How does car insurance work in Ontario?

The insurance sector in Ontario is regulated by the Financial Services Regulatory Authority of Ontario (FSRA) who ensure that Ontario’s regulations and acts are followed by all appropriate bodies.

If you drive a vehicle in Ontario, the law requires that you have auto insurance. Your auto insurance policy includes coverage when you are in an accident and, typically, covers you for liability as well as damages. However, not all policies are created equal and it is important to understand the insurance system so that you know what you are entitled to after an accident.

There are two ways you may receive compensation after a car accident:

Statutory Accident Benefits (SABS)

Included in your insurance policy, Statutory Accident Benefits (SABS) cover expenses related to car accident injuries. This includes coverage for health costs not covered by OHIP and income replacement benefits to help you recover and assist with expenses.

Tort System benefits

After a car accident, you may wish to pursue compensation for pain and suffering (non-pecuniary benefits) resulting from the accident. A car accident injury lawyer can work with you to file a lawsuit and guide your case through Ontario’s tort law process to help you receive compensation.

Why is it so difficult to receive compensation for my injuries?

While Ontario’s policies may seem beneficial, there is some fine print information that you need to know to ensure your auto insurance coverage is actually covering you.

Some of the regulations established and enforced by the FSRA impact the amount of accident benefits you may receive after being involved in a car accident.

Income replacement benefit

When you are hurt in a car accident, your car insurance policy’s Statutory Accident Benefits (SABS) entitle you to receive 70% of your income each week, should you be unable to work as a result of your injuries. However, there is a catch – the benefit is capped at $400. That means that if 70% of your typical income is more than $400 and you do not have disability insurance or enhanced benefits, you will not actually receive 70% of your income. This can cause major issues, as many people cannot afford this drastic change in income.

You may be able to buy enhanced benefits that will help you access a higher percentage of your income in the event of an accident. If you decide to go with enhanced benefits, it is important to do your research. Many insurance companies do not provide these benefits due to the extra cost, and if you’re making more than $75k per year, even if you buy enhanced benefits, you could still end up losing money; so fully understanding your policy and what you are entitled to is essential.

Deductible

If you are injured in a car accident, you may be eligible for compensation for your pain and suffering (non-pecuniary damages). However, the FSCO sets a deductible on awarded compensation based on a pre-established threshold each year to account for inflation, as per the Ontario Insurance Act. This deductible can actually hurt car accident victims by reducing their compensation.

In 2022, the threshold for awards is listed at $138,343.86 with a statutory deductible of $41,503.50. That means if you are awarded anything under $138,343.86 by the court, the insurance company of the at-fault driver will keep around $40,000 of your entitled compensation. Ontario’s insurance system unfairly limits the amount of benefit you will receive, seeming to punish victims for surviving a car accident. Awards over the threshold are not subject to the deductible and will be awarded the full amount.

Often in court, jurors will award compensation without being aware of this deductible, and many people can end up receiving very little, if any, of the compensation they are entitled to. Even worse, jurors cannot be advised on a suggested compensation amount, meaning they would never know about the reduction that compensation under the threshold is subject to.

If you are seeking compensation following a car accident, it is important to contact a car accident injury lawyer to help you understand the compensation you are entitled to and the options available to you.

The Morris Law Group can help!

Benefits and insurance claims are difficult to navigate and often seem unfair due to policies like these. If you have been injured in a motor vehicle accident, you need support and guidance to ensure you are receiving the maximum compensation available for your recovery.

The Morris Law Group created Accident Benefits Consultants (ABCs) back in 1994 to help guide clients through the claims process, by acting as front-line advocates. They provide assistance and information to ensure clients access all the benefits they are entitled to receive. They also will assist in negotiating fair payment for benefit entitlement.

Accident Benefits Consultants ensure that clients at The Morris Law Group are heard and defended both before and after a lawsuit.

If you or a loved one has been the victim of a personal injury, call The Morris Law Group at 905-526-8080 or toll-free at 1-877-464-4466 for a free no obligation consultation with one of our experienced personal injury lawyers. At our law firm we work on a contingency basis, meaning that you don’t pay until your case settles.