The issues about automobile insurance coverage are directly connected with the motor vehicle accidents. That is why we decided to give you some useful and extended information about auto insurance: types of auto insurance, what insurance policy is, what is your liability, how your auto insurance rates are set, accident benefits coverage and more. We hope that this information will help you to better understand automobile insurance.
Ontario Automobile Policy as of September 1, 2010
The Ontario Automobile Policy (effective September 1, 2010) sets out the rights and obligations of insured persons and insurance companies related to automobile insurance coverage, and the terms and conditions of that coverage. The mandatory coverage is liability, accident benefits, direct compensation – property damage, and uninsured automobile. Optional coverage includes increased liability as well as collision and comprehensive coverage for your automobile and its contents.
The Ontario government introduced changes to the auto insurance system intended to provide greater price stability, and give drivers more control over the amount of coverage and price they pay for auto insurance.
As a result, some coverage under the Ontario Auto Insurance policy has been altered. Drivers are now able to:
- Choose the insurance coverage that best meets their protection needs and budgets.
- Customize their level of income replacement, medical, rehabilitation, attendant care, caregiver, housekeeping, death benefits and home maintenance coverage; and
- Better integrate their auto insurance with private disability insurance coverage, or individual or group health insurance coverage
In Ontario, automobile insurance is regulated by the Financial Services Commission of Ontario, a regulatory agency of the Ministry of Finance. Every person who owns a car is required to have insurance for the vehicle.
Every passenger-plated vehicle has to have mandatory insurance. Effective November 29, 2010, Ontario will electronically verify with the Insurance Bureau of Canada, if a passenger-plated vehicle has mandatory insurance coverage during the licence plate renewal process. In addition, every commercial motor vehicle has to have Liability insurance that is being used to transport goods for compensation.
The Mandatory Amount of Automobile Insurance in Ontario
In Ontario, automobile insurance is mandatory. The government has a responsibility to provide a product which addresses the needs of as many insurance consumers as possible and ensures that the interest of the public at large is protected. This is why all vehicles operated on the road must carry certain mandatory coverage. These coverage is liability, statutory accident benefits, uninsured automobile and direct compensation-property damage. The statutory accident benefits provided to persons insured are detailed in the Statutory Accident Benefits Schedule (SABS). Coverage includes, among other things, income replacement benefits, supplementary medical and rehabilitation benefits, death and funeral benefits and long-term care benefits. These benefits are available not only to the owner of the policy, but they could also be accessed by passengers in the vehicle, as well as pedestrians, who may not have coverage under their own automobile insurance policy.
The mandatory automobile insurance coverage in Ontario are: $200,000 of third party liability, statutory accident benefits, uninsured automobile and direct compensation-property damage.
What most people do not realize is that insurance companies are now assessing your risk level based on how many convictions you have on your record, and of course by how serious the offences are. Demerit points DO NOT affect your insurance. But what does, is getting convicted of an offence.
AUTO INSURANCE – IT’S THE LAW!
Ontario law requires that all motorists have auto insurance. Fines for vehicle owners, lessees and drivers who do not carry valid auto insurance can range from $5,000 to $50,000. If you are found driving without valid auto insurance, you can have your driver’s licence suspended and your vehicle impounded.If you are convicted of driving without valid auto insurance, your insurance company may consider you a “high-risk” driver and charge you higher premiums or refuse to sell you insurance altogether. If you are injured in an accident 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 received in the accident.
More importantly, if you are found to be at fault for an accident causing injury or death to another person, you may be held personally responsible for his/her medical costs and other losses.
AUTO INSURANCE POLICY
Your insurance company is responsible for providing you with the insurance coverage summarized on your Certificate of Automobile Insurance, and for which you pay a premium.
Certificate of Automobile Insurance:
- lists the vehicles that are insured and the coverage purchased,
- provides a description of how you were rated for the premiums charged, and
- indicates the period during which you are covered by insurance
It is important that you read this certificate. You only have insurance coverage for a vehicle if your Certificate of Automobile Insurance shows a premium for that vehicle or shows that the coverage is provided at no cost.
