What you need to know about the Ontario auto insurance reform

Posted On March 20, 2016

What you need to know about Ontario auto insurance reform

In the biggest change to auto insurance in more than five years, Ontarians will not only see the cost of their standard auto policy decrease, but also the benefits. On June 1st, the Ontario government implemented major changes to auto insurance as part of a larger initiative to reduce premiums and insurance fraud.

The government’s actions to reduce fraud and, in turn premiums addresses Ontario’s steep auto insurance costs – by far, the highest in the country. According to the Insurance Bureau of Canada, the average annual premium last year stood at $1,425, nearly 25% more costly than Alberta, which has the second highest auto insurance rates.

On average, a quarter of a million accidents occur annually on Ontario roads. Residents sign up for auto insurance policies so that their insurance company will cover the cost of property damage, medical treatments or lost income if an injury occurs.

However, some have taken advantage of this. The high premiums are attributed to the amount of fraudulent accident and injury claims by drivers in the province. Based on statistics provided by the Insurance Bureau of Canada in 2013, the average accident benefit payout was $31,785 in Ontario, compared with $7,895 in Nova Scotia and $3,766 in Alberta – a drastic difference.

The auto insurance reform and new standard policy, while addressing this, will allow Ontarians the option to purchase more coverage based on their individual needs and driving profiles.

The most significant change to the new lower standard auto policy includes a reduction in payout for injuries – both catastrophic and non-catastrophic, as well as a decreased time period that benefits will be available. The policy includes a $65,000 benefit for the treatment of non-catastrophic injuries, including both the medical and rehabilitation benefits, as well as the attendant care benefits – a 25% reduction compared to the previous policy. Additionally, the time period to receive benefits for related injuries has been reduced from ten to five years. As it concerns catastrophic injuries, the coverage has been reduced in half, and now stands at $1 million.

Another key change includes the revision of the description of catastrophic injury, which now includes new criteria for traumatic brain injuries, amputations, ambulatory mobility, loss of visions, and mental and behavioural impairments.

According to the Financial Services Commission of Ontario (FSCO), minor collisions, including fender-benders, will no longer be considered an at-fault accident if damages are less than $2,000 and no one was hurt.

Under the reform, if you have a one-year policy, the maximum interest rate that insurance companies will be able to charge you for monthly premium payments has been reduced from 3% to 1.3%

However, the FSCO revealed that some benefits have remained the same. The standard policy will continue to include third party liability, uninsured automobile, direct compensation-property damage, and accident benefits.

The auto insurance reform comes nearly two years after the Fighting Fraud and Reducing Automobile Insurance Rates Act was passed, which included plans to reduce auto insurance rates by 15 per cent within two years. Preparations for the reform began back in 2011, when the Ontario government formed the Auto Insurance Anti-Fraud Task Force with a mandate to review the existing system, and propose solutions to help prevent fraud and protect consumers, which included transforming the auto insurance dispute resolution system.

As of now, any auto insurance policy coming up for renewal will automatically have the new lower standard benefits unless you ask to increase your benefits. Before signing off on your next renewal, it’s important to go through the changes carefully, and get in touch with your insurance broker to discuss your options and ask questions.


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