What auto insurance reforms mean for drivers, passengers
· Toronto Sun
Things are about to change when it comes to your auto insurance coverage.
On July 1, Ontario will be switching its auto insurance system to a more “à la carte” model, according to the Insurance Bureau of Canada, unbundling Statutory Accident Benefits to let motorists customize their policies and lower premiums.
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Drivers should understand how removing these benefits could affect them should an accident occur, said Daniel Ivans, insurance expert from Rates.ca .
“Accident benefits make up only about 5% of the total premium, so the savings from opting out can be modest,” says Ivans. “The bigger question is whether a household could absorb the costs those benefits are designed to cover. For many Ontarians, removing that protection is unlikely to be worth the amount saved.”
Mandatory vs. optional
It’s important to know what’s mandatory and what will be optional on your auto insurance policy come July 1.
Medical, rehabilitation and attendant care benefits are mandatory.
Benefits that will become optional in July include: income replacement, caregiver benefits, non-earner benefits, visitor expenses, housekeeping, lost educational expenses, personal item damage and death and funeral expenses.
Ivans said Ontario motorists should consider what they would lose in opting out of the optional benefits.
• Income replacement: This benefit can help if an injury prevents someone from working. Examples include: an office worker recovering from a concussion, a delivery driver with a broken leg, a truck driver with mobility issues, or a cook with a hand injury could all face time away from work after a collision.
• Caregiving responsibilities: Caregiver benefits can help financially if an injured person can no longer care for dependents, such as parents, grandparents, guardians, or adults caring for elderly relatives or family members with disabilities.
• Household support: Housekeeping and home maintenance benefits can help offset support for daily tasks when injuries limit someone’s mobility. Examples include seniors, single parents or people without nearby family support could be affected if an injury makes it difficult to cook, clean, do laundry, shovel snow, or manage basic household responsibilities.
• Students, retirees and stay-at-home parents: Non-earner benefits can provide support for people who were not working at the time of an accident but are unable to continue their normal daily activities because of their injuries.
• Long-term injuries: Costs could rise for those recovering from a serious injury who need ongoing therapy, medication, assistive devices, home modifications, or accessible transportation. Indexation can help benefits keep pace with inflation if recovery costs continue for months or years.
“As more accident benefits become optional, drivers need to look at more than the monthly premium,” Ivans said.
“These benefits are meant to help with the financial impact of a serious injury, from income disruption to care and household support. Before opting out, it’s important to understand what each benefit covers and whether those costs could be covered another way.”
What to do before reforms take effect?
If Ontario drivers don’t make any changes to their auto insurance policies, their accident benefits package will simply roll forward, even though many benefits will become optional for new policies.
Ontarians can always change their mind and add options to enhance their injury coverage to protect themselves and their family after an accident. Ivans strongly recommends avoiding underinsuring at purchase.