There are big changes coming to auto insurance for policies renewing June 1, 2016. These changes are the result of the Fighting Fraud and Reducing Automobile Insurance Rates Act, passed in 2014 and incorporated into the Ontario Budget for 2015. The Act was meant to protect consumers and reduce rates, but it comes at the expense of the amount of coverage consumers will have.
It’s important to review your policy with your broker before the changes to your policy take place to ensure that you will have the coverage that suits your lifestyle and provide you with peace of mind.
Major Reductions to Accident Benefit Coverage
The Ontario Government has significantly reduced the standard accident benefits coverage you are entitled to if you are injured in an automobile accident. The biggest changes have been made to the Medical and Rehabilitation and Attendant Care Coverage. Coverage has been reduced from $86,000 to $65,000 for non-catastrophic injuries and from $2,000,000 to $1,000,000 for catastrophic injuries.
While these amounts may look high to the average person, expenses in these areas can add up quickly. Even if an injury is classified as “non-catastrophic”, you may need months of rehabilitation, attendant care and miscellaneous medical expenses not covered by the provincial healthcare system or an employer group benefit plan after being injured in an accident.
It really becomes a quality of life decision, should you not have adequate coverage. Many medical costs aren’t covered by provincial health care, such as assessments, massage therapy, physiotherapy, prescription drugs, doctors fees to complete paperwork and mobility devices such as wheelchairs and crutches, to name a few. With the ever rising cost of health care, insurance companies are seeing seriously injured individuals having to move into assisted living facilities at a much younger age to preserve the amount of coverage available to them, rather than being able to stay in the comfort of their own home. The last thing you want to deal with is inadequate limits of insurance if you are injured in an accident.
Just because you have employer group medical benefits doesn’t mean you will have adequate coverage. There are often limits on these policies that can range from about $300-$500 per year per practitioner. With only $500 available for physiotherapy, for example, your coverage could run out in just a few visits. Also, your circumstances can change where you are between jobs without coverage, working a on part-time basis, or are taking additional pay in lieu of benefits. Assuming you have adequate coverage just because you have employer group benefits could be a very costly mistake.
The following benefits are not changing but are often overlooked and can provide valuable benefits to you. In particular people often overlook the need to purchase higher income replacement benefits:
- Income Replacement Benefits: If you are an income earner the standard policy provides up to $400 per week in income replacement which is the equivalent of about $21,000 per year. Are you making more then that? If so, then you definitely need to increase the limit and your options are $600 ($31,000), $800 ($41,000) and $1,000 ($52,000).
- Dependent Care: Does a dependent rely on you for financial aid and care? This could be a child or parent. If you are unable to provide this care who will provide it? You can purchase optional dependent care coverage.
- Housekeeping and Home Maintenance: Do you do the cleaning, laundry and yard work around your house? Even if you are able to work, you may be unable to do these tasks as a result of an accident. You can purchase optional benefits to help cover these costs.
- Death and Funeral: Your policy provides a lump sum payment to a spouse and dependents. You are able to increase these payments.
- Indexation Benefit: The base policy does not provide for the indexation of your benefits. This means you will receive the same dollar amount in future years as you do today. You are able to purchase the Indexation Benefit which increases your benefits, such as Income Replacement, with inflation on an annual basis.
It’s up to you to make sure you have the coverage you will require if you are injured in an accident. Your broker can guide you through this process, and your Kennedy Insurance brokers are here for you every step of the way. Give us a call to discuss the changes to your automobile accident benefit coverage and how it will affect you.
Minor Accidents Cannot Be Used For Underwriting
After June 1, 2016, insurers can’t use minor at-fault accidents which meet specific criteria for underwriting reasons. The criteria are:
- No payment by any insurer
- No injuries
- The cost of damage to each automobile does not exceed $2,000 and is paid by the at-fault driver
- No other minor accident on the policy in the prior 3 years
- The standard Comprehensive deductible will be raised to $500 from $300.
- The interest rate for monthly payment plans has been capped at 1.3% for annual policies.
- The mandatory winter tire discount went into effect on January 1st, 2016 and ranges from 2% to 5% depending on the insurance company.