What’s in a Standard Auto Insurance Policy?
If you own a vehicle in Ontario, you are required to, at the very least, purchase the following automobile insurance coverage:
- Third-Party Liability Coverage: This section of your automobile insurance policy protects you if someone else is killed or injured, or their property is damaged. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage
- Statutory Accident Benefits Coverage: This section of your automobile insurance policy provides you with benefits if you are injured in an automobile accident, regardless of who caused the accident including supplementary medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits
- Direct Compensation – Property Damage (DC-PD) Coverage: This section of your automobile insurance policy covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, to the extent that another person was at fault for the accident. It is called direct compensation because even though someone else causes the damage, you collect directly from your own insurer, instead of the person who caused the damage. Coverage under the DC-PD section of your automobile insurance policy only applies if the following conditions are met: 1) the accident took place in Ontario; 2) there was at least one other vehicle involved in the accident; and 3) at least one of the other vehicles is also insured by an insurance company that is licensed in Ontario or has signed a special agreement with FSCO to provide this coverage. If these conditions are not met, then you can make a claim on your optional Collision coverage (if you have it), whether or not you are at fault. If you don’t have Collision coverage, you may be able to pursue recovery from the at-fault driver to the extent you were not-at-fault for the accident.
- Uninsured Automobile Coverage: Protects you and your family if you are injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to your vehicle caused by an identified uninsured driver.
- Increased Liability and Accident Benefits Coverage: In addition to the mandatory minimum coverage that is required by law, you may purchase higher liability limits under your Third-Party Liability Coverage, as well as increased Accident Benefit Coverage. These options will allow you to customize your policy to better suit your needs.
- Increased Third-Party Liability Coverage: While you are legally required to carry a minimum of $200,000, you may want to increase this coverage. The cost to increase your Third-Party Liability coverage to $1 million or $2 million is small in most cases.
- Income Replacement Benefits: If you cannot work as the result of an automobile accident, you may be eligible for basic weekly income replacement benefits of 70 per cent of your gross income up to $400. If this is not enough to cover your current after tax income level, you may want to consider buying optional income replacement benefits to increase your maximum weekly protection to $600, $800 or $1,000. When considering the amount of coverage you will need, keep in mind you are required to first claim wage loss benefits from a disability plan you have purchased or workplace benefits that you have access to.
- Medical, Rehabilitation and Attendant Care Benefits: The standard maximum amount for medical and rehabilitation expenses, such as physiotherapy, chiropractic treatment, dental expenses, etc., is $50,000. If you are catastrophically injured, the standard maximum is $1,000,000. The standard maximum for attendant care is $36,000. If you are catastrophically injured, the standard maximum is $1,000,000. You can buy optional benefits which will cover up to $100,000 or $1,100,000 in medical and rehabilitation expenses and $72,000 or $1,072,000 in attendant care expenses, and up to $3,000,000 in combined medical, rehabilitation and attendant care expenses for catastrophic injuries. Keep in mind that many health care expenses are not covered by OHIP, or only partially covered, including physiotherapy and chiropractic treatment, mobility devices (crutches, wheelchairs), modifications to your home and car that you may require, and other specialized goods and services. Minor injuries may only require several thousand dollars in treatment. The most serious injuries (brain injuries, amputations) are permanent and may require hundreds of thousands of dollars in specialized goods and services on an ongoing basis. You may need the services of an attendant 24 hours a day. Review any extended health care plan you and your spouse have access to through work to help you decide how much coverage you require.
- Caregiver Benefits: If you are providing care full-time to dependants and can no longer provide that care as the result of an automobile accident, you may be eligible for caregiver benefits if you need to hire someone to care for your dependants. The maximum amount for caregiver benefits is $250 per week for one dependant, plus $50 per week for each additional dependant. The standard coverage is only available to those who are catastrophically injured in an auto accident. You can extend coverage to all injuries by purchasing the optional benefit. If you have children you need to consider who will look after them if you are injured in an auto accident.
