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We all drive with the hope and misplaced expectation that we will not be involved in a car crash. Unfortunately, a lack of foresight and proper planning can lead to devastating consequences in the event of a motor vehicle accident and you do not have the proper amounts of auto insurance to will protect you and your family while you recover from your injuries. This article will provide you with a primer on auto insurance in Ontario, review the recent changes to the statutory benefits (‘SABS’) and offer some suggestions to consider reviewing with your broker when purchasing car insurance.

We all drive with the hope and misplaced expectation that we will not be involved in a car crash. Unfortunately, a lack of foresight and proper planning can lead to devastating consequences in the event of a motor vehicle accident and you do not have the proper amounts of auto insurance to protect you and your family while you recover from your injuries. This article will provide you with a primer on auto insurance in Ontario, review the recent changes to the statutory benefits (‘SABS’) and offer some suggestions to consider reviewing with your broker when purchasing car insurance.

In Ontario, everyone who drives a car needs to purchase a minimum amount of car insurance. The minimum amount of liability insurance required is only $200,000. Ensuring that you have sufficient liability coverage is only one of a host of choices and decisions you will need to make when purchasing the right amount of coverage for yourself, your family and your budget.

There have been recent changes to the Ontario insurance regulations. As of September 1, 2010, all renewals for car insurance in Ontario have had the amounts of “optional” car insurance benefits significantly cut. When you renewed your car insurance after September 1, 2010, many of the benefits that were previously ‘automatic’ were made ‘optional’. When speaking with your broker it is a good idea to have these changes clarified.

If you have ever discussed insurance with your insurance broker, you quickly learned that the car insurance “options” or “optional benefits” can be intimidating and complicated. In addition to the minimum liability amounts, you have the option to purchase additional ‘buckets’ of insurance. These ‘buckets’ of Statutory Accident Benefits (or ‘SABS’) are your first line of defence after a car accident to support you in getting well and pay the bills if you are unable to work. SABS are there to provide you with initial monetary care and support during your recovery.

Mandatory Insurance

So what are the basic car insurance options typically included in Ontario? Mandatory coverage in order to drive in Ontario must include the following:

  • Third party liability which covers you if you accidentally injure someone or damage their property;
  • Accident benefits (‘SABS)’ provide statutorily designated ‘buckets’ of coverage for supplementary medical, rehabilitation and income replacement benefits. See below for further details.
  • Direct compensation property damage allows you to claim for damage to your car if the motor vehicle collision is not your fault, even if you only have ‘one-way’ insurance;
  • Uninsured/unidentified driver coverage protects you and your family if you are injured by an uninsured or unidentified driver, even if you are a pedestrian or bicyclist.

Optional Insurance

Most people will also choose to purchase additional coverage for their vehicle in the form of collision coverage or comprehensive coverage endorsements.

  • Collision coverage requires your insurance company to reimburse you for damage caused to your vehicle as a result of a collision, even if you are at fault. If your car is leased or financed this coverage is typically required.
  • Comprehensive coverage protects you for loss or damage to your vehicle not caused by a collision, such as theft, fire, flood or windstorms. These amounts are determined based on the value of your vehicle – be sure to speak with your broker if you are driving a new car or collectible/antique.
  • Statutory Accident Benefits or ‘SABS’ are a critical part of your insurance coverage and are essential to your financial health in the event you are injured in a collision. This chart outlines the major benefits and what has changed after September 1, 2010. The benefits highlighted indicate the significant changes in the mandatory statutory accident benefits from before and after September 1, 2010:
Benefit Before September 1, 2010 After September 1, 2010
Income Replacement Benefits to provide you with income if you are unable to work as a result of our injuries. 80% of net weekly income;
Maximum amount of $400 per week unless optional benefits are purchased. Waiting period of 7 days.
70% of gross weekly income;
Maximum amount of $400 per week unless optional benefits are purchased (up to $1,000 per week). Waiting period of 7 days.
Non-Earner Benefits to compensate you if you suffer a complete inability to carry on normal life $185 per week after a 26 week waiting period; after two years this increases to $320 for students. $185 per week after a 26 week waiting period; after two years this increases to $320 for students.
Caregiver Benefits for those who are the primary caregiver of someone under 16 years of age. $250 per week plus $50 for each additional dependant. $0
Only if optional benefit is purchased.
Medical and Rehabilitation benefits to pay for physiotherapy, wheelchairs and other expenses not covered by OHIP $100,000 or
$1,000,000 for catastrophically injured individuals
$3,500 for “Minor Injuries” or
$50,000 for injuries not ‘Minor’ or catastrophic; or
$1,000,000 for catastrophically injured individuals
Attendant Care Benefits to pay for someone to help care for you as a result of your injuries $72,000 over two years or
$1,000,000 for catastrophically injured individuals
$36,000 or
$1,000,000 for catastrophically injured individuals
Housekeeping and Home Maintenance to pay for someone to help with housekeeping chores, snow removal, yard work etc. $100 per week for two years $0
Only if optional benefit is purchased

For more information on the above, visit the Financial Services Commission of Ontario, the governing body for insurance in Ontario, at www.fsco.gov.on.ca under “Auto Insurance”.

