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Where Is Auto Insurance Going?

This review of impending Ontario auto insurance legislation changes was written by Murray Miskin, an Ontario lawyer, with over 30 years of experience in a motor vehicle litigation practice. This post has been updated since the final passage of Bill 15 in November 2014 and again following the Ontario Budget of April 23, 2015.

Since 1990 auto insurance personal injury claims have been governed in Ontario by a no-fault system. By that, it is meant that most compensation for injury in accidents comes from benefits paid under a government-regulated standard Ontario auto policy regardless of fault for the accident. For those benefits, a person must go to their own insurer for payment if they have one and if they do not the person would go to another involved insurer. Before 1990, there were limited no-fault benefits available for medical expenses and loss of income from a person’s own insurer, but most compensation came from liability claims where a lawsuit was brought against the at-fault driver and vehicle owner where liability insurance covered drivers for such claims and paid out any victim who made a claim who was not the at-fault driver. Since the system was adopted in 1990 there have been several changes to no-fault benefits and the right to be compensated by the insurer of the responsible driver. Significant compensation can still be received for serious injury now for claims based on the fault or liability of the driver responsible for the accident.

With the no-fault-based system, there are still liability claims but they are restricted. To be able to make a successful injury liability claim now, a person must have a very serious and permanent injury or death. If you believe this may apply to your situation get advice right away from a lawyer who is experienced and knowledgeable about personal injury claims. For any injury from a motor vehicle accident in Ontario, a no-fault benefits claim may be made. If you have your own auto insurance policy it gives coverage to you and your household members even if your automobile is not involved in the accident. If there is no auto insurance policy for anyone in your home you can be covered under the policy of the car you may be in at the time or another car involved in the accident. For example, if you are a bicyclist or pedestrian without your own insurance, who is hit by a car, the insurance for the car that hit you will pay no-fault benefits. If there is no insurance available the Ontario Government pays the no-fault benefits. If you are insured by your own policy, ask your broker or insurance company about optional coverage that provides more no-fault benefits with a higher level of coverage at a fairly low additional cost.

Since 1990, there have been many changes in the Ontario no-fault system. More changes are coming soon with the dispute resolution system for such claims. When you claim no-fault benefits the insurer has a right to dispute your claim and refuse to pay some things. To be payable, medical treatment must be considered both “reasonable and necessary due to the accident”. Insurers may have their own medical advisors who disagree with recommended treatment. There also are disputes over the loss of income claims where the insurance pays income replacement benefits to a person who is off work because of accident injuries. Where there is a dispute, a person must request Mediation where an independent government-employed mediator tries to help the person settle with the insurer on some compromise basis. If mediation fails to get an agreement, the person may request Arbitration or sue in court. The arbitrator or the court after hearing evidence can impose a ruling on the parties to the dispute.

A judge recently reviewed the auto insurance accident benefits system for the government and made recommendations for streamlining the dispute resolution process. The Ontario Government is going ahead with changes through Bill 15 that was introduced in the Ontario Legislature on July 15 with final Legislature approval and Royal Assent in November 2014. The changes in dispute resolution are scheduled to take effect on April 1, 2016. Under the new system, there will be no more actual Mediation and no option to go to court if you are unable to resolve a dispute. There will be an Adjudication similar to an arbitration process using members of an independent panel of decision-makers who are paid by the Government for each day they work. It will be part of the Licence Appeal Tribunal (LAT) which currently handles decisions and appeals of a variety of Ontario Government-regulated disputes. We can expect new postings for LAT panelists soon and it is anticipated that current FSCO arbitrators and mediators will be among those appointed to handle these claims. Most current FSCO mediators have received training in arbitration from Murray Miskin with more scheduled to receive such training later in June 2015. Many of these mediators are likely to serve on the LAT panels since they do have expertise with these specific disputes. Persons who dispute an insurer’s decision will then have a right to file for adjudication with LAT. There will be a settlement meeting during the process instead of a mediation to encourage parties to a dispute to settle. This will be part of the process and, in fact, it already is done as part of arbitration in the current system. With the initial mediation process removed, the system will do less to encourage early settlement but claims will proceed more cheaply and quickly.

Additional changes include a reduction of the interest rate on accident benefit payments made late and also on claims for pain and suffering made in liability claims.

This new system is intended to speed up the process by taking out steps and save a lot of money which should help the Government in its goal of reducing auto insurance premiums. The transition of the system may be a difficult one.

Further changes were announced for motor vehicle accident benefits on April 23, 2015, with the 2015 Ontario budget including limiting medical and rehabilitation benefits to 5 years post-accident from the current 10 years. Those benefit limits will be combined with the limits for attendant care benefits and reduced in non-catastrophic injuries from a combined maximum of $86,000 to a maximum of $65,000. Currently, very few people receive benefits even to the 5-year point as insurers tend to cut off funding for treatment within the first two years. As well most injuries are classified (often improperly) by insurers as being under “Minor Injury Guidelines” where there is no attendant care benefit and medical treatment costs are limited to $3,500. There is a big reduction in compensation for catastrophically injured people from a combined total (for medical, rehabilitation, and attendant care) from $2,000,000 to $1,000,000 limits. Non-earner benefits will be available to those “who are unable to carry on a normal life” as a result of accident injuries without a 6 month waiting period, but the benefits will be limited to two years instead of being for life with an increase in the amount after two years. Clearly, accident benefits available regardless of fault, are being reduced in dollars and in the time period for which they are available. There is optional and costly additional coverage available which a person could add to their policy to increase the non-catastrophic medical, rehabilitation, and attendant care limit to $1,000,000. Few people buy or even know about this additional optional coverage.

Changes are also being made to reduce what can be claimed in fault-based claims in addition to the no-fault accident benefits. The deductible of $30,000 on claims for pain and suffering will be increased as will the amount (now $100,000 assessment) above which the deductible does not apply.

On a positive note, there will be a mandatory 5% premium discount to Ontarians who use winter tires on their cars. Insurers will also be prohibited from raising rates of drivers with “minor” accidents.

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