YOU SHOULD BE AWARE THAT
SEF 44 AUTO INSURANCE PROTECTION HAS LIMITATIONS
SEF endorsements (Special Endorsement for Family Protection) are a wonderful thing. They allow Albertans to protect themselves and their family in case they are involved in a car accident in circumstances where the at-fault motorist is uninsured or has insufficient insurance to pay the injured Albertans their damages. Albertans are able to purchase SEF 44 endorsements from their auto insureres at an extra cost and, in our experience as a personal injury counsel, virtually all of our clients have purchased this type of coverage.
Unfortunately, there is a gap in the SEF coverage which, needs to be addressed. At the present time (with the present wording of the SEF 44 endorsement), if the at-fault motorist has no insurance or less insurance than the injured Albertan, then the injured Albertan has access to their SEF 44 coverage. The best way to illustrate this is with numerical examples. Let’s assume that the injured Albertan has one million dollars worth of third party liability coverage and an SEF endorsement. If the at-fault motorist has no insurance and the injured Albertan is catastrophically injured with damages in excess of a million dollars, then the injured Albertan can claim $200,000.00 from the Motor Vehicle Accident Claims Fund and, potentially, $800,000.00 on their SEF. If the at-fault motorist has $500,000.00 worth of insurance coverage and the injured Albertan with a million dollar SEF is catastrophically injured with damages of over one million dollars, then the injured Albertan has access potentially to $500,000.00 from their own SEF 44 coverage.
The problem: assume that the at-fault motorist has $1,000,000.00 worth of public liability insurance and two passengers in his vehicle, who are severely injured, and also assume that in the “innocent” vehicle there is a family of four that all sustained catastrophic injuries as a result of being impacted by the at-fault vehicle. In this example, there are six injured Albertans with significant or catastrophic injuries all claiming against the at-fault motorist. Now, assume that all six innocent injured people all have auto insurance policies with $1,000,000.00 public liability coverage and SEF 44 endorsements. The way the formula currently works, there is no under insurance because the at-fault motorist carries the same amount of insurance that is available to each of the injured parties on their SEF 44 endorsements. Unfortunately, in this example, the six injured Albertans all have to split the $1,000,000.00 third party liability limit of the at-fault motorist with no ability to claim on their own SEF 44 coverage.
Section 3 of the standard SEF 44 endorsement provides the formula for determining if the at-fault motorist is under insured. This formula is as follows:
The injured Albertan’s SEF insurance limits $1,000,000.00
The at-fault motorist’s insurance limits $1,000.000.00
Amount that injured person can claim
from their SEF 44 Insurance $ 0.00
If the at-fault vehicle has the same amount of insurance as the injured person, then the injured Albertan has no access to SEF 44 coverage even if they only received a portion of the at-fault motorist’s insurance because there are several seriously injured claimants.
If we assume that each of the six seriously injured Albertans are entitled to damages of $500,000.00 against the at-fault motorist’s $1,000,000.00 insurance policy. That is $3,000,000.00 of damages against $1,000,000.00 of insurance. Each injured Albertan in this scenario gets only $166,667.00 (and the rest of their needs must be satisfied either out of their own pocket or through social programs funded by tax dollars). The irony is that if the at-fault motorist had no insurance or $200,000.00 of coverage, those fictitious six seriously injured Albertans would be better off. In other words, the current wording of the SEF 44 endorsement does not deduct from the innocent party’s SEF endorsement the share of the at-fault motorist’s insurance that they actually receive but, rather, the full amount of the at-fault motorist’s insurance coverage for the purposes of determining whether there is under insurance.
Clearly, there is a need for either a change in the wording of the SEF 44 endorsement or, alternatively, different family protection endorsement that Albertans can purchase that would address and rectify the situation. In other words, in the experience of Robinson LLP, there is a need for a family protection endorsement that protects injured victims where there are numerous injured parties that have to share the at-fault motorist’s third party liability insurance. Ironically, as it stands now, where there is more than one innocent Albertan injured in an accident, they are probably much better off if the at-fault motorist has no insurance or little auto insurance.