No Fault Changes: Companies wins, drivers lose
In case you've forgotten the announcement made by Ontario Finance Minister Dwight Duncan last November, I'm here to remind you that effective Sept. 1 the no fault coverage provided by your car insurance policy will be reduced.

Those who want to maintain the same coverage they now have should contact their brokers or insurance companies and be prepared to pay substantially more to maintain current coverage.

But, based on human nature, few of us will make that call and agree to pay more.

Maximum medical and rehabilitation benefits for non-catastrophic injuries will be reduced from the current $100,000 to $50,000. Medical assessment costs will be deducted from this lower limit thereby further reducing the maximum payment.

If you sustain what is deemed a "predominantly minor injury" the medical and rehab coverage is reduced to $3,500. Maximum attendant care benefits will be reduced from $72,000 to $36,000. Housekeeping benefits of $100 per week will be eliminated.

Caregiver benefits - to provide compensation if you provided full-time care to dependents - of $250 per week plus $50 for each additional dependent will be eliminated. There's no attendant, housekeeping or caregiver benefits for minor injuries.

Income replacement benefits will be reduced to 70% of gross income, down from 80%. Payment for rebuttal assessments to challenge insurer assessments will be eliminated.

There's more bad news, but that should be enough to make my point.

The value of your insurance policy has been devalued. You paid a premium for a certain level of coverage but effective Sept. 1 you'll be receiving a lower level of coverage. It's a classic bait and switch.

So what to do? If you can afford it, top up your coverage. Sadly, most of us won't bother. Certainly most people already struggling to pay their bills and facing increasing expenses with HST and galloping increases in hydro fees are unlikely to pay a higher premium for additional coverage.

And that's a real pity as those are the very people most likely to be financially devastated by injuries suffered in a motor vehicle accident.

Who are the winners and losers? Insurance companies win big. They provide less coverage for the same premium. They get extra premiums for the same coverage.

Accident victims lose. Car owners lose.

We get the privilege of paying more for the same coverage we now have.

Lawyers win big.

You see, these changes are a recipe for more lawsuits. Remember that the no fault benefits are paid by your own insurer. If you aren't content with the no fault benefits you can always sue the other driver for negligence.

Accident victims aren't bound by the no fault limits in a negligence or tort lawsuit.

But if you do sue the other driver and your claim is valued at under $100,000 you'll face an automatic $30,000 reduction in your award. The new insurance rules will allow you to pay an additional premium to have the deduction lowered to $20,000.

By now you should be asking how we got into this mess.

Simple, insurance companies claimed they were losing money, that accident benefits were too high and the system encouraged abuse, if not fraud.

The Ontario government wanted to stem the tide of insurance premium increases and caved in to the insurance lobby.

To be fair, there's a lot of good intentions in these changes, but having two classes of insurance policies, one for the rich and a very basic one for everyone else doesn't seem to make good public policy.

My advice: Drive defensively and speak to your broker or agent to educate yourself and determine what upgrades make the most sense and how much they'll cost.

Source: Shanoff, Alan., 'No fault insurance changes: Companies win, drivers lose' The Toronto Sun (May 23rd, 2010).
Marc Koplowitz Associates
"...lawyers who use plain language know it doesn't just make good sense, it makes good cents"
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