Recent car insurance cutbacks are greatly going to affect the amount of coverage Ontario drivers will receive. Effective June 1st, the cutbacks will affect the benefits a driver would receive in the event of a motor vehicle collision.
ACCIDENT BENEFITS
There are several different types of accident benefits that are available to you through your insurance company in the event of a crash resulting in serious injuries. These benefits include:
- Medical
- Rehabilitation
- Income replacement
- Non-earner
- Caregiver
- Housekeeping
- Attendant care
- Liability
- Underinsurance
- Family member compensation
The cutbacks to these benefits have increased time and time again. After the most recent cutbacks if Ontario drivers feel they need more protection than they will have to increase their coverage.
LEVELS OF IMPAIRMENT
If the event of a motor vehicle collision results in serious injuries, insurance companies divide these injuries into three levels of impairment based on severity. This category determines the type, amount and duration of the benefits available to you. The categories are:
- Catastrophic (para/tetra/quadriplegia, brain injuries, amputation or total loss of vision)
- Minor (sprains, strains, ligament/tendon/muscle tears, partial joint dislocation)
- Other (Injuries that aren’t considered minor or catastrophic. Provides access to basic and time-limited benefits in each category.)
If your injuries change after you are put into your initial category it can be changed afterwards. Injuries seen as minor could worsen, and vice versa, resulting in different coverage.
PAST AND CURRENT CUTBACKS ON INSURANCE COVERAGE
The Ontario government was elected on a promise to reduce car insurance rates, yet the insurance industry says it is impossible to lower the rates without cutting the accident benefits. They claim they wouldn’t be profitable otherwise. Well, this is a little contradictory considering a report in 2013, which indicated that car insurance companies were making record profits. Then in 2014, a study showed industry profits of 10.6%. This number was twice as high as it should have been to benefit consumers.
Despite the industry’s profits, the Ontario government still agreed to benefit cutbacks in the hopes that premiums would be reduced.
So, what was eliminated? For starters, along with cutbacks, the medical, rehabilitation and attendant care benefit were merged into a single benefit. As for catastrophic coverage, the cutback eliminated one million dollars in coverage. They did this by introducing more stringent requirements to show catastrophic injuries based on your overall level of daily functioning.
The changes have also cut the weekly benefit for those who have suffered life-changing injuries but don’t work. It used to be $185/week for life, but now it’s just for 2 years. If there’s a 25 year lifespan post-accident, the loss would be over two-hundred and twenty thousand dollars of income lost.
If insurers don’t provide the compensation you’re eligible for, then they must pay interest on that amount. That percentage has dropped from 2 to 1.3 per cent and it ultimately eliminates the incentive for insurers to resolve issues in a timely manner. So chances are, you’ll have to wait longer to receive compensation you are entitled to and the interest rate is almost half of what it used to be.
If you feel as though these benefits do not provide enough protection it may be beneficial to speak with your insurance broker or agent to explore your additional coverage options.
