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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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.

Court Sends Message: Being able to work doesn’t necessarily mean you’re living a normal life…

Under the Accident Benefits regime in Ontario, if you are employed at the time of your accident you are required to elect whether you wish to make a claim for non-earner benefits or income replacement benefits.  For most claimants it would make sense to elect income replacement benefits.  However, for some claimants the line becomes blurry and the decision is particularly important where the income replacement benefit would be less than the set non-earner benefit amount.   Before continuing, it is beneficial to review what both these terms mean.

Income Replacement Benefit (“IRBs”)

If you unable to work because of the injuries caused by a motor vehicle accident and if you are eligible, this benefit will partially cover your loss of income.  To qualify for IRBs you must be (a) be employed at the time of the accident and (b) must suffer a substantial inability to perform the essential tasks of your employment.

Non-Earner Benefit (“NEBs”)

You may be entitled to claim a non-earner benefit if you suffer a complete inability to carry on your normal activities because of the injuries cause by a motor vehicle collision and do not qualify for an income replacement benefit.

Ms. Hafya Galdamez (“Galdamez”) was required to make the same election when she was injured by a car that ran over her foot on October 26, 2002.  Galdamez returned to work only four days after her accident on modified duties and eventually left her employer in January 2004.  She has not worked since.

On January 7, 2003, Galdamez applied for statutory accident benefits.  The insurer informed her that she “may be eligible for more than one weekly benefit.”  Subsequently, Galdamez indicated to the insurer that she wished to receive income replacement benefits.  On January 28, 2003, the insurer denied Ms. Galdamez’s claim for IRBs.  After a failed attempt at mediation, Galdamez sued Allstate for failure to pay her IRBs among other things.  Allstate argued that Galdamez did not qualify for IRBs because she did not “suffer a substantial inability to perform the essential tasks of her employment” as she was able to return to work after the accident.

In 2009, Galdamez wrote to Allstate and applied for non-earner benefits.  Again, Allstate denied her request and the motions judge sided with Allstate.  The motions judge held that Galdamez was not able to qualify for NEBs simply because she was employed at the time of the accident.  In other words, she either qualified for the income replacement benefit or nothing at all.

The Court of Appeal made it clear that this interpretation of the law was wrong.  The Court held that NEBs are payable where the claimant is not eligible for IRBs and suffers a complete inability to carry on his/her normal activities due to the injuries caused by a motor vehicle collision.  It is important to note that the Court made it clear that “complete inability” means that an injured person must be “continuously prevented from engaging in substantially all of the activities in which the person ordinarily engaged in before the accident.”  Simply put, “substantially all” does not mean all.

Ultimately, the Court held that just because Ms. Galdamez was able to return to work, this doesn’t necessarily mean that she was not prevented from engaging in “substantially all” of the activities she normally took part in before the accident.   This is significant because it highlights that a good personal injury lawyer understands the importance of painting a picture of the injured person’s pre-accident and post-accident life.  All facets of the client’s life need to be explored before a lawyer is in a position to properly advise the injured person as to whether it will be more beneficial to elect IRBs or NEBs.

You can read the full decision here: Galdamez v Allstate Insurance Company of Canada, 2012 ONCA 508

Kevin Butler and Jonathan Wright are Ottawa-based lawyers practicing in the areas of Civil Litigation and Personal Injury at Mann & Partners, LLP. The articles on this blog are not intended to provide legal advice. Should you require legal advice, please contact Mann & Partners, LLP at 613-722-1500 or fill out our form to be contacted within 24 hours.