How Do the New Insurance Rules Affect You?

Ontario insurance rules

There has been a little flurry of activity in the past week regarding the latest cut to auto insurance benefits. Whenever there is a substantial change for the worse especially there is perhaps some type of protest, but our Ontario Government usually just weathers it out and lets the dust settle. As Ontarians we have a tendency to come out fighting but soon lose our steam.

The latest hit by this Provincial Government is their plans to cut the catastrophic insurance benefits that were at $2 million combined which included medical, rehabilitative and after care, down to $1 million combined. While this may still seem like a lot of money ask anyone that has suffered a catastrophic injury if they think $1 million is going to be adequate. Once you add up the medical costs it seems to be forgotten that these individuals still have to live, they do have a future and the quality of that future greatly depends on the medical, rehab and after care they are receiving through their recovery.

Unfortunately a lot of people who hear this news of the cuts will be disturbed but the furthest they will go is to reiterate the thought, “I hope it doesn’t happen to me or my family.” No doubt the same thought that those who have been critically injured at one time thought as well.

The general concept is that there are some that milk the system with their injuries and end up getting a lot of money for injuries that don’t warrant it. So what it comes down to is everyone potentially suffers because of a few bad apples.

There was a fairly big protest held at Queen’s Park to rally against these new changes, but as usual the Government will probably turn a blind eye to this. Their retort is they are working hard at trying to keep Insurance costs down. Well, this is certainly a strange way to go about it. Plus, they are indicating that they will make sure that the Insurance Companies are not going to realize huge increases in profit as a result of these changes.

Let’s take a look back in history here:

Back in 2010 the Insurance Companies did a great job at convincing the Ontario government that they would have to dramatically increase their premiums or reduce the benefits because they were simply paying out way too much in claims. So the Ontario government listened and decided to slash accident benefits. This time they took a real run at the benefits outside of the catastrophic category. Many of the benefits were slashed by half.

So, as a result of these changes did Ontarians as individuals derive any benefits like a reduction in insurance premiums? Well it is indicated that some did benefit which was the Insurance companies that may end up saving in excess of $1 billion a year from not having to pay out claims.

At the very least did these measures help to freeze the rise of premiums? Nope, in fact Ontario Insurance rates increased by 6.4% in the second quarter of 2011.  Plus there were huge increases in the denial of claims.

You as a tax payer of Ontario whether you are concerned about the possibility of getting into an accident yourself or not is only one concern. The other is that the individuals who are unfortunate enough to become injured may not have enough insurance money to cover their needs and will have to rely on the services that are being funded by the tax payers. So either way you are paying the price.


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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
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