Auto insurance coverage in Ontario just changed

Next time your auto insurance policy comes up for renewal, check your price: you might find it lower than expected. But before celebrating, check your coverage: you may find that’s decreased, too.

The Ontario government has revamped standard auto insurance policies, which comes into effect today. The move is part of the government’s plan to make premiums more affordable over the years. However, some experts say the lower premiums resulting from today’s changes will come at the price of substantially decreased coverage for policies.

“What we’ve seen over the years is that premiums have come down a little bit, certainly not very much,” says Adam Wagman, President of the Ontario Trial Lawyer Assocation. “But benefits have been eroded to the point where Ontarians are going to suffer.”

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According to the Financial Services of Ontario, for policies renewed after June 1, the biggest changes revolve around catastrophic and non-catastrophic injuries. Catastrophic injuries are defined by brain trauma, amputation, loss of vision, and mental impairments. The pre-June 1 policy granted you $1 million for medical treatment and rehabilitation for those injuries, and another $1 million for attendant care. That gave you a total of $2 million in benefits. After June 1, you’ll see total benefits drop to $1 million.

Wagman says the best estimate for how long the $1 million pre-June 1 benefits for attendant care would last is 13 years. With coverage halved under the new changes you’ll have 13 fewer years of attendant care in the event of a catastrophic injury, the severity of which often requires lifelong support.

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Michael Brattman, Chairman of the Insurance Brokers Association of Ontario (IBAO), says it’s important that people in Ontario are aware of the cuts in coverage, and that there’s the option to buy it back. A study by the IBAO found that only 46% of people in Ontario are aware of the changes.

For example, with catastrophic injuries there’s the option to add another $1 million in coverage to buy back the original $2 million offering.

“For what sounds like a very small amount of money, a few cups of coffee a month basically, people can purchase back the coverage that’s now been taken away,” Wagman says.

The option to gain back the original $2 million in coverage would probably cost you between $25-$80 extra a year, explains Brattman.

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Previously, non-catastrophic injuries like sprains or whiplash had pre-June 1 coverage of $50,000 for medical treatment and rehabilitation, and $36,000 in attendant care. Under the new policy, the benefits have been combined and limited to $65,000 total. If you’re looking for extended coverage, there are options to boost your coverage to $130,000, which Brattman says will cost around $40 a year.

Another key change is that if you’re at fault for an accident, and pay for damages under $2,000 out of pocket as the at-fault driver, then the insurer can no longer use that accident to increase your premiums.

You may also be pleasantly surprised to learn that if your auto insurance contract is over twelve months, and is issued or renewed after June 1, the maximum fees charged for monthly premiums will drop from 3% to 1.3%.