- Housekeeping and Home Maintenance Expenses: If you are unable to perform your usual housekeeping or home maintenance duties, these corresponding benefits pay for someone to perform the duties. The maximum benefit payment is $100 per week. The standard coverage is only available to those who are catastrophically injured in an auto accident. You can extend coverage to all injuries by purchasing the optional benefit. If you normally do the cleaning and maintenance of your home, you need to consider who will look after these things if you are injured in an auto accident.
- Dependant Care Benefits: This optional benefit can only be claimed if you were employed at the time of the accident, are not receiving a caregiver benefit, and have to pay for additional childcare expenses as a result of the accident. Optional dependant care benefits cover up to $75 per week for the first dependant and $25 for each additional dependant.
- Death and Funeral Benefits: In the event that you die as a result of an auto accident, the standard amount which will be paid is $25,000 to your eligible spouse, $10,000 to each dependant, and a maximum of $6,000 for funeral expenses. If you buy optional benefits, you can increase these amounts to $50,000 to your eligible spouse, $20,000 to each dependant, and $8,000 for funeral expenses.
Extra Coverage for Loss or Damage to Your Vehicle
In addition to the standard policy coverages you may also buy extra coverage for loss or damage to your vehicle including:
- Specified Perils Coverage: This coverage pays for losses caused by one of the following perils: fire; theft or attempted theft; lightning, windstorm, hail, or rising water; earthquake; explosion; riot or civil disturbance; falling or forced landing of an aircraft or parts of an aircraft; or the stranding, sinking, burning, derailment or collision of any kind of transport in, or upon which an insured vehicle is being carried on land or water.
- Comprehensive Coverage: This coverage pays for losses, other than those covered by Collision or Upset, including perils listed under Specified Perils, falling or flying objects, missiles and vandalism.
- Collision or Upset Coverage: This coverage pays for losses caused when an insured vehicle is involved in a collision with another object, including another vehicle, or rolls over. “Object” includes: another vehicle or a trailer that is attached to the vehicle that is covered by your insurance policy; the surface of the ground, and any object in or on the ground.
- All Perils Coverage: This combines Collision or Upset and Comprehensive coverages. In addition, it covers loss or damage caused if a person who lives in your home steals the vehicle that is covered by your insurance policy. All Perils also covers you if an employee who drives or uses, services or repairs that vehicle, steals it. For example, if you take your vehicle to a garage for repairs and an employee involved in the repair of your vehicle steals it, All Perils would cover you.
WHAT YOU MUST KNOW ABOUT AUTO INSURANCE IN ONTARIO
In Ontario, it is illegal to drive a motor vehicle that is not properly insured. Ontario has compulsory automobile insurance. This means that every vehicle registered in the province must be insured for third party liability of at least $200,000. This covers you in the event that you injure or kill someone or damage someone’s property. Collision insurance to cover damage to your own vehicle is a good idea but not required by law. In Ontario, insurance companies categorize convictions on your driving record as Major and Minor offences. Major offences include:
- Impaired Driving
- Failure to Remain at the Scene of an Accident
- Fail to Stop for the Police
- Careless Driving
- Fail to Stop for a School Bus
- Racing and Stunt Driving
- Speeding over 50km/h
- Fail to Report Accident
- Driving While under Suspension and some others
Minor offences include any other Highway Traffic Act, Compulsory Automobile Insurance Act or Municipal Traffic Bylaw offences.
Paying your ticket automatically finds you guilty of the offence and creates a conviction on your driving record for 3 years.
Each party involved in an accident reports to their own insurance company, regardless of who is at fault. As part of the Ontario policy, you agree to inform your insurance company of any accident involving the automobile that must be reported to the police under the Highway Traffic Act or for which you intend to make a claim under the policy. The Highway Traffic Act of Ontario indicates that you must report any accident that involves an injury, and must report any accident in which the total damages to all vehicles and property is greater than $1000. You must notify your insurance company within 7 days after the accident, or if unable, as soon as possible after that.
