First, a quick overview of how the system works:
Under the Ontario “no-fault” insurance system (the Statutory Accident Benefit Schedule, or SABS), if you are injured in a motor vehicle accident, then you can claim medical and rehabilitation services costs, attendant care expenses, income replacement benefits (IRBs), etc., from your own insurance company. The amounts you can claim and the time periods covered are limited under the SABS and depend upon the severity of your injuries. If this coverage is not sufficient to cover your losses, and if someone else was at fault for the accident, then you may be able to sue that person under tort law. However, that obviously takes much longer to get resolved, can be costly, and has the risk of not being successful.
Note 1: There is no change to benefits covered under the Minor Injury Guideline (MIG), which includes minor injuries such as a sprain, strain, whiplash, contusion, abrasion, laceration, subluxation, etc. Medical and rehabilitation benefits under the MIG are limited to $3,500. Thus the balance of this discussion ignores benefits covered under the MIG.
Note 2: A catastrophic injury includes severe injuries such as amputation, blindness (both eyes), severe brain injury, mental or behavioural disorders, paraplegia or quadriplegia, etc.
Note 3: The following discussion is meant to be an over-view and an oversimplification of some complex rules and changes. Therefore, please contact your insurance broker or a personal injury lawyer in your area for more detailed understanding of the rules and changes.
So, what are the changes to the SABS benefits and when are they coming?
Effective date – The changes to SABS benefit limits will be effective to policies issued or renewed on or after June 1, 2016.
Medical, Rehabilitation & Attendant Care Benefits – Under the current system, assuming you are not catastrophically injured, you are limited to $50,000 in medical and rehabilitation costs, and to $36,000 in attendant care benefits. Under the new system this will be limited to a total of $65,000. [Note – for accidents on or before September 1, 2010, these limits were $100,000 for medical and rehab and $72,000 for attendant care, so you can see the pattern.] For those deemed catastrophically injured, the current system provides for $1,000,000 in medical and rehabilitation costs and an additional $1,000,000 in attendant care benefits. Under the new system this will be limited to a combined total of $1,000,000.
In addition, under the current system the medical / rehabilitation benefits for non-catastrophic injuries are available for up to 10 years after the accident. Under the new system, the medical, rehab and attendant care benefits for non-catastrophic injuries will no longer be available after 5 years.
Non-Earner Benefits (NEBs) – NEBs are payable to injured persons who suffer a complete inability to carry on a normal life as a result of the accident and do not qualify for an IRB. Under the current system NEBs are paid (after a 6-month waiting period) at $185 per week for up to 2 years after the accident. The benefit would then be increased to $320 per week assuming you continue to qualify. Under the new system, the waiting period is reduced to 4 weeks (oh good), however, the benefit will no longer be payable after 2 years (oh…).
Optional Benefits – Under the current system you are able to purchase optional benefits for up to $100,000 in non-catastrophic medical / rehab expenses and $72,000 in attendant care benefits. Under the new system you will only be able to purchase a combined optional medical / rehab and attendant care benefit, for non-catastrophic injuries, of up to $130,000. For catastrophic injuries, under the new system, a new optional benefit of up to $1,000,000 for medical / rehab and attendant care will be available. This optional benefit would essentially put you back to the standard benefits under the current system.
So, What Should You Do?
Talk to your insurance broker when renewing your policy (or purchasing a new policy) after June 1, 2016. Know what your options are, and how much extra premium the various available options cost. Our experience is that many of these options cost very little.
Consider purchasing additional umbrella insurance. Remember, medical and rehabilitation costs continue to go up. Our primary auto insurance coverage seems to be continually going down. Therefore, lawsuits are likely to continue to increase.
Article written by: Brent M. Pyper, CPA, CA, CFP