ACCIDENT BENEFIT CHANGES
A new Statutory Accident Benefit Schedule effective September 1, 2010 has been introduced in Ontario. The new Regulation (referred to herein as the “new SABS”) is Ontario Regulation 34/10.
The changes are being introduced by way of a completely new Regulation, rather than by way of an amendment to the current Statutory Accident Benefits Schedule (Ont. Regulation 403/96, referred to herein as the “old SABS”).
The new SABS serve to restrict and reduce the accident benefits available in serious but non-catastrophic cases. Generally speaking, the new SABS will have a negative impact on motor vehicle accident victims in Ontario.
While the new SABS has been designed to allow consumers to purchase optional benefits to either restore the reduced accident benefits or to enhance those benefits further, it must be remembered that optional benefits exist under the current SABS, and only 3% (approximately) of insured persons purchase the currently available optional coverage. With this background, it is unrealistic to think that motorists will suddenly understand the need to purchase optional coverage to properly protect themselves in the event of a motor vehicle accident. Quite simply, most people opt for the cheapest insurance they can purchase. Many feel their insurance premiums are currently far too expensive. Generally motorists will not purchase optional coverage as it would increase their insurance premiums.
For optional benefits to be meaningful, the public must be educated on the limitations of the new standard automobile insurance policy. An education program is required to ensure that consumers recognize how the current benefits have been reduced and the value in purchasing some of the available optional benefits. The government has taken on the goal of educating the public on optional benefits, but in doing so, the government must ensure that the public education program includes requirements that brokers properly explain the effect of the optional coverages to motorists when they are renewing their policies. There also needs to be some mechanism to verify that insured persons have actually considered the optional coverages, and made an educated decision to either purchase the optional coverages or reject them.
This paper will begin by reviewing all of the procedural changes in the new SABS and will conclude with a summary of the standard accident benefits available under the new SABS.
While many of the changes have been addressed in this paper, this paper is intended to focus on the more significant changes. Also, because the new SABS have only been available since March 3, 2010, it is anticipated that additional information will soon be made available through the Financial Services Commission of Ontario, including the introduction of Guidelines such as the Minor Injury Guideline, and this further information may impact on some of the analysis in this paper (look for updates at www.thomsonrogers.com).
Related Resources on Accident Benefits Changes: