What Most People Forget About Car Insurance
If you are like most Ontarians, your monthly automobile insurance premiums have increased from last year. As you already know, every month we pay premiums to an automobile insurance company in exchange for a policy of insurance. We do that because the Compulsory Automobile Insurance Act states that every owner of a motor vehicle driven on the road must ensure their vehicle is insured under a contract of automobile insurance. However, there is also another reason why we pay premiums that few people understand – because an insurance policy covers you in the event you are injured in a motor vehicle accident.
Whether you are a pedestrian, bicyclist, or passenger in a vehicle that is involved in an accident, typically your own insurance company (regardless of who is at fault) will provide certain benefits to you if you are injured. The amount and type of benefits available to an injured person is described in the Ontario legislation called the Statutory Accident Benefits Schedule.
Based on the severity and type of your injuries, an insurance company will place you into one of the following three categories:
- Minor Injury Guideline,
- Non-Catastrophic, or
- Catastrophic.
If you are in the smallest Minor Injury Guideline category, you are entitled to a maximum of $3,500 for medical and rehabilitation treatment. In the Non-Catastrophic category, you are entitled to a maximum of $65,000 for medical and rehabilitation treatment. Lastly, if you are in the Catastrophic category, you are entitled to $1 million for medical and rehabilitation treatment.
While most Ontarians are vividly aware of the cost of car insurance and what the insurance company is taking from their pockets every month, few are aware of the benefits that automobile insurance provides in the event of an accident. Fewer still cannot understand whether the premiums represent an arbitrary number or a fair value – monthly premiums in exchange for benefits if injured in an accident.
For example, if you are injured in an accident and cannot return to work, one available benefit is Income Replacement Benefits (IRBs). IRBs are calculated at 70% of your gross pre-accident income up to a maximum of $400 per week. In other words, if the insurance company agrees that you cannot work because of your injuries from an accident, you will only be paid $400 per week at most. You can also pay more to purchase “optional” benefits that will boost the IRBs amount to $1,000 per week. Can you afford to earn $400 or $1,000 per week?
Another example is if you are injured in an accident, and at the time of an accident you were unemployed, retired, a full-time student, or recent graduate – and your injuries cause you to suffer a complete inability to carry on a normal life – then the insurance company will pay you Non-Earner Benefits (NEBs). NEBs are paid at $185 per week. That $185 per week is only paid after a four week waiting period following the accident and until a maximum of two years. What happens after the two years?
For many of my injured clients, the available benefits are insufficient. Either they consume the full amount of the available $3,500 or $65,000 in medical treatment within a year or two, or they struggle to survive on $400 per week for IRBs or $185 per week for NEBs.
The only way to counteract against the insufficient accident benefits from your insurance company is to start a lawsuit or tort action against the responsible parties who caused the accident. In a lawsuit, one can claim compensation for out-of-pocket expenses for treatment and medication, income loss, housekeeping and home maintenance, damages for pain and suffering, etc. That is why it is vital to speak to a personal injury lawyer as soon as possible after an accident.
As you may be aware, the law in Ontario dictates that whenever someone is injured through no fault of their own via a motor vehicle accident, slip and fall accident, trip and fall accident, dog bite, assault, or any other type of accident, there is a civil limitation deadline of 2 years from the date of the accident for the injured person to start a lawsuit. Otherwise, their legal claim is extinguished. Without a lawsuit, the available accident benefits from your insurance company are likely insufficient.