.