Lawyers concerned by Ontario’s plans to make some automobile insurance coverage optional

Steve Rastin

By: Ian Burns, Law360 Canada

Law360 Canada (March 27, 2024, 1:45 PM EDT) -- The Ontario government is saying auto insurance reforms outlined in its 2024 budget will give more choice to consumers, but legal observers are raising alarm bells that they could lead to people driving around without proper coverage.

As part of the province’s fiscal plan, which was tabled in the legislature on March 26, mandatory auto insurance accident benefit coverage will continue to apply to medical, rehabilitation and attendant care benefits while all other benefits will become optional. The province said this would allow consumers to take advantage of a wider range of coverage options to meet their needs, and drivers who already have access to certain benefits through their workplace benefit plans would not have to pay for them twice through their auto insurance policies.

“We are moving forward with auto-insurance reforms that would provide more choice and flexibility to drivers in order to keep their premiums more affordable,” Finance Minister Peter Bethlenfalvy said in his budget speech.

The province said it will also move forward with plans to make auto insurers pay for medical and rehabilitation benefits following an auto accident before extended health-care plans do, which would apply to all automobile accidents regardless of the injury sustained. This proposed change would help reduce paperwork and red tape for patients and their health-care providers, the province said.

The proposals were met with support in the insurance community, with Amanda Dean, vice-president of the Insurance Bureau of Canada (IBC), saying in a statement they were “a good first step in giving Ontarians more control and choice over their auto insurance coverage.”

“We have long advocated for much-needed reforms that provide consumers with more choice and options when purchasing auto insurance,” said Dean. “We commend the government on the actions announced today and look forward to working with the province and other stakeholders to implement these reforms. Ontario’s property and casualty insurers look forward to exploring further opportunities to provide consumers with greater choice in the future.”

But legal observers were not as supportive of the government’s plans. Philippa Samworth of Dutton Brock LLP said optional benefits have been around since the early 1980s, and it has been an area of contention among lawyers and insurance companies on how to handle them.

“Personally, I’m all for optional benefits — I think it’s important for people to get a wide range of choices, so you can buy up or buy down if you want to. But I'm not in favour of what appears to have been the decision of the government to reduce the mandatory coverage and eliminate mandatory benefits and put in place pure optional benefits,” she said. “There will be no income replacement benefit unless you choose to buy it, and people will look at making sure they’re properly protected versus wanting a cheaper premium. And maybe 10 per cent of the files I see involve people who have purchased optional benefits, so the concern I have here is how we are going to make sure that people understand the importance of making the right optional purchase.”

The automobile insurance system in Ontario contains three levels of injury — catastrophic, non-catastrophic (major) and minor — with medical, rehabilitation and attendant care benefits for minor injuries fixed at a maximum limit of $3,500.

And M. Steven Rastin, senior counsel with Gluckstein Lawyers, said he thinks the vast majority of people in Ontario will soon be driving around with only that $3,500 to help them and no coverage for things like income loss, saying “well over” 50 per cent of people who get into an accident fall within the minor injury guidelines.

“If you have a car accident, and you don’t have a proper plan, how are you going to pay for your groceries or your property tax bill?” he said. “I think the most vulnerable people in our society are going to be in a situation of increased risk because consumers in Ontario have this naive belief that they pay these incredibly high auto insurance premiums, so they’ll be taken care of if they get in an accident.”

There is going to have to be a comprehensive educational program so the public understands what they should and shouldn’t be buying, said Samworth.

“And they’re also changing the ‘who pays first’ provision, and that’s an important thing because, right now, if I have comprehensive coverage at work and I have an auto accident, my work policy pays first. But now that’s not going to be the case,” she said. “And there’s no indication they're going to increase the present limits on medical, rehabilitation and attendant care, which is a combined limit of $65,000 right now for non-catastrophic injuries. Sometimes that isn’t enough, and if you’re not getting access to your other benefits from work policy, everything is going to come out of your insurance policy, and you may run out of money.”

But one aspect of the plan that Samworth highlighted as being positive was a promised review of the professional fee guideline and the attendant care hourly rate, which she said was “long overdue.”

“That’s been talked about for some time,” she said.

Rastin said the courts should be making it easier to pursue cases through the judicial system.

“Why not streamline the court process? Why not make it easier for people to get justice through the courts when they’ve been wronged? If you had a fast, efficient court system that didn’t penalize people, then the people that would lose would be the ones who are responsible for their own accidents,” he said. “Focus on making the civil justice system, fast, efficient and fair — the government will save a boatload of money and the people that were wronged through the actions of others would have a fast, efficient way to find justice.”


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