Why Ontario motorists will need more insurance
Author(s): Darcy R. Merkur
April 30, 2010
Ontario’s new Statutory Accident Benefit Schedule reduces the accident benefits available to motorists covered by standard automobile insurance policies and restricts access to those benefits. It will have a negative impact on motor vehicle accident victims in Ontario.
The new Statutory Accident Benefits Schedule (new Ontario Regulation 34/10—the “new SABS”) becomes effective Sept. 1. 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 (Ontario Regulation 403/96—the “old SABS”).
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, optional benefits exist under the old SABS and only approximately three per cent of insured persons purchase optional coverage. Accordingly, 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, it must ensure that the public education program requires brokers to 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.
One significant change in the new SABS is that claimants will now be paying medical assessment and examination costs out of their limited medical and rehabilitation benefits. Because of the reduced limits on medical and rehabilitation benefits, claimants will be forced to weigh the value of reasonable and necessary assessments with the need to fund ongoing treatment.
Another extremely troubling change which permeates the new SABS is the new definition of the term “incurred.” Virtually every benefit available under the SABS refers to expenses which must be “incurred” by the insured person and the new SABS contains a restrictive definition of the term “incurred.”
The definition of “incurred” in subs. 3(7)(e) of the new SABS tries to restrict payment of benefits to situations where the claimant has paid for the service, and the service is being provided by a person who is doing so as part of their regular occupation or profession, or is otherwise suffering an economic loss by virtue of providing the service. One example of where this will create injustice is the common situation where a nonemployed family member provides necessary attendant care to an injured family member. By virtue of the change in definition of “incurred,” injured victims will face a tremendous hurdle in recovering compensation for the attendant care provided by their family members.
Thankfully, where injured persons have a viable tort case, they will, in their tort claim, be able to advance the value of the attendant care services provided by persons such as family members at market rates and without regard to the new SABS definition of “incurred.”
The new SABS significantly reduces the benefits available to motor vehicle accident victims suffering from non-catastrophic impairments. Specifically, the new SABS reduces the following benefits in non-catastrophic impairment cases:
- Medical and rehabilitation benefits have been reduced to $50,000 from $100,000—and assessment and examinations costs now come out of medical and rehabilitation limits in all cases;
- Attendant care benefits have been reduced to $36,000 from $72,000—and note the implications of the word “incurred” discussed above;
- Housekeeping benefits ($100 per week) have been eliminated and replaced with optional benefits; and,
- Caregiver benefits ($250 per week plus $50 per week for each additional person in need of care) have been eliminated and replaced with optional benefits.
The changes in the new SABS will force accident victims to become more conscious of how quickly they are exhausting the available benefits. Undoubtedly, the reductions in accident benefits set out in the new SABS will have detrimental impacts on the rehabilitation of many seriously injured persons in Ontario. Hopefully, the public will be educated on the need for optional benefits and the purchase of optional benefits will become the norm rather than the exception.