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Tips & Info

AUTO REFORM CHANGES AS OF JUNE 1, 2016

If you own a vehicle in Ontario, you are required by law to purchase coverage in case an accident occurs. At a minimum you must carry third-party Liability, Accident Benefits, Direct Compensation Property Damage and Uninsured Automobile. You have the option to increase limits and purchase additional Accident Benefit coverage to protect your lifestyle.

In order to control the cost of automobile insurance in Ontario, the Financial Services Commission of Ontario has enacted legislation that significantly changes the Accident Benefits section of your policy. If you are injured in a car accident, regardless of who has caused it, accident benefits cover expenses not covered by OHIP or Group Insurance Plans.

The legislation made changes to the Medical and Rehabilitation benefit which is the reimbursement for reasonable, necessary medical and rehabilitation expenses like physiotherapy. The legislation also changed the Attendant Care benefit which is the reimbursement for an attendant to look after you either at home or within a healthcare facility. 

Effective June 1, 2016 the legislation combined these two benefits into a single benefit and reduced the standard coverage. Therefore, new policies and existing policies upon renewal will have substantially reduced standard coverage for these benefits. The reimbursement limit for the benefit is based on the severity of the injury.

Non-Catastrophic Injuries
The Standard Medical and Rehabilitation Benefit was previously $50,000
The Standard Attendant Care benefit was previously $36,000
Total Previous Standard Benefit was $86,000

The New Standard Combined Benefit for Medical, Rehabilitation and 
Attendant Care  for Non-Catastrophic Injuries is $65,000

You can purchase increased limits. Please see options in the chart below.

Catastrophic Injuries
The Standard Medical and Rehabilitation Benefit was previously $1 million
The Standard Attendant Care benefit was previously  $1 million
Total Previous Standard Benefit was$2 million

The New Standard Combined Benefit for Medical, Rehabilitation
and Attendant Care for Catastrophic Injuries is  $1 million

You can purchase increased limits. Please see options in the chart below.

 Non-Catastrophic & Catastrophic Injuries
This is a new Optional Benefit that previously was not available. This option is available to increase the benefit for both Non-Catastrophic Injuries and Catastrophic Injuries. You can purchase this option. Please see chart below.

There are 6 possible OPTIONS for the combined Medical, Rehabilitation and Attendant Care benefit as follows:

 

 

6 COVERAGE OPTIONS

 

DESCRIPTION

 

NON-CATASTROPHIC
LIMIT

 

CATASTROPHIC
LIMIT

 

1

STANDARD Benefit – no additional premium

 

$65,000

 

$1 million

 

2

 

Increase non-catastrophic
Only

 

$130,000

 

$ 1million

 

3

 

Increase catastrophic
Only

 

$65,000

 

$2 million

 

4

 

Increase Non-catastrophic
and Catastrophic

 

$1 million

 

$2 million

 

5

 

Increase Non-catastrophic
and Catastrophic

 

$130,000

 

$2 million

 

6

 

Increase Non-catastrophic
and Catastrophic

 

$1 million

 

$3 million

 

OTHER IMPORTANT ACCIDENT BENEFIT CHANGES INCLUDE:

For non catastrophic  the duration for accessing these benefits has been shortened from 10 years to 5 years, except in cases involving children (under 18 at time of accident) where claims can be made until the claimant’s 28th birthday). 

Please be aware that the Government has also revised the definition of “catastrophic impairment”. A number of new tests have been introduced in support of the new definition. If you suffer catastrophic injury (loss of limb/quadriplegic) from a car accident or if you suffer a non catastrophic injury (broken bones, severe strains, soft tissue) the Government has reduced the amounts covered under the Standard Benefit. The Medical, Rehabilitation and Attendant Care benefits for Minor injury (sprains, whiplash)are limited to a maximum of $3,500 and has not changed under this legislation. The other Accident Benefits components have not been changed by this Legislation apart from the Tort Deductible which is now indexed.

The legislation also made other important changes to your policy:

Non-Earner Benefit
The new legislation, applicable to claims arising from accidents on or after June 1, 2016,  reduces the duration of eligibility for non-earner benefits from “life” to a maximum duration of 2 years (while replacing the 6 month waiting period that currently applies with a 4 week waiting period).  Those that were about to enter or re-enter the workforce will now only be eligible for weekly benefits totalling $18,500 over their lifetime ($185/week for 2 years, other than during the first 4 weeks) instead of a lifetime of access.

Changes to Tort Deductible
As of January 1, 2016 the deductible (if applicable) will be adjusted in accordance with an indexed percentage stipulated in the Insurance Act. Presently this deductible is $36,905.40 for the insured. On January 1 of every subsequent year, the prescribed amount of the deductible will be revised according to the indexation percentage of the Insurance Act for that year. The Tort deductible buy down option reduces the deductible by $10,000.

Comprehensive Deductible 
 The standard deductible for Comprehensive coverage has been increased from $300 to $500

Minor Accident 
Insurers can no longer use a minor at-fault accident (under $2,000 damages to either vehicle) subject to certain criteria,  to increase your premiums. This applies to accidents occurring on or after June 1, 2016

Interest Rate for Monthly Payments Plans
The maximum that can be charged for monthly premium payments has been lowered to 1.3% for one year policies with corresponding reductions for shorter terms.

Dispute Resolution
FSCO has been removed from the Accident Benefits dispute resolution process and is replaced by the Licensing Appeal Tribunal which is part of the Ministry of the Attorney General. Mediations and lawsuits will no longer be available over denied accident benefits.

Depending on your lifestyle, you should consider purchasing increased optional Accident Benefits if any of the following apply to you:

  • Your auto insurance policy is your only form of coverage (ie you do not have a group plan through an employer or spouse)
  • You are a primary caregiver of young children, elderly parents or disabled family members
  • You are responsible for housekeeping or home maintenance
  • Single income family
  • You earn more than $30,000 a year

Is your Income close to
or greater than

Consider an IRB
at this level

What is the appropriate Income Replacement Benefit Limit?

$30,000/year?

$600/week

 

$45,000/year?

$800/week

 

$60,000/year?

$1,000/week

 

Unfortunately, until you have an accident, you do not realize how important these Accident Benefits are. It is our recommendation that you evaluate purchasing increased Accident Benefits coverage if your Financial Situation changes and especially if you do not have other forms of coverage eg you have changed Employers and no longer have a Group Plan.

DISCLAIMER: This a summary of the amendments only and should not be relied upon to be exhaustive. For a list of all amendments please go to: http://www.fsco.gov.on.ca/en/auto/autobulletins/pages/default.aspx

ECONOMICAL DEMUTUALIZATION

Economical has begun the process to demutualize the company.  This is a financial process that may take up to two years or more to complete. If you are an Economical policyholder we strongly recommend that you review the material mailed to you directly by Economical.  Further information on the demutualization process can be obtained by calling Economical at 1-866-302-6046, by visiting the Economical website at www.economicalinsurance.com or by visiting the Office of the Superintendent of Financial Institutions (OSFI) website at www.osfi-bsif.gc.ca/Eng/fi-if/app/aag-gad/Pages/demu-MPCIC.aspx.

As your broker, we shall continue to provide all insurance related services for your Economical policy.  Please note that we are unable to comment on the Financial Details of the Demutualization

Tips for Decreasing Personal Auto Insurance Premiums

  • Increase your physical damage deductibles
  • Delete collision or comprehensive on older vehicles
  • Insure both your home and auto together with the same insurance company to obtain a multi-policy discount
  • Install a theft deterrent device
  • Before buying a new car find out the insurance rating group – a lower rating group equates to a lower premium
  • Keep your driving record clean - Wear your seat belt and keep your hands on the wheel at all times
  • Let us know if you no longer drive your vehicle to work
  • Pay your premiums on time

 

Tips for Decreasing Commercial Auto Insurance Premiums

  • Increase your physical damage deductibles
  • Delete collision or comprehensive on older vehicles
  • Pre-qualify drivers before hiring to ensure they have safe driving records
  • Use risk management practices including safe driving training
  • Install theft deterrent devices
  • Let us know if the use of the vehicle changes
  • Pay your premiums on time
  • Talk to us for more information