Factors that affect your automobile insurance premium
Insurance companies use a variety of risk factors to determine a premium. The cost of automobile insurance for different drivers varies as the level of risk for the insurance companies varies. Factors that could affect your premiums include:
- driving history, including previous at-fault accidents and driving violations;
- type of vehicle including make, model and model year;
- where you keep and drive your vehicle;
- the age and gender, along with the number of years licensed;
- the number of kilometres driven in a year;
- whether the vehicle is used for pleasure, commuting or business purposes
The consequences of having convictions in your driver’s records:
- Convictions for major offences can result in immediate increase of your insurance premium.
- Driving without or with false insurance can result in your insurance premium 2-5 times increasing
- Insurance companies hold all convictions against you even if they carry no demerit points.
- If you have 6 or more demerit points on your record, you could be considered un-insurable.
- You would be labeled as a “High Risk Driver” and could remain in this category for 3 years minimum and up to 6 years.
- Some insurance companies will not renew your policy if you have 3 or more convictions on your driving records within the 3 year period.
- Insurance companies assess fault in relation to accidents. If the accident is assessed as an at fault accident, it will be held against you for a minimum of 5 years before your insurance company forgives and forgets.
- Your insurance may not be renewed at all!
If you drive without or with false insurance in Ontario: Knowing the Consequences
When driving your own vehicle or someone else’s, you must carry the pink insurance card from the insurance company for that particular vehicle. You must show this card when a police officer asks for it.
Penalties for driving without or with false insurance in Ontario
If you drive a vehicle without insurance or if you carry a false insurance, you can be fined as follows:
- The penalty for driving without insurance is a fine ranging between $5,000 to $25,000
- Your licence could be suspended for up to 1 year
- Your vehicle can be impounded for up to 3 months
- If you do not show the pink insurance card when a police officer asks for it, you can be fined up to $200.
Remember, driving without or with false insurance can result in your insurance premium 2-5 times increasing! You would be labeled as a “High Risk Driver” and could remain in this category for 3 years minimum and up to 6 years. Your insurance may not be renewed at all! Knowing all this information, you have to decide: to fight or not to fight your ticket for driving without or with false insurance
Generally, there are 3 options available for you:
- Pay the fine (out of court)
- Visit a court office to plead guilty but make submissions about amount of fine or time to pay
- Request a trial
Weigh the pros and cons of every option. Calculate the cost of fighting your ticket and weigh it against increasing of your insurance premium. You have only 15 days from the date of the offence to make a decision.
HOW THE AUTO INSURANCE RATES ARE SET
Your auto insurance rates are determined by a combination of factors including:
- Your Personal Profile
- The Amount of Coverage You Purchase
- Your Deductible
- The Insurance Company You Choose
1) Your Personal Profile
- The type of vehicle you drive: Many insurance companies’ rate makes and models of vehicles according to their actual claims experience, such as the cost of repairs, the rate of injury, and the likelihood that a particular vehicle may be stolen or involved in an accident. The Insurance Bureau of Canada (IBC) has a document called How Cars Measure Up. This document provides information on the claims experience of most models of passenger vehicles. To review or print the latest version of “How Cars Measure Up”, visit IBC’s website at: www.ibc.ca.
- Your driving record: The premium you pay also depends on your driving record. This includes accidents where you are more than 25 per cent at-fault1, the length of time you have been licensed to drive, whether or not you have taken a driver-training course that your insurance company recognizes, and driving convictions (such as: speeding and impaired or careless driving). Generally, your first minor conviction will have little or no impact on your rates. But if you have had a second minor conviction in the last three years, it will most likely affect your premium. If you have had accidents where you are more than 25 per cent at-fault over the last six years2, or a number of minor driving convictions or even one major or serious conviction over the last three years, your premium will be higher. Likewise, the better your driving record, the lower your premium will be.
- How much you drive: Your auto insurance premium will also be affected by how much you drive. This is because the more time you spend on the road, the higher the chances of becoming involved in an accident. In urban areas, driving to work may include driving to a subway, bus, or train station. If you live close to work, you will probably have a lower premium than someone who lives far from work or who needs to use his or her vehicle for business.
