On June 1, 2016, the Government of Ontario implemented changes to the province’s auto insurance rules “in an effort to comply with a provincial promise to make auto insurance premiums more affordable,” per the CBC. Praised by the Insurance Bureau of Canada, the reforms have been met with hostility by accident victims’ advocates and Ontario personal injury lawyers who say the reforms make it more difficult to access benefits. Now, some experts believe insurers may also be at risk.
Recap: how are injury victims affected?
The June auto insurance reforms resulted in a small – if temporary – reduction in rates, but did so at the expense of injury victims. Under the new regulations, benefits for non-catastrophic injuries were reduced from a combined $86,000 for medical and attendant care to a combined $65,000; benefits for catastrophic injuries were halved, from a combined $2-million to a combined $1-million.
Examples of the impact of the new auto insurance regulations have already begun to emerge. The changes put injury victims at risk and make it harder for Ontario personal injury lawyers to help their clients access sufficient compensation to finance their recoveries.
Insurance brokers also at risk
In addition to reducing benefits, Ontario’s auto insurance reforms transferred accident benefits dispute arbitration away from the Financial Services Commission of Ontario (FSCO) to the new licence appeal tribunal (LAT).
At a recent panel discussion, Resort to the LAT or Last Resort, legal experts discussed the impact this shift might have on the auto insurance industry, including a heightened risk of lawsuits against brokers.
In Ontario, drivers must carry a minimum limit of $200,000 in third-party liability coverage, a figure which Thomson Rogers partner Wendy Moore Mandel said “was set so long ago, that it’s really no longer relevant,” Canadian Underwriter reports. That $200,000 limit is intended to pay for claims that stem from lawsuits against the policy holder. However, because accident benefits have been so steeply reduced, more accident victims are likely to initiate civil lawsuits in hopes of accessing funds for their recovery, and many of those claims will be well in excess of $200,000.
Accident victims with “a valid tort claim” aren’t going to go through the LAT procedure if “there is enough coverage on the tort side,” Moore Mandel explained.
The new LAT process, said Jim Vigmond, ex-president of the Ontario Trial Lawyers Association (OTLA), “offloads everything to the tort system and until we get those (third party liability auto) limits up, that’s going to be a big problem.”
Both Vigmond and Moore Mandel believe insurance companies’ failure to educate their clients on the need for higher benefits policies and higher third-party limits could lead to lawsuits against brokers.
“There will be a lot more claims against insurance brokers,” Vigmond said. “I think we are going to see greater incidence of those claims driven not only by the facts but the need to find another deep pocket.”
Sam Pitaro, a partner at Pitaro Romeo Schneider Injury Lawyers, also sat on the panel. He believes that since June 1, it has become necessary for brokers to supply “a rigorous set of instructions … to a potential insured” explaining how to purchase additional coverage, and why it is necessary. By paying as little as $35 extra per month, Pitaro explained, insureds can “essentially reinstate the $2million catastrophic” coverage.
What can Ontario personal injury lawyers do to help accident victims
If you or a member of your family is injured in an automobile accident, you should immediately contact an experienced attorney. The accident benefits and auto insurance systems are complex environments that are best navigated by a dedicated professional. With the help of Neinstein’s team of Ontario personal injury lawyers, you may be able to access the compensation you need for a successful recovery.
Greg Neinstein
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