An Insurance Policy Primer: S.E.F. 44

Insurance is one of the few things we’re comfortable paying thousands of dollars for in the hopes that we never, ever have to use it. That’s no excuse, however, for not knowing exactly what your policy does (and, more importantly, does not) cover, because the reality is that even the best, safest drivers get into accidents.

Not all motor vehicle insurance policies are created equally, and sometimes it isn’t until it’s too late that people actually scrutinize their policies. Standard Endorsement Forms (abbreviated S.E.F. on your policy) are additional forms of coverage which are not required in Newfoundland and Labrador and which increase your monthly premiums, but may well end up being worth the extra few dollars. S.E.F. 44, commonly referred to as “Family Protection Endorsement”, does just that: it protects the policyholder and his or her immediate family members from underinsured third party drivers.

What does it mean to be underinsured? You might think that if you’re in a serious accident that leaves you injured, disrupts your enjoyment of life, and requires you to take considerable time off work, the driver who caused the accident should be responsible for compensating you for your injuries. You would be correct, but there’s an important distinction between legal entitlement and actual damages that can reasonably be recovered. In Newfoundland and Labrador, the minimum amount of third party liability insurance (referred to as “Section A” on automobile insurance policies) that a driver must carry is $200,000.00. That may sound like a lot of money, but depending upon the nature of injuries, that money can be depleted quickly. The negligent driver’s insurance company, however, is only liable up to the policy limits—after that, an injured driver can get a personal judgment against the other driver and attempt to collect, but there’s never any guarantee that the money will be realized. Hence, a legal entitlement could still amount to an insufficient payout at the end of the day.

S.E.F. 44 coverage offsets the consequences of getting into an accident with an underinsured driver by increasing the policy limits from the amount carried by the third party driver to your Section A limits. In other words, if you are injured by a driver carrying the minimum amount of insurance, but your own insurance policy includes $1,000,000.00 in third party liability coverage, then you are protected up to $1,000,000.00 for your own personal injuries in the event of an accident.

It’s important, however, to be aware of the limitations on S.E.F. 44 coverage. Namely, this addition to your regular insurance policy does not work as an “add on” to a negligent driver’s policy, and is only engaged when your Section A limits are higher than those of the other driver in the accident. For example, if you are in an accident and you carry $500,000.00 in coverage but so does the other driver, your S.E.F. 44 coverage will not make up the difference even if your injuries are in excess of $500,000.00. This can be a devastating blow, particularly if you had a misconception about just how protected you were before the accident; the only way to prevent this is to ensure your own Section A limits are sufficiently high—in the hopes, of course, that you never, ever have to use it.

Your insurance policy shouldn’t sit in your filing cabinet until the day you unexpectedly need to find it. Review your limits and the extent of your coverage, and if you have any questions it costs nothing to call O’Dea Earle and speak to an experienced injury lawyer who can give you the peace of mind to get behind the wheel, no matter what might happen.