On July 1, we once again celebrated Canada Day, a statutory holiday across the country that commemorates the unification in 1867 of the colonies of Nova Scotia, New Brunswick, and the Province of Canada into a single country called the Dominion of Canada.
For typical Canadians, July 1 is a time to get together with friends and family and enjoy all that this country has to offer. It is doubtful many Ontarians gave much thought to their auto insurance policies on that day. And why would they? People typically don’t think about insurance until it is time to renew their policy or if they need to make a claim. However, for those who may not have realized it, Canada Day marked the implementation of a significant change in Ontario’s auto insurance system.
Change May Have Been Overlooked.
If it seems that the provincial government’s move to transition Ontario’s accident benefits system to a more "à la carte" model went largely unnoticed, there is good reason. First, when it took effect on July 1, existing policyholders generally retained their existing insurance coverage unless and until they elected to change it. It was up to you to take action.
Under the Ford government’s new regime, medical, rehabilitation and attendant care benefits continue to be mandatory for drivers. However, consumers can now opt out of a number of Statutory Accident Benefits (SABs), which include income replacement, caregiver, non-earner, housekeeping, death benefits and funeral benefits.
“This would provide drivers with an opportunity to lower their premiums by taking advantage of a wider range of coverage options to meet their needs,” the government announced when the plan was introduced in the 2024 provincial budget.
Consumer Awareness is Less Than Ideal.
Although the recent change has made headlines in the media, you may not be aware of the new system. If that’s the case, you are not alone. When it comes to insurance, consumer awareness is not what it could, or should, be.
According to a 2016 study commissioned by the Financial Services Commission of Ontario, only 10 per cent of Ontario drivers said they are “very knowledgeable” about the elements in a standard auto insurance policy.
Canadian Underwriter reported that while 75 per cent of Ontario drivers who have auto insurance stated that they were familiar with the benefits and coverages included, only 10 per cent were knowledgeable about the elements in a standard policy.
Of course, insurance can also be confusing. A 2022 Canadian Automobile Association (CAA) survey found that more than half of Ontarians (53 per cent) found their auto insurance policy difficult to understand.
"While motorists know that they are required to carry valid auto insurance in Ontario, our research shows they may not fully understand what their policy coverage means. We often see motorists learn about their coverage once they need to make a claim," said the CAA's Elliott Silverstein.
Complex Legal Language.
Gluckstein Law Clerk Valeria Ustenko, who recently wrote about the new auto insurance reform, noted that drivers must also contend with insurance policies containing “complex legal language that is difficult to fathom.”
“Some people are confused by contracts that are intentionally designed to discourage people from reading them. Others assume that because a company is asking them to agree to terms, these contracts are standard and they have no choice,” she noted. “But it is important to bear in mind that if you have agreed to the terms of any contract, you will be expected to live up to its terms.”
Ustenko says failing to review and understand your automobile insurance policy can have serious consequences.
“It is not uncommon for people to come to us after a motor vehicle accident with questions about what exactly is covered,” she says. “This can be an incredibly difficult time for them, especially if they discover they are underinsured and some of their financial needs may not be met.”
Understanding the New System.
Simply stated, the change to Ontario’s auto insurance regime allows consumers to drop the coverages they don’t want, excluding medical, rehabilitation and attendant care benefits, of course. It should be noted that unless they choose to make changes, existing policyholders keep their current coverage.
Ideally, under the new regime, a policyholder would see a cost saving by eliminating coverages they believe are unlikely to be needed.
"This is something that we are committed to because … we want insurance to be affordable for many," Finance Minister Peter Bethlenfalvy told reporters when the plan was introduced.
However, CBC reported that Bethlenfalvy noted reforms wouldn’t necessarily lower auto insurance premiums.
"I don't think this is where we have any sort of specific numbers in terms of the rate of increase or a decrease," he said at the time. "What we're really focused on is making sure that we provide as much choice and convenience to drivers."
Consumers might be swayed by the opportunity to save a little money on their premiums. The anticipated savings may be relatively modest, while the financial consequences of declining coverage can be substantial if a serious collision results in disability, caregiving needs, or a prolonged absence from work. Someone who decides to opt out of coverage for such protections as caregiver support or income replacement could ultimately find themselves in financial jeopardy in the event of a serious accident. For example, a person who declines income replacement benefits and later becomes unable to work following a serious collision may discover that they have no access to the wage-loss protections that were previously included in a standard policy.
When times are tight, people may be tempted to pare down their automobile policy to improve their bottom line, but critics argue that removing the safety net these options provide can be a recipe for disaster.
Look Before You Leap.
In the end, understanding your auto insurance policy is the first step toward ensuring you are protected in the event of an accident. Taking an active role to tailor your policy to your specific needs may involve a little bit of homework, but it could save you from a great deal of distress in the future.
If you plan on opting out of certain coverages, consider what financial fallout would be if you were injured in an accident. Check over the CAA’s Insurance Guidebook, which was designed to help consumers "gain the knowledge to feel comfortable having more advanced conversations about their policy.” Then discuss your policy with your broker.
Call Us if You Have Been Hurt in An Accident.
A car accident can have consequences that may not be evident at the time. That’s why you need to seek legal advice you can trust.
The experienced team of personal injury lawyers at Gluckstein Lawyers will assess your claim, explore your options, explain our fee structure and determine how we can assist in accessing benefits or compensation for your losses.
Your initial meeting is free and without obligation on your part. We will never charge legal fees until your claim is settled. Contact us today.