This is the first of a series where Patrick Brown discusses the upcoming changes to auto insurance.
Starting this September, if you are injured in a car accident, the benefits available to assist you in getting better will be drastically reduced.
The insurance industry has set it self up, once again, for record profits. Following intensive lobbying by the insurance industry, the Ministry of Finance released the new Regulations for Auto Insurance on www.e-laws.gov.on.ca. These regulations are now law. As of September 1, 2010, all persons who are injured in an incident involving a car (this includes cyclists and pedestrians) will face reduced benefits when hurt.
Dollars used to care for the injured victims will be deflected away from the insurance industry to the public health system. The last time the government gave a break to the auto insurance industry was in 2003 when they reduced compensation to be paid out to victims of accidents. Back in 2003 the industry was crying poor and pressing the panic button on rising health care costs and increased premiums. After the 2003 changes were made profits soared. In 2004, Canada’s property and casualty insurance industry made $4.7 billion. It went on to make $4.6 billion in 2005 and about $5.8 billion in 2006.
This new round of cuts are even more severe than those in 2003. Most people’s medical and rehabilitation benefits will be cut in half. These benefits are designed to help the injured person get better and re enter the workforce. Attendant care benefits used to help the disabled person meet basic care needs at home have , in most cases, been cut in half. In the majority of injuries, benefits for housekeeping will be removed entirely.
It is extremely important for all consumers to know, that when renewing your auto insurance, you will be given a number of choices. A letter will likely be directed to you before the changes take place in September. If you do nothing and buy the “basic package” you will have your benefits reduced drastically from what they were before. You will however be given the choice to restore your benefits to previous levels or increase them. What will be of interest to all is how much will it cost in premium dollars to maintain the same level of benefits. Will premiums go up to get the same value. If you buy the new water downed basic package, will your premiums go down. One would think that such a drastic reduction in benefits must mean lower premiums to consumers.
Every consumer should ask their broker when renewing their insurance in upcoming months the following:
What am I paying for?
How much of my benefits have been reduced from before?
How much did those reductions save me?
How much does it cost to restore my benefits?
At the end of the day, all consumers should be aware of what they are buying. Do not assume you are paying for the same policy you had before, because you are not.