The RCCAQ was recently made aware of a questionable practice engaged in by certain auto dealers: the insurance broker is sent an "Official Undertaking" signed by the insured. The document reads as follows:

"As per our conversation, I would like to obtain your official undertaking in writing covering the following points:
- You undertake to offer me, without restriction, replacement value insurance for a set term of ____year(s), regardless of the number of claims recorded in my automobile insurance file.
- You undertake to maintain, for the above-mentioned term, a rate of $_______ for the replacement value insurance and you undertake not to increase this amount.
- In the event of a partial loss, you undertake to replace any damaged parts with new manufacturer's parts for the duration of the above-mentioned term."

This document also contains a section in which the broker is asked to:

• Sign "on behalf of the firm and/or the insurance company".
• Fax the document back to the auto dealer.

The RCCAQ strongly advises you:

• NOT to sign this document. If you do, you will engage the insurer's liability. This could then lead to a professional liability loss if the insurer refuses to pay a claim.
• Notify your staff.

If you have any questions, please feel free to contact us.