[vc_row][vc_column][vc_column_text]November 2, 2010

By Brian Babcock

Effective September 1, 2010 the Ontario standard form automobile policy changed, for the fourth – or perhaps fifth – time in twenty years, to conform to new regulations relating to statutory accident benefits (sometimes referred to as “no fault benefits”). These are the benefits paid beginning immediately after an accident without having to sue to prove fault. They include weekly indemnity payments (also called “income replacement benefits”) to replace lost income; medical and rehabilitation benefits; attendant care benefits; caregiver benefits to replace the lost ability of a caregiver; housekeeping benefits; and other benefits which are less commonly relevant.

The changes are designed to lower the cost of insurance. However, unless we suddenly have fewer accidents, that means for the average person less insurance coverage for the same cost. When it comes to no fault benefits, most people only buy mandatory coverage. This change should allow the government to avoid insurance cost as an election issue.

I find that most people are very confused about these changes. The confusion is compounded by the fact that the change only applies to policies as they come up for renewal, not immediately; and because most benefits are subject to options to purchase additional coverage, at additional cost. When the changes were announced, there were very few details about what the optional benefits would cost, so consumers were left puzzled. Most of us still are.

The majority of the changes affect no fault accident benefits. There is also a new option to remove the $30,000.00 deductible in lawsuits against other drivers for pain and suffering if you are seriously hurt.

Important changes include:

• A new concept – “minor injuries” – limited to $3,500.00 worth of rehabilitation and medical benefits (down from up to $100,000.00 before). Beware – what the policy calls ‘minor’ might seem major to you.
• Basic rehabilitation and medical benefits for injuries which are not ‘minor’ are reduced to $50,000.00 from $100,000.00. The average rehab claim is apparently $40,000.00 – very close to the new limit.
• Reductions in attendant care benefits.
• Reductions (and in some situations elimination of) payments for housekeeping or home maintenance.
• Changes to the definition of “catastrophic impairment” (which triggers increased benefits).

From what I have heard so far, the pricing of optional coverages is a disincentive for many people to pay for more than basic mandatory coverage, but we should think carefully. The right choice may be different for some of us than for others.

I am an insurance lawyer, not a broker – they know far more about prices, options and alternatives than I do. The correct decision for any one situation depends upon a variety of factors – income; assets; dependants; other insurances, availability of cash; and risk tolerance. These are the issues brokers are trained to review with clients.

The better your other coverage, the less you would want to pay to increase auto benefits. If you lack good extended health care, you will want to seriously consider increasing at least your rehab benefits. At least one broker I know is eager to have his clients strongly consider buying increased attendant care benefits, which cover everything from home health care to meal preparation and personal grooming, where the need is created by injuries in a car accident.

On your next renewal, make sure your broker takes the time to thoroughly review your individual situation. They get paid healthy commissions to do so. Remember – it’s your health at stake here. Since no fault benefits are all most injured people receive, they are important.[/vc_column_text][/vc_column][/vc_row]