Many of you may have heard that there will be changes to auto insurance in Ontario.
First, this is a "Readers Digest" version. It is not a complete summary. As with everything insurance related I post here, this is for general information only. Contact your own agent or broker for insurance advise specific to your situation/company or needs. Even if you are a client of mine, please call me before acting on any information I post.
Typically I try to re-phrase insurance terminology in a more readable/understandable fashion. However, the powers that be have instructed us to use the "approved wordings" only. My apologies!
Finally, I know insurance is frustrating. However, please use this thread to ask questions or make comments relevant to the insurance reform and not vent about the "Evil insurance companies" making money or being in cahoots with the government. This issue is confusing enough without conspiracy theories littering the page.
Changes come into effect September 1, 2010.
The major parts of this reform are:
- New Standard Accident Benefits (SABS)
- New Accident Benefit (AB) options
- New Tort Deductible option
- Unfair or Deceptive Acts or Practices (UDAP) amendments
- New DCPD deductible option
- Rating of claims < 25% at fault
New Standard Accident Benefits (SABS) & AB Options
This is the heart of the insurance reform. The chart below nicely breaks down: the old standard, the new standard, and the new options.
The most notable change is an additional level of distinction for injury. Previously there was only catastrophic & non-catastrophic. This vague definition left too much room for interpretation and subsequent abuse. Now there is: minor, non-catastrophic, & catastrophic injuries. The expectation is that a $3500 limit for a minor injury and 50% reduction in coverage for non-cat will help curb abuse while the catastrophic injury coverage remains at 1 million, leaving Ontarians with some of the best accident benefits available in Canada.
A Catastrophic Impairment is defined as:
- Paraplegia or quadriplegia
- The total and permanent loss (or loss of use) of an arm or leg
- Total loss of vision in both eyes
- A score of 9 or less on a Glasgow Coma Scale within a reasonable peroid of time
- A score of 2 or 3 on a Glasgow Coma Scale more than six(6) months after the accident
- Impairment of 55% or more of the whole person
The Minor Injury Guideline has not been released yet...I will update as information is available.
This is an option for consumers to purchase an endorsement that provides first-party coverage to reduce the tort deductible for pain and suffering awards to $20K from $30K (and $10K from $15K for Family Law Acts awards).
Unfair or Deceptive Acts or Practices
Insurers can no longer use credit in the processing of or responding to:
- Requests for applications
- In processing completed applications
- Offers to Renew
- Any other matter related...
It is now considered an "unfair or deceptive" act if:
When, in connection with a request for a quotation for automobile insurance or an application for automobile insurance made to an affiliated insurer, or by an affiliated insurer to renew an existing contract of automobile insurance, such a person fails to provide the lowest rate available from the insurer of any of the insurers with which it is affiliated in accordance with,
i. their declination grounds, and
ii. their rates and risk classification systems as approved under the Act or automobile insurance rate stabilization Act, 2003.
New DCPD (Direct Compensation Property Damage) deductible option
Previously you had the option of $0 or $300. You may now also choose $500 to save some additional premium. Generally most policies have a $0 deductible for DCPD. If you add a DCPD deductible YOU PAY it when you are NOT AT FAULT, not worth the minimal savings in my opinion.
Rating of claims < 25% at fault
If you are found to be less then 25% responsible (at fault) for a claim, it will not be ratable. (however only 1 fault determination chart has such a classification)
The general consensus is that initially you won't see much of a rate reduction. However, after a year like we've had with multiple increases filed for most companies, these changes should help reduce claim expenses over the next year. If that is the case, future rates may also follow.
If you want any further explanation as to how these changes effect your policy or assistance selecting the best option for your specific needs, please contact your agent or broker. If you have any general questions, I will do my best to answer.