As the above chart illustrates, there are two significant areas of change:

A. The change in medical rehabilitation benefits to $50,000

One of the most significant changes in the post-September 1, 2010 insurance is the reduction of maximum medical and rehabilitation benefits from $100,000 to $50,000 over the course of 10 years. While $50,000 may appear sufficient at first glance, many of the common injuries sustained in a motor vehicle collision follow a progression in their treatment from physiotherapy to gym programs, acupuncture treatments and massage therapy over a course of several years. The costs can quickly add up to more than $50,000. Consider that this treatment is required to not only help you get better, but also to allow you to keep working, manage your pain and if required assist in your rehabilitation into a new career or life.

Another change that strongly impacts the availability of the $50,000 is that the cost of the insurance company’s assessments – their tool for determining if the treatment recommended by your medical team is ‘reasonable and necessary’ – are now subtracted from your $50,000 for medical rehabilitation. This is yet another strain on an already insufficient amount. For these reasons, I would encourage everyone to purchase the $100,000 optional limit for medical and rehabilitation benefits. I would also encourage most people to consider purchasing an optional benefit to $1,100,000 in medical rehabilitation. Keep in mind that if you purchase it on your policy, in most cases it will cover you and your dependants (i.e. spouse, children etc) for no extra charge.

B. The change in caregiver benefits and housekeeping/home maintenance

Practically, the restricted availability of caregiver benefits will have the most impact on unpaid caregivers. Unpaid caregivers include stay at home parents, parents caring for disabled children, and children caring for their elderly parents. The elimination of caregiver benefits from mandatory coverage will leave these already vulnerable families without weekly benefits for the first two years after the accident. This is further compounded by the removal of housekeeping and home maintenance benefits.

If you have young children at home or are otherwise involved as a key caregiver who does not earn a paid income, strongly consider adding caregiver and housekeeping/home maintenance benefits to your insurance plan. In the event of an accident, this will provide you with a means to pay for a substitute caregiver while you recover from your injuries.

Thoughts to Keep in Mind

Your insurance broker is a professional who is obligated to properly advise you of your options in purchasing motor vehicles insurance, not just try to sell you the cheapest premium. Brokers are under a duty to you as a consumer and may be held liable if they fail to describe to you all of the available optional benefits.[1] It is worth your time, and peace of mind, to speak with your broker to ensure that you and your loved ones are adequately covered by your policy. After a car accident is not the right time to try to deal with this issue..

Additional options you might need to keep in mind to discuss with your insurance broker, depending on your personal situation, may include:

  • Everyone – protect yourself to make sure you will have adequate funding to get the treatment you require. Optional medical/rehabilitation benefits should be at $100,000.
  • Young Children? Discuss purchasing optional caregiver benefits and additional housekeeping/home maintenance benefits. Ensure that your liability policy limits are generous with a family protection endorsement to protect your family in case of tragedy (see below re: family protection).
  • Family protection? Standard in most Ontario policies, the family protection plan provides additional protection if you are involved in a motor vehicle accident caused by an underinsured or unidentified motorist.  This allows you to access your own liability policy limits if you are insufficiently covered by the at-fault driver’s insurance.

 

For example, if you have a $3 million dollar liability policy on your vehicle and are struck by a driver with the minimum $200,000 policy, the family protection endorsement will allow you to access up to $2.8 million in coverage from your own insurer.  I would strongly recommend high liability policy limits and the family protection endorsement for anyone who is frequently driving with multiple passengers or young children who can suffer devastating injuries in a motor vehicle accident.

 

  • Hard Worker? Ensure that your income replacement benefits are set at 70% of your gross weekly wages. For most people, if you have income in excess of $34,000 per year, the standard $400 will not be sufficient.
  • New car? Discuss whether a new vehicle protection plan is appropriate for you and your budget. Without this endorsement, you will receive the “fair market value” of your car, not what you paid for it (even if you just drove it off the lot!). You can lock in the value of your car by requesting your broker remove the depreciation deduction (replacing your car with a new one should it be stolen or declared a total loss) or a new vehicle protection plan that will protect your new car against depreciation.

As general rules of thumb, everyone should purchase the increased Medical and Rehabilitation and attendant care benefit at $1,100,000. Most people should consider purchasing increased Income Replacement Benefits. Those of you with children should consider optional Caregiver or Housekeeping/Home Maintenance benefits along with the increased liability limits.

Speak with your insurance broker about the choices in coverage and options that are right for you and ensure that you are adequately protected for your peace of mind. Keep the above tips and thoughts in mind when comparing your insurance policy coverage and premiums from previous years.

If you have any questions about insurance issues or accident benefits arising out of a motor vehicle collision whether in Ontario or elsewhere, please contact Anna Szczurko or call 519-660-7784 for a free consultation.

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