LETTER OF THE LAW: Benefits cut, so why are premiums still high?

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LETTER OF THE LAW: Benefits cut, so why are premiums still high?



If you drive a vehicle in Ontario you must have auto insurance -- that is the law. The question is do you know what is included with the basic auto insurance coverage?

On June 1, the basic coverage will once again be slashed. You will be paying the same premiums for less coverage.

Before September 1, 2010, if you were injured in a car crash, your basic auto insurance would provide you with $100,000 of coverage to pay for needed medical and rehabilitation benefits to get you back to work and recover from your injuries. This basic coverage would cover you for 10 years.

After September 1, 2010, the Liberal Government allowed the insurance companies to impose the Minor Injury Guideline (“MIG”), which reduced medical and rehabilitation coverage to a total of $3,500 for more than 60 per cent of those injured in car crashes.

For those who are more seriously injured, the benefits were cut by 50 per cent to a total of $50,000 for medical and rehabilitation benefits.

Now in 2016, we are facing the most drastic cuts ever to the basic auto insurance coverage. Here is a summary of the cuts coming June 1:

  • The MIG will continue and will limit most injured people to a total of $3,500 for all medical and rehabilitation services and no access to attendant care benefits
  • For those more seriously injured, coverage limits for medications, medical appointments, rehabilitation services (chiropractic, physiotherapy etc.) and attendant care will be cut from $86,000 to $65,000
  • The time period for being eligible to receive medical and rehabilitation benefits in non-catastrophic cases has been reduced from 10 years to 5 years
  • Medical, rehabilitation and attendant care benefits for the most seriously hurt persons have not only been cut in half, from $2,000,000 to $1,000,000, but the ability to qualify for these benefits has been made substantially more difficult, especially for those who suffer brain injuries
  • Weekly disability benefits for those persons not working at the time of a crash (called non-earner benefits) are now only payable to a maximum of 2 years where before they were payable for life

These are drastic and frankly devastating cuts to the basic auto insurance coverage.

Look at the numbers: the insurance companies have cut more than 50 per cent of all benefits and in many cases reduced benefits to maximum of $3,500. These are massive savings for the insurance industry.

So if the insurance companies are saving all this money by not having to pay out benefits, where are the premium savings?

In 2013, the Liberal government promised a 15 per cent reduction in auto insurance premiums by August 2015. The reality the average reduction in insurance premiums is only 7 per cent.

This minimal reduction has come at the cost of severe and draconian cuts to all benefits. The only winners in Ontario are the insurance companies.

As a driver what you need to do is look at your auto insurance policy and speak with your broker about optional benefits. While it may cost you a bit more money, you will be glad for the extra coverage if you are injured in a car crash.

This is the new reality, less coverage for the same money and we can thank the Liberal government.

Kristian Bonn is a personal injury lawyer and partner at Bonn Law. He grew up in Trenton, works in Belleville and Trenton and lives just over the Bay Bridge in Prince Edward County.

Read More: Opinion, Letter of the Law, Quinte

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