Changes to the Ontario Insurance Act that will directly impact on your Auto Insurance Benefits – Consumers Beware

Auto Insurance

Effective June 1, 2016, the Ontario Government has introduced changes to the automobile insurance system which will greatly affect the coverage consumers select and the price they will pay for auto insurance.   Many of these changes affect the statutory accident benefits that a person will receive if they have been injured in an automobile accident regardless of who is at fault.   Some of these benefits have been reduced and some options for increased coverage have been eliminated or changed.

Accordingly, it is absolutely vital for an individual to speak with their auto insurance broker to determine what the best coverage is for them and in many cases the increased coverage can often be provided at a minimal cost.

These changes will apply only to auto insurance policies issued or renewed after June 1, 2016.

Previously, medical and rehabilitation benefits for non-catastrophic injuries (less serious) provided a maximum of $50,000.00 in benefits with an additional $36,000.00 available for attendant care if deemed necessary.   Under the June 1, 2016 changes these benefits have been combined and reduced to $65,000.00 total.    A party can now choose to increase the benefits to a total of $136,000.00.

The 2016 changes also effectively cut in half coverage available to those with catastrophic injuries (serious brain injuries/spinal cord injuries).   Prior to June 1, 2016, the limit for medical care and rehabilitation and attendant care was 1 million dollars each.   Under the new policy these benefits have been combined and reduced to 1 million dollars in total.    An insured can now choose to add on an additional 1 million dollars for a total of 2 million dollars available for catastrophic injuries.

Disability claim

Prior to June 1, 2016, if an individual is unable to work they can receive income replacement benefits reflecting 70% of one’s gross income up to a maximum of $400.00 per week.   The new policy does not cause any changes.  However, an individual can now choose to increase their weekly limit of income replacement benefits (if eligible) to $600.00; $800.00; or $1,000.00 per week.

Other benefits/coverage including housekeeping and home maintenance expenses, death and funeral benefits and dependent care benefits can all be increased or modified for additional premiums.

It is important to speak to your auto insurance broker to determine what the best option for you is and how much any additional premiums will be.

It may very well be that a very minor increase in premium can afford you significant increased benefits.   If no changes are made one’s insurance, coverage will automatically default to the current new low standard benefits.

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Change in Pre- Judgment Interest: Retroactive or Not?

We blogged about the change in the pre-judgment interest rate in March and April of this year.  As of January 1, 2015, the Insurance Act was amended to provide that the 5% pre-judgment rate set out in the Rules of Civil Procedure does not apply in motor vehicle accident cases.  As a result, pre-judgment interest on general or non-pecuniary damages in motor vehicle accident cases will now be based on the rate that applies to all other damages.  That rate is presently 1.0%.

In a recent Ottawa case that is apparently now on its way to the Court of Appeal, Justice Toscano-Roccamo held that the reasoning of the Judge in Cirillo v. Rizzo (which held that the change in rates applied retroactively to accidents before January 1, 2015) was not persuasive and that both entitlement to pre-judgment interest and the specific rate at which interest was calculated was a substantive right that could not be interfered with in a retroactive fashion in the absence of specific statutory language providing the change was to be applied retroactively.  Thus, according to her Honour the change in the interest rate should apply prospectively and only affect persons injured in motor vehicle accidents that occurred after January 1, 2015.

We will have to await the decision of the Court of Appeal for Ontario for a final determination of this question.

The “Minor Injury” Guideline

The “minor injury” guideline and treatment protocol has been a part of the motor vehicle accident landscape in Ontario since 2010. A “minor injury” is defined under the Regulations as “a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation…”. Medical and rehabilitation funding for a “minor injury” is capped at $3,500.00.

The Ontario government commissioned a report into the treatment of common traffic injuries with a view to developing a treatment protocol that would “enable and optimize the recovery of individuals injured in traffic collisions”. The final report entitled “Enabling Recovery from Common Traffic Injuries: A Focus on the Injured Person” was recently released and is available on the website of the Financial Services Commission of Ontario.

The report cited the views of numerous people injured in motor vehicle accidents who shared their frustration with the process and their belief that the current provisions of the minor injury guideline severely limit their treatment options and inappropriately characterize their injuries and experiences as minor and inconsequential. It concluded that there was no scientific rationale or merit in continuing to employ the term “minor injury” to describe common traffic injuries.

