Injury victims will pay the price for auto insurance coverage cuts

Cuts to mandatory auto insurance coverage in Ontario could leave injury victims paying more at a time when they can least afford it.

According to budget documents, the provincial government plans to eliminate income replacement, caregiver, non-earner, death and funeral benefits from the mandatory list, leaving medical, rehabilitation and attendant care as the only types of accident benefit coverage that drivers must obtain before getting on the road.

Auto owners can still access non-mandatory coverage but now have to pay for the privilege.

As a personal injury lawyer with more than two decades of experience, this is a show that I’ve seen (several times) before and spoiler alert: it’s drivers who lose out when auto insurance coverage is cut — especially those injured in accidents.

As is typically the case for insurance cuts, Finance Minister Peter Bethlenfalvy hailed the news as a boost to consumers’ “convenience and choice.” He could not provide an estimate for the premium savings that drivers will enjoy as a result of the cuts, but my guess is they will be minor if they materialize at all.

The trouble with auto insurance coverage cuts like these is that drivers rarely understand what they’re giving up until it’s too late. It’s only once they’re injured in an accident that they realize they’ve sacrificed a key element of their coverage for a negligible premium saving.

Whittling away coverage

The most recent cuts are just the latest in a long-term trend that has seen mandatory coverage whittled away to the bare-bones basics.

Earlier this year the government allowed drivers to opt out of the previously mandatory Direct Compensation-Property Damage, which covers physical damage to a vehicle. Auto owners who took advantage had better hope that they are not involved in an accident or robbed since there is no chance the token amount they saved on their premium will help with the repair or replacement costs they must now cover for the vehicle and its contents, even when they were not at fault. 

Under the previous Liberal administration, even more drastic accident benefit cuts saw the combined limit for attendant care and medical rehabilitation services available to catastrophically injured victims halved to $1 million from the previous $2-million limit.

In addition, the combined attendant care and medical and rehabilitation services for non-catastrophically injured victims fell from $86,000 to $65,000, and the standard duration for medical and rehabilitation benefits was cut from 10 years to five years, except for children.

In each case, drivers have the opportunity to pay more to obtain the coverage that was previously included — often for a surprisingly small supplementary payment. But in reality, “more choice” is more accurately described as “less coverage” when the cheaper, poorer option becomes the default for most drivers.

As coverage dwindles, profits soar for insurers

There is no question that Ontario’s auto insurance out-of-control premium rates are a problem that needs tackling. A recent report by an insurance comparison website concluded that drivers in the province paid an average premium of $1,744 in 2023 — a 12 percent spike compared with 2021.

Brampton, Toronto and Mississauga had the dubious honour of topping the charts for premium hikes since 2021, with rates up by 37 percent, 19 percent and 17 percent for drivers in those respective cities, for average 2023 premiums well in excess of $2,000.

It would be refreshing to see an auto insurance policy that genuinely seeks to tackle the problem of high premiums with something other than cuts to coverage. As NDP finance critic Catherine Fife pointed out in response to the budget, the profit margin for insurance companies on Ontario auto products ranges from 15 to 33 per cent, so there certainly seems to be some room for a price drop that does not affect coverage levels.

Talk to a broker

In the meantime, the best advice I can offer to drivers renewing their auto insurance policies is to talk to a broker or other insurance expert who can give you some guidance regarding your various coverage options. If you want to take advantage of the cost savings that come with the cheapest option, you should be fully informed about what you are giving up in return.

Some drivers may be willing to take the risk on the assumption that their workplace benefits can fill any coverage gaps, but in reality, most employer plans have strict monetary limits that are quickly exhausted by those in serious need of care.  

Nobody wants or expects to be injured in an accident. Anyone unlucky enough to need to make a claim under their auto insurance policy will want to know that they are properly protected, and I have yet to meet an injury victim who, with the benefit of hindsight, would give up more comprehensive coverage for a few hundred dollars off their premium.

If you have been injured or your vehicle damaged and would like to speak to a personal injury lawyer in Oakville about your situation, our team at Edwards Pollard would be happy to assist or call (289) 529-0404.

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