- Where you live: Auto insurance rates are generally higher in larger urban centres. This is because there are a greater number of vehicles on the road, and the chances of getting into an accident are higher. Also, more vehicles are stolen in urban areas.
- Your age: In general, mature drivers have fewer accidents than younger drivers, particularly teenagers. Drivers who are 25 years of age and over can generally buy insurance at a considerably lower cost than younger drivers.
Only those accidents occurring on or after September 1, 2010 where you were more than 25% at fault can be used in rating. Any at fault accident that occurred before September 1, 2010 can still be used in rating.
2. The Amount of Coverage You Purchase
Many people buy additional protection beyond the mandatory coverage. For example, if you buy optional Collision Coverage, which protects you for damage to your vehicle regardless of who caused the accident, or Comprehensive Coverage, which protects you against theft, vandalism, hail, or explosion, your vehicle will, be covered against any such incidences, but you will pay more.
There are also other options, such as increasing your Third-Party Liability protection or increasing your Standard Accident Benefits Coverage. These options give you more choice and flexibility over your coverage that will allow you to customize your policy to better suit your needs. All of these optional coverage will have an effect on the cost of your policy.
3. Your Deductible
Your deductible is the portion of a loss that you are required to pay. Your deductible can vary, depending on the type of coverage you have and the percentage of fault you are assigned in the event of an accident. There are deductibles for Collision or Upset, Comprehensive, All Perils, and Specified Perils Coverage.
You can also pay a lower premium by having a deductible on Direct Compensation-Property Damage (DC-PD) Coverage or raising the deductible on the other coverage. For example, by having a higher deductible of $500, instead of $300, on Comprehensive Coverage, you can save about 10 per cent off your Comprehensive premium. These savings are due to the fact that higher deductibles mean you pay more towards the cost of repairing your vehicle, while your insurance company pays less toward the total cost of repair. As a result, your premium will be lower. If you’d rather have lower deductibles, you may be able to do so if you meet certain conditions and if your company offers them, but your premium will be higher. (Recognize, however, that since Collision or Upset and Comprehensive are both optional coverages, your insurance company may obligate you to carry higher deductibles if you have had a lot of prior claims.)
4. The Insurance Company You Choose
As mentioned above, auto insurance premiums for the exact same coverage can vary substantially from insurance company to insurance company. Why? Financial factors unique to each insurance company will contribute to the amount each company will charge you for auto insurance. This is why it is important to shop around!
Insurance works according to a “pooling” concept. You are one member of the risk group in the company you select as your insurer. Your company charges premiums based on the claims experience of the entire group. If an insurance company’s claims experience for a particular risk group is significantly higher than another insurance company’s, its insurance premiums will be higher.
High Risk Drivers
Although an individual insurance company may refuse to sell you auto insurance if its approved underwriting rules determine you to be a “high risk,” the insurance industry as a whole cannot refuse to sell you basic insurance.
High-risk drivers are those drivers who have had a number of convictions or at-fault accidents, had policies cancelled because they haven’t paid their premiums, or have other risk-related characteristics.
The Facility Association, an insurance pool that all auto insurance companies belong to, is an insurer of last resort, which makes auto insurance available to high-risk drivers who are unable to find automobile insurance in the regular market. As well, there are a number of “non-standard” insurers who specialize in insuring high-risk drivers.
Tips for Saving Money on Auto Insurance
The following tips may help you save money on your auto insurance:
- Build a good driving history free of accidents and convictions. This means driving carefully and obeying the rules of the road. Wear your seat belt and don’t use your cell phone while driving. Don’t drink and drive.
- Be a comparison shopper. Talk to your friends and neighbours. Make some phone calls and check websites for on-line quotes. Compare rates. Different companies price policies differently. Do your shopping well in advance of when your current policy expires.
- Don’t pay for coverage you don’t need. For example, it may not be cost effective to have Collision or Upset and/or Comprehensive Coverages on a vehicle that is worth less than $1,000, because any claim you make would not substantially exceed your deductible or the annual premium.
