Understand Ontario’s auto insurance changes

By Mathieu Yuill

A series of reforms to the auto insurance industry mandated by the McGuinty government will serve little to reducing your premiums, industry experts say.

In 2009, the provincial government announced changes to the heavily regulated auto insurance industry that in effect gives consumers more choice. The mandate created a new standard auto insurance policy that reduces the coverage in some of the accident benefits portion.

While the changes do allow more choice for consumers, it won’t result in a lower premium.

An auto policy is made up of liability, accident benefits and physical damage (collision and comprehensive). Accident benefits include coverage for things like medical and rehabilitation, attendant care, death and income replacement.

When the provincial government announced the changes in the summer of 2009, Finance Minister Dwight Duncan said it would help keep insurance affordable but in reality premiums have continued to rise.

“This past year premiums have risen,” Peter DaSilva, president and COO of Cornerstone Insurance Brokers said. “Some insurance companies increased their premiums by as much as 15 percent.”

DeSilva notes one of the reasons for the increases is that Ontario has the richest auto insurance policy in Canada, meaning the benefits far exceeded what other provinces were afforded in their auto insurance policies.

“What we should see with these changes are premium increases in the single digits are no increase at all,” DeSilva said.

According to DeSilva, there are only a few types of people that should consider increasing their insurance (when the changes take place) to what they have now. Those include the self-employed, those making more than $30,000 but without an employee disability plan, those who care for children or the elderly and those with pre-existing medical conditions.

The current standard policy includes $100,000 for non-catastrophic and $1 million for catastrophic medical and rehabilitation benefits. The new standard will allow $3,500 for minor injuries, $50,000 for non-catastrophic and $1 million for catastrophic. You’ll be able to buy up to $100,000 or $1.1 million for non-catastrophic and up to $2 million for catastrophic.

Shelagh Paul, assistant vice president corporate communications at The Dominion says the changes ultimately give the consumer choices to better customize their insurance policy.

“You really have to look at where you drive, how much you drive, what your risk appetite is and determine what is the appropriate level of coverage (for you),” she said. “Ultimately a broker can help explain coverages and help consumers but they can’t make the choices for them.”

The Dominion hasn’t left it entirely up to brokers, however. They recently launched a fairly comprehensive website outlining the changes to auto insurance and presenting several case studies based on life scenarios to help consumers understand what might be right for them.

A common misnomer, Paul says, is employee benefits or OHIP will cover your medical costs in the event of an accident. According to The Dominion’s Web site, www.understandingmyinsurance.ca, 50 percent of accidents involve rehabilitation costs like physiotherapy, which is not covered by OHIP. Doctor’s fees for completing paperwork aren’t covered either nor are mobility devices.

Both DeSilva and Paul agree that Ontario’s standard insurance has been by far the richest of any province and the changes bring the baseline more in line with the rest of the country.

The new standard is available to consumers on Sept. 15 and current policyholders can have their coverage changed regardless of their renewal date then. For others, the new standard will take effect when their policy renews and you’ll have to specifically ask to have the coverage bought back.