A number of reforms are coming to auto insurance in Ontario starting on June 1st, 2016.
Aimed at making policies more affordable, the changes reduce the benefits and coverages received in standard policies and adjust some increased coverage options.
After June 1st, insurers are no longer allowed to use a minor at-fault accident against you to increase your premiums. The definition of minor in this case means that there were no injuries, no insurer paid out as a result, and damage was less than $2,000 per car paid out-of-pocket by the at-fault driver. This provision is limited to one minor accident every three years.
Insurers are also having their maximum interest rate charges reduced for customers who choose to make monthly payments. The new rate is 1.3%, down from 3% under the existing system.
In terms of coverage, the most important changes apply to coverage of medical, rehabilitation, and attendant care costs.
Previously, medical and rehabilitation coverage for catastrophic injuries was $1,000,000, and the same amount again could be applied to attendant care for a total available coverage amount of $2,000,000. Under the reformed system, these benefits have been combined and total coverage is reduced to $1,000,000 for all three categories.
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Similarly, while existing policies offer a minimum of $50,000 for medical and rehabilitation of non-catastrophic injuries and $36,000 for attendant care, a new policy sees these benefits combined and eligible for $65,000 of coverage in total. The previous optional benefit structure has been eliminated and a new combined optional amount of $130,000 is now available.
If your existing policy includes optional benefits to increase these amounts, be sure to check the paperwork before you sign as the coverages may have been changed to reflect the new standard amounts.
Other changes include a change in standard deductible for comprehensive coverage to $500 from $300, a reduction of the waiting period for non-working benefit recipients from six months to four weeks (who can now only receive benefits for up to two years after the accident), and a restriction of a maximum of five years for medical, rehabilitation, and attendant care benefit payouts for non-catastrophic injuries for all claimants except children.
What does all of this mean for drivers in Ontario? Less base coverage means more affordable insurance but could also spell big hits to your bank account in the event of an accident where recovery costs exceed basic coverage. All policy shoppers should consider whether it's better to absorb those costs or pay a higher insurance premium for more coverage that could prevent nasty surprises down the road.
These changes do not apply to existing policies but instead become effective whenever a driver buys a new policy or renews a policy on or after June 1st. More detailed information is available at the Financial Services Commission of Ontario website at www.fsco.gov.on.ca.