Instead, the report proposes that traffic injuries be classified as Type I, II or III injuries. Type I injuries would include those injuries that have been shown to have a reasonably short recovery time (from days to a few months at most) and they would include musculoskeletal injuries such as sprains and strains of the spine and limbs (currently classified as “minor injuries”). The report acknowledges that despite medical intervention, a small percentage of people with Type I injuries will experience residual problems over the long term and may develop chronic regional and more widespread pain. As a result, the report proposes that injuries also be classified according to the persistence of symptoms. Injuries that are symptomatic for up to three months post-collision would be classified as “Recent” and other injuries would be classified as “Persistent”. Each level of classification would have its own treatment protocol.

If the recommendations contained in this report become law then it will replace the current minor injury guideline with evidence based treatment that will hopefully lead to more optimal outcomes in traffic injuries.

Changes to Statutory Accident Benefits

In an effort to reduce insurance premiums, the Government has promised to make significant changes to statutory accident benefits.

The changes include:

  1. An amendment to the test for catastrophic impairment;
  2. Including attendant care services with the $1 million medical and rehabilitation benefit for catastrophic impairments;
  3. Reducing the standard duration of medical and rehabilitation benefits from 10 years to five years for all claimants except children; and,
  4. Eliminating the six month waiting period for non-earner benefits, and limiting the duration of non earner benefits to two years post accident ;

Tort claims

In addition to the above Statutory Accident Benefit changes, the Government has indicated that it will propose amendments to the Insurance Act, these amendments are as follows:

  1. An adjustment to the deductible on awards for pain and suffering damages to reflect inflation and future changes in inflation;
  2. An adjustment to the monetary thresholds beyond which the tort deductible does not apply to reflect inflation.

These changes will serve to increase the $30,000.00 deductible introduced in 2003.

The full list of proposed changes to both SABS and Tort Claims can be found at http://www.fin.gov.on.ca/en/budget/ontariobudgets/2015/papers_all.pdf.

With the amounts available to victims of motor vehicle accidents set to be dramatically reduced, it is important to ensure that those involved in accidents receive the full amount they are entitled to. A lawyer familiar with the legislation can help you make sure you receive your entitlement.

If you have been injured in a motor vehicle accident, please feel free to contact a member of the Mann Lawyers personal injury team at 613 722 1500.

Change in Pre-Judgment Interest Determined to be Retroactive

We blogged about the change in the pre-judgment interest rate last month. As of January 1, 2015, the Insurance Act was amended to provide that the 5% pre-judgment rate set out in the Rules of Civil Procedure does not apply in motor vehicle accident cases. As a result, pre-judgment interest on general or non-pecuniary damages in motor vehicle accident cases will now be based on the rate that applies to all other damages. That rate is presently 1.3%.

A question arose as to whether the change was intended to be retroactive, that is, whether it was intended to be applied to motor vehicle accidents that occurred before January 1, 2015. The recent decision in Cirillo v. Rizzo has answered that question, at least for now. The court in that case concluded that while entitlement to pre-judgment interest is a substantive right (akin to the right to sue, for example), the mechanism for determining the amount of pre-judgment interest in a particular case is procedural in nature. Procedural amendments are presumed to apply retroactively and the court found that the change in the pre-judgment interest rate was intended to apply to all motor vehicle accident cases regardless of the date of the accident.

Change in Pre-Judgment Interest Rate

There has been a change in the interest rate that applies to non-pecuniary damages (general damages or damages for pain and suffering and loss of enjoyment of life and damages under the Family Law Act) as of January 1, 2015. This rate was reduced by the Province of Ontario from 5% to 1.3% no doubt as a result of the efforts of the insurance lobby.

This signals a change in philosophy. The pre-judgment rate was kept artificially high by the government while interest rates were falling in general in order to incentivize insurers to deal fairly with injured victims. It was, in effect, used as a means to redress the imbalance of power between insurers and car accident victims and to ‘level the playing field’. This is yet another setback for accident victims in Ontario.

Vehicle Ownership – Liability is based on possession of vehicle

HighwayCar owners are liable under the Highway Traffic Act for the negligent operation of their vehicles by others. This liability is based on possession of the vehicle. In a recent Ontario case (Fernandes v. Araujo), the owner of an all-terrain vehicle was found liable for the negligent operation of that vehicle on a highway even though the owner expressly prohibited the person from operating the ATV on a highway. The court found that liability flowed from the fact that the person was permitted by the owner to have possession of the vehicle.

Be very careful to whom you lend your vehicle to!