Consumers buying cars in Quebec sometimes faced confusion and uncertainty in the past when dealing with dealers’ and insurers’ replacement guarantees. They may find themselves resting a little easier from now on, knowing they are now under the protection of the province’s Autorité des marchés financiers.
July 31 deadline
A year ago, the Autorité, whose mandate is to regulate and supervise securities in Quebec, announced that henceforth it would be overseeing automobile replacement guarantees. At that time, a 12-month transition period was started. It was subsequently extended to July 31 this year, so that insurers, manufacturers and replacement guarantee administrators would be able to implement the changes while maintaining business as usual.
A new automobile insurance policy, known as form F.P.Q. No 5, standardizes car replacement guarantees issued by insurance agents and brokers, as well as by automobile dealerships. The Autorité believes that enshrining the guarantee will better protect consumers. Anyone buying or leasing a vehicle can obtain a guarantee that can be used to replace it, if it becomes a write-off as a result of an accident.
A standard guarantee
However, until now there have been many different versions of this type of guarantee. The Autorité’s new policy creates a single standard. Sylvain Théberge, a spokesman for the Autorité, said in an interview that much debate preceded the adoption of the standardized guarantee. “Automobile dealerships were involved a lot in replacement guarantees and there was a growing debate as to whether the replacement guarantee was an insurance product or not,” he said.
In the end, it was decided that a replacement guarantee was indeed an auto insurance product and that it had to be subject to regulation by the Autorité. “It wasn’t exactly a jungle, but it was a little difficult to figure things out in this dossier,” he added. “So we wanted everything to be clear for the protection of consumers in order to make sure there were precise rules that framed all of this.”
Stricter regulation
As far as consumers are concerned, it will now be mandatory to give them a precisely worded replacement guarantee document when they buy or lease a vehicle, said Théberge. “Companies will now also have to submit to very strict regulation. So people now will have rights, will have something to fall back on if ever they have problems with their guarantee.
“This changes a lot. For consumers, this is certainly a protection that is much improved.” Théberge said that before now, replacement guarantees weren’t necessarily worse, but they contained more grey areas for the consumer. He noted that although this type of guarantee is a relatively new insurance product, it has been growing in popularity and so it was necessary to regulate it.