- Consider higher deductibles. This means you’ll contribute more toward the loss if you have an accident, but it will also mean a lower premium. For example, a zero-dollar deductible usually applies to your DC-PD Coverage. However, you may be able to lower your auto insurance premium by increasing this deductible.
- Make sure you always pay your premium on time. If you pay your premium by cheque or through automatic withdrawals from your bank account, make sure you always have enough money to cover your payment. If your insurance company is unable to withdraw your payment because you don’t have enough money in the account, it could result in the cancellation of your auto insurance policy. If your policy is cancelled for non-payment of premium more than twice, and you have to purchase auto insurance all over again, many companies may consider you a higher risk, and you could pay much more for your auto insurance. Also, if you’ve had your insurance policy cancelled more than once over the past three years because you failed to pay your premium, insurance companies are not required to offer the option of monthly premium payments.
- Choose the type of vehicle you drive wisely. For example, if you buy a vehicle with a high theft rate, your premium will be higher. Choose a vehicle with good security features.
- Take advantage of discounts which may be available to you.
- Make sure you tell your broker, agent, or insurance company about any changes to your policy (e.g., different drivers, different use of the vehicle). In some cases, your premium will drop.
- Finally, don’t switch insurance companies mid way through the policy. Wait until renewal time to avoid penalties for cancellation.
Insurance Fraud Is a Crime!
Insurance fraud costs all of us in the form of higher auto insurance premiums. It is an offence under the federal Criminal Code for anyone, by deceit, falsehood, or other dishonest act, to defraud or to attempt to defraud an insurance company. If you are caught committing or attempting to commit insurance fraud:
- Your claim will be denied.
- Your insurance policy may be cancelled outright.
- You may pay higher premiums in the future.
- You may be denied insurance in the future.
- More importantly, the offence is punishable, on conviction, by a maximum of 10 years’ imprisonment for cases involving an amount over $5,000 or otherwise a maximum of 2 years’ imprisonment.
Common types of fraud or attempted fraud may include:
- lying about the way a loss occurred,
- filing fraudulent automobile accident or damage claims,
- including previously existing damage to a vehicle when submitting a claim,
- withholding information about past accidents, traffic convictions, claims, policy cancellations or non-renewals, other insurance in force, and medical and disability history, and
- receiving payments for treatments not received
Did You Know That …
- It is not only the driver but also the owner of the vehicle who is liable when an accident is caused with his or her vehicle. This puts a heavy onus on owners to ensure that they give only competent drivers permission to operate their vehicle!
- Your auto insurance rates are based on the information you have given to your broker, agent, or insurance company. An insurance company has the right to cancel your policy if the information you have given is not correct or complete.
- If you have a lot of comprehensive claims (e.g., repeat broken windshield claims), your insurance company may require you to have a higher deductible or may refuse to sell you Comprehensive Coverage at all.
- If you want to change insurance companies and cancel your existing policy before it expires, you may have to pay a penalty. You may instead want to have the new policy start once your existing policy expires.
- You should receive your policy renewal from your insurance company approximately 30 days before it expires. This allows you to change your policy, examine policy changes, or shop around.
- If you don’t want to renew your policy, you should notify your broker, agent, or insurance company immediately. Don’t just stop making payments: that will result in cancellation of your policy because of non-payment and possibly put you in a higher risk category.
- Your insurer can cancel your policy for non-payment of premiums, so long as it follows certain procedures. As required by the Insurance Act, the insurer must give you 15 days’ notice of termination by registered mail or five days written notice of termination if it’s personally delivered. If you pay the outstanding premium before the end of the notice period, the insurer may, but is not required to, keep the policy in force. If the insurer does not receive your payment before the end of the notice period, your policy will be cancelled for non-payment.
- If there is a lapse in your coverage due to cancellation of your policy because of non-payment of premiums, insurance companies may then charge you higher premiums for a future policy.
- Your auto insurance policy requires that any accident involving injury or property damage, be reported to your insurance company within seven days, regardless of who is at fault. If you are unable to report within seven days, you must report it as soon as possible after the accident.