Beginning June 1st, auto insurance policies in Ontario will change. The most significant update is the change in Accident Benefit coverage. If you’ve been injured in a car accident, Accident Benefits cover expenses like rehabilitation. Typically we assume medical expenses are covered by OHIP, but in the event of injury from a car accident, your insurance policy comes into play.
Arguably the most important Accident Benefit, Medical Rehabilitation covers necessary medical and rehabilitation expenses like physiotherapy. Under the current structure, non-catastrophic injury coverage is $50,000 (sprains, whiplash, broken bones) and catastrophic injury coverage is $1,000,000 (loss of limb, para/quadriplegia). A second benefit called Attendant Care covers the cost of a professional to look after you either at home or within a healthcare facility. Coverage is $36,000 for non-catastrophic injuries and $1,000,000 for catastrophic injuries. As separate benefits, it’s common for one benefit to be underutilized and the other over utilized (the Attendant Care benefit can’t be accessed unless a professional’s involved in your care).
As of June 1st, these benefits will be combined into one. The (new) Medical, Rehabilitation and Attendant Care benefit is single coverage for everything that falls within this category. Under the new system, all funds are available, allowing greater flexibility – whether you have a family member, friend or paid professional taking care of you, funds can be accessed. But total coverage will be reduced: non-catastrophic injury coverage will be $65,000, and catastrophic injury coverage will be $1,000,000. Total. All medical, rehabilitation and professional care expenses included. There’s a very real possibility individuals will reach their maximum benefit level and exhaust available funds, especially in the case of catastrophic injury.
So how do you figure out if you’ll need more coverage?
For one thing, Accident Benefit coverage encompasses much more than you might think. Beyond rehab, it includes mobility devices like wheelchairs and crutches and transportation mediums like accessible vehicles; it also includes renovations in the instance your home requires modification to accommodate an injury. Becoming informed on what’s included might get you thinking about how you’d finance these items if your insurance policy didn’t. A few sample costs:
* Rehab Team Services: $3,500–$4,000/month
* Prosthetic Limb: $10,000–$20,000/3–5 years
* Manual Wheelchair: $5,000–$10,000/5 years
* Power Wheelchair: $15,000–$25,000/5 years
* Accessible Vehicle: $100,000+
* Professional Attendant Care (8 hrs/day): $7,000/month
* Home Renovations: $100,000–$400,000
Source: Ontario Rehab Alliance
You can also ask yourself a few questions – how vulnerable are you to injury (consider your age, general health and any pre-existing conditions), and would you be more vulnerable to slower recovery? Do you have insurance from other sources (like employment benefits)? Be aware of any limitations you might have and get informed on how to work with them.
When the Ontario government altered auto insurance in 2010, 90% of consumers chose standard coverage instead of tailoring the product to cover their unique circumstances. With these changes, considering what’s available is crucial. It’s relatively inexpensive to increase coverage, so talk to your insurance broker about coverage gaps and how they might be avoided – they’ll ensure you have the right coverage so you and your family are covered in the event of an accident.
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Effective June 1, 2016, to help make insurance premiums more affordable, the benefits and coverages you receive in a standard auto insurance policy changed – some were reduced, and some options for increased coverage were eliminated or changed.
When it’s time to renew or purchase auto insurance on or after June 1, 2016, the standard auto insurance policy you receive from your insurer will have the new lower benefits – unless you act quickly and contact your insurance representative to purchase optional coverages.
We recommend the following things to make sure you know what you are getting, and get what you need:
- Read the “Important Changes to your Policy!” document that came in your renewal package. See if the changes reduce or eliminate something that was important to you, and if so what you can do about it.
- Compare the new policy to your current policy to see what changes have been made. Remember, if you have benefits from your employer or another policy, you may already have some level of coverage for some or all of the changes made. You should consider these benefits as you review your coverage options.
- Understand your policy. Call your insurance representative and ask questions, or do some additional reading, to make sure you understand auto insurance or what a coverage means. Make sure you know what options are available to increase or purchase other benefits, or to reduce premiums by increasing deductibles or taking advantage of discounts.
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The theme this year is Our Kids Count Goes International. Think about joining for either a sushi making party on May 21st, or a Nigerian feast on June 9th. Only 10 spots available per evening, so book early!! Tickets can be reserved and purchased on line at the link below.
The evenings are a casual learning experience, hands on and so much fun. Bring a group or come out and make new friends. And of course bring your appetite!
Recent announcements at the political and insurer level have sparked a number of questions about demutualization and its potential impact. It’s important to highlight that the demutualization process has only just begun. Only proposed regulations have been released which means it’s premature to consider the outcome for customers as of today. IBAO is watching the mutual insurers and draft regulation process closely; once the regulations are finalized, they can review in detail.
What is Demutualization?
The process that federally regulated mutual property and casualty (P&C) companies go through to convert into share companies. Until recently, there were no federal regulations that allowed the process of demutualization for P&C insurers to occur.
What’s Happened So Far?
The Department of Finance has released two draft regulations into the Insurance Companies Act: 1. A set of rules addressing P&C companies comprised of only mutual policyholders (“Single Structure Conversions”). 2. A set of rules addressing P&C companies with both mutual and non-mutual policyholder structures (“Dual Structure Conversion”). At this time, only Economical Mutual Insurance Company (“Economical”) has announced plans to pursue demutualization.
Why Would An Insurer Demutualize?
Mutual insurers may have their own reasons for changing their corporate structure. For example, one mutual has stated that an advantage of demutualization is that it provides the company new access to capital by issuing shares in the public and private markets.
Impact to Policyholders:
As part of the process, policyholders of mutual insurers may benefit from the demutualization process. It’s important to stress that at this time, it’s speculative to comment on what (if any) these benefits would be.
If you have questions regarding this matter please contact our office.