Underinsured and Uninsured Claims: What happens when there isn’t enough insurance coverage?

Written By: Nick Todorovic and Nicole Fielding, Student-at-Law

An interesting area of automobile insurance law is the concept of uninsured and underinsured drivers. What happens when someone who is not insured or is underinsured gets into a motor vehicle collision? Similarly, what happens if the at-fault driver does not have enough insurance coverage to compensate an injured party for their injuries?

An example of the challenges presented by limited insurance policies is the tragic Toronto van attacks, which occurred on Monday, April 23, 2018. A driver drove a rented van southbound down Yonge Street from Finch Avenue to Sheppard Avenue, killing ten people and injuring sixteen. This is an example which demonstrates how important it is to understand the implications of policy limits in automobile insurance.

Uninsured Drivers

If you are convicted of driving without valid automobile insurance, or are injured while driving or occupying an uninsured vehicle, you may not be entitled to receive income replacement and/or non-earner benefits, and you may not be allowed to sue the at-fault driver for compensation as a result of injuries sustained in the accident.

If you are injured by an uninsured driver, and you are not able to claim under the third party liability coverage of any other motor vehicle liability policy, you will have access to the mandatory uninsured automobile coverage in your own policy. The amount recoverable under this type of coverage is limited to $200,000.

If no automobile insurance is available in a claim (for example, when a pedestrian or cyclist is hit by an unidentified driver), the Motor Vehicle Accident Claims Fund (MVACF) is considered to be a “payer of last resort”.  For more information on this claims fund, click here.

Underinsured Drivers

Often, the policy limit on coverage for underinsured or uninsured drivers is not enough to fully compensate victims. Family Protection Coverage, also known as OPCF 44R coverage, is an optional benefit you may purchase as part of your auto insurance premiums, to provide you with additional coverage.

This coverage comes into play when an at-fault driver’s liability coverage is not enough to compensate the injured victim. If an injured party has OPCF 44R coverage, that party may file a claim under this coverage to recover damages. Family Protection Coverage provides coverage to any “eligible claimant”. An “eligible claimant” is defined as an “insured person” or the spouse or dependant relative of the named insured.

The injured party’s OPCF 44R coverage will pay the difference between the defendant driver’s liability policy limit and the limit of the injured party’s coverage. This coverage is important when the defendant driver’s policy has insufficient limits to fully compensate the injured person or persons for their damages.

In the case of the Toronto van attacks, there may be concerns with the amount of coverage available to the victims. The Insurance Act dictates the priority rules by which polices of insurance will respond. Pedestrians who were injured in the attacks will first be able to access funds through a policy in which they are the named insured, then through a policy insuring the driver, and third, through the owner.[1] Pursuant to the Insurance Act, liability insurance on rented vehicles is limited to $1,000,000.[2] Thus, if the victims have no alternative sources of insurance coverage, they will be limited to sharing the $1,000,000 policy on the rental van.

These concepts are critical for ensuring yours and your family’s protection. Look to your policy to determine what your limits are, and what additional coverage may be available to you, often for a relatively small increase in premiums.

If you or someone you know has been injured in a motor vehicle collision, contact one of the critical injury lawyers are McLeish Orlando LLP for a free consultation.

[1] RSO 1990, c I 8, s 268(2).

[2] Ibid, s 267.12(3).

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