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Cheaper auto insurance means less coverage for Ontarians

Cheaper auto insurance means less coverage for Ontarians

Beginning June 1, Ontario’s car accident survivors may be forced to make a lot of tough choices when it comes to their rehabilitation and quest for independence as newly disabled people.

This is because on that date, the no-fault benefits for catastrophic and non-catastrophic injuries on all mandatory auto-insurance policies in the province will be cut substantially. Those with non-catastrophic injuries, such as a broken leg, will receive a combined $65,000 instead of the $50,000 for care and $35,000 for treatment that they’re currently entitled to. On top of that, those with catastrophic injuries, such as a permanent disability, will go from receiving $2 million to $1 million.

There will be no change to the benefit for those with minor injuries, like whiplash or dislocations, but Ontario’s $3,500 benefit is on record as being the lowest minor injury benefit amount in the country.

“This change that is coming on June 1 is the single biggest cut to insurance that we’ve seen in many, many years in this province,” says Adam Wagman,  incoming president of the Ontario Trial Lawyers Association. He says he regularly sees accident survivors come into his Toronto-based personal injury practice at Howie, Sacks & Henry unaware of the coming changes to their benefits.

It’s estimated that under the current laws $1 million in care benefits lasts about 13 years, which is far from sufficient if you’re a young person living with a disability that may require around the clock care. But Wagman says it is at least a foundation on which to build rehabilitation.

“Thirteen years isn’t very long, but 13 years at least gives you time to get treatment, to recover as much as possible, to renovate your home and create an independent living space and enough time to hopefully become as independent as possible before that care is gone,” says Wagman.

Under these new reforms $1 million for care and $1 million for treatment becomes a single million dollar reward, effectively forcing survivors to give up five or six years of care under the basic benefit.

“This change means if you’re in a wheelchair, you’re going to have to make some decisions,” says Wagman. “Do you renovate your house to make it wheelchair accessible or do you save that money so you can have someone help to care for you so you can get a bath?”

So why are Ontarians suddenly having to choose between care and independence if they’re injured in a car accident? It’s actually an attempt to fulfill a promise by the Liberal government.

The Premium Promise

In 2013, when Kathleen Wynne’s Liberals were still a minority government and needed the NDP’s support for the 2013 budget, her administration promised a 15 per cent cut in auto-insurance premiums by August 2015. August came and went with Wynne calling 15 per cent “a stretch goal.” However, in the fourth quarter of 2015 they actually pulled it off. But Wagman says, that promise is being kept at the expense of coverage.

“One might think [the government] would look at insurance company profits, insurance company costs, taken a look at the amount of money insurance companies spend on insurance company doctors they use to deny benefits, or even insurance fraud and the amount of money that’s costing the system,” he says.

“Instead of looking at any of those areas to try to reduce insurance premiums, what the government has done is cut benefits, which is the easiest way to reduce premiums, but also the most devastating to those who really need those benefits.”

The actual reduction in insurance premiums for individuals as a result of the change isn’t as significant as the reduction in benefits. According to the Financial Services Commission of Ontario [FSCO],  the average decrease in rates across the market is only about 3.07 per cent.

Still, Michael Brattman, president of the Insurance Broker’s Association of Ontario, sees the reduction in benefits as the only way the government could realistically reduce premium costs.

“This is an election promise that consumers and voters want. But the reality is, if you want to reduce the cost of insurance, you have to make amendments to the product…Healthcare is expensive, so there is a need to make amendments to the product and the limits in order to support the demand for lower prices,” he says.

Brattman also points out that even with the reduction in coverage, the basic benefits available after June 1st will more than adequately cover healthcare expenses for the majority of accidents. Plus, in the unlikely event that you have to make one of the 1,000 catastrophic injury claims that occur in Ontario each year, there is something you can do to make sure you are still sufficiently protected.

Going Beyond Basic Benefits

Before the reduction in coverage, 90 per cent of Ontarians purchased only the basic level of auto-insurance. Given the reduction in basic coverage, both Wagman and Brattman recommend purchasing at least one of the buy-up options that are available.

“People have to know that what they’ve got to do is call their insurance broker or insurance company and tell them they want the optional Medical, Rehabilitation and Attendant Care Benefits,” says Wagman.

For those who are concerned that adding this additional benefit to their policy will once again raise the price of their monthly premium, Brattman says they can rest assured the increase will be minor.

“What I am seeing as an insurance broker is how inexpensive it is to increase your benefits to higher limits. For the price of three cups of coffee per month, consumers can increase their coverage to be better prepared in the event of an accident,” says Brattman.

He also recommends looking at all your insurance sources, including long-term care and disability insurance in both individual and group plans to make sure you have the broadest possible coverage, as auto-insurance only provides protection while operating a motor vehicle and one size never fits all.

“There is no carte blanche recommendation that can be applied across the board. We recommend consumers use an insurance broker – a professional that will inquire about their lifestyle and apply their expertise to ensure they have the right coverage for themselves and for their family,” says Brattman.

But having adequate insurance is only half the story, Wagman also recommends Ontarians increase their injury liability limits as well.

“If you are responsible for causing someone’s to be injury in an accident, that person may now sue you for more money because they don’t have as much in their basic benefits as they once did. So, if you really want to protect yourself and your family, you should really look at increasing your liability limits,” he says, recommending that people up the standard $1 million in liability coverage to at least $2 million.

Ultimately, Brattman sees these changes as beneficial to consumers in the long-term. He feels the changes give Ontarians more opportunities to customize their insurance needs and more freedom of choice, while simultaneously giving them the opportunity to control their own premium costs. Wagman on the other hand, remains skeptical and greatly concerned.

“As a society, our goal for rehabilitation should be about maximizing self-worth, independence and who you are as a person in whatever state you find yourself in, but we are sacrificing that in favour of a small premium reduction. It’s a shame and it should not be done.” he says.