“I just need the basic coverage”. This is what insurance brokers hear on a daily basis. Sound familiar? Of course, this mandate makes the broker’s job easy: find the cheapest premiums for the client and sell an automobile insurance policy. Rarely are the terms “optional benefits” discussed, even though they should be.
No one pictures themselves or family members actually getting into a car accident when premiums are purchased. However, when our clients are injured in a car accident, inevitably they are shocked at how little they are covered.
Ontario Automobile Policy (OAP 1) is the standard auto policy. It includes coverage for Liability, Accident Benefits, Uninsured Automobile Coverage and Property Damage and the coverage is prescribed by the Insurance Act and, more specifically, the Accident Benefits by Ontario Regulation 34/10 the Statutory Accident Benefits Schedule (“SABS”). The SABS is the first party coverage or “no fault benefits” to which everyone injured in an automobile accident is entitled.
There have been drastic changes to the SABS over the past 5 years by the Ontario Liberal Government. In 2010, the coverage for Medical and Rehabilitation (MR) benefits (in non-Catastrophic cases) was reduced from $100,000 to $50,000. The Regulations have been further amended to come into effect in 2016 to reduce these limits once again: MR and Attendant Care (AC) limits (formerly $50,000 and $36,000 respectively) are now to be combined to $65,000 and the claim will only be open for 5 years instead of 10. In 2010, the Housekeeping benefit with coverage of $10,400 was entirely removed from non-CAT cases.
The OAP includes the following section on Optional Benefits:
“You may purchase any one or more optional benefits to increase the basis level of benefits provided in this Section. The optional benefits are: Increased Income Replacement; Increased Caregiver and Dependant Care; Increased Medical, Rehabilitation and Attendant Care; Increased Death and Funeral. You may also purchase an optional Indexation Benefit which provides that certain weekly benefit payments and monetary limits will increase on an annual basis to reflect changes in the cost of living”.
Last October I renewed my own auto insurance. After I insisted, my broker provided me with a quote: to increase from the basic coverage of $50,000 for MR the maximum of $1,072,000 of combined MR/AC was only an increase in my annual premium of $140!
In reviewing our firm client base, 0-2% of our clients had purchased Optional Benefits for MR and we want to change that.
Optional Benefits can also be purchased for Income Replacement Benefits (IRB). The standard amount payable is 70% of gross income to the maximum of $400/week. However, if purchased, an optional benefit could increase the IRB to $1000/week, removing the shortfall for many of our clients off work due to their injuries who do not have any further disability coverage.
The minimal cost of adding this comprehensive coverage makes it well worthwhile. Consider buying a Big Mac at McDonald’s: The cashier offers the Value Meal at an additional charge or even to “supersize” it. You don’t bother. Imagine 6 years later you order the Big Mac again but all you receive is half a hamburger patty. Obviously the minimal extra charge for the complete Value Meal becomes a deal.
Call your insurance broker and add optional benefits to your automobile policy.
Sonia Leith