Bill 15: Will This New Auto Insurance Bill Hurt Drivers?
The Ontario Government passed Bill 15 on November 19, 2014. Bill 15 aims to tackle fraud and reduce car insurance premiums.
Two of the changes made by Bill 15 have serious implications for people who have been injured in motor vehicle accidents in Ontario:
- Bill 15 removes the right to sue for statutory accident benefits that have been denied; and
- Bill 15 lowers the prejudgment interest rate from 5% to 1.3%.
What does this mean?
When someone is injured in a motor vehicle accident and requires compensation or benefits -- whether for treatment, loss of income, etc.-- an application is made to their insurer. Before Bill 15, when their insurer denied certain benefits the injured person had the right to go to court to dispute this denial.When Bill 15 comes into effect this right will be taken away.
When Bill 15 comes into effect, the resolution of claims will begin with a settlement meeting. If this settlement meeting is unsuccessful an arbitration application will be filed. After this application is filed it will be decided, based on the nature of the dispute, whether the person is entitled to a paper hearing, an expedited in-person hearing, or a full in-person hearing.
Additionally, claims that are now heard by the Financial Services Commission of Ontario, an institution with years of experience resolving accident benefits disputes, will be heard by the License Appeal Tribunal, which already hears appeals from twenty-one different statutes.
Prejudgment Interest Rate
Pre-judgment interest is interest that is paid to injured people on their non-pecuniary (pain and suffering) damages claim, from the time their claim is made until the time they are compensated. Now, the prejudgment interest rate is 5%, which ensures timely payment by insurers. Bill 15 will lower this interest rate to 1.3%.
This lower rate provides incentive for insurance companies to delay payment, as long as they are earning more than 1.3% interest on their investments. Thus, unfortunately, while Bill 15 may help the Provincial Government achieve rate-cutting goals, it removes protection for vulnerable accident victims in Ontario.
Written by Kristin Walker, Student-at-Law, Gluckstein Lawyers
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