An Accident Benefits option that’s well worth considering

It is never a bad idea to consider an increase in limits. In light of the recent changes to the Ontario automobile insurance wording, an increase in limits may be particularly advisable when it comes to the medical, rehabilitation and attendant care benefits for non-catastrophic injuries.

I received a call the other day from an industry colleague and friend, Jo Anne Mitchell of Effective Training & Communications Plus. Among other things, Jo Anne called to point out a potentially critical Accident Benefits option for policyholders – and their brokers!

It will be helpful to start by reviewing one of the reductions to the Ontario Statutory Accident Benefits Schedule that took effect June 1^st. With respect to non-catastrophic injuries, the maximum amount payable for medical, rehabilitation and attendant care benefits has been reduced from $86,000 to $65,000. In addition, the time limit for receiving these benefits has been reduced from ten years to five years. (There is an exception for an insured person under the age of 18 at the time of the accident. Benefits are then payable until the insured person turns 28.)

Among the options that are now being made available to consumers, there is an option to double the limit to $130,000. I think there is a strong argument for going even further and taking the other option, which is to increase the limit to $1,000,000. The reasons for saying this are buried in the language of the legislation.

In setting the five-year and age-28 limits for receiving medical, rehabilitation and attendant care benefits, Section 20 (2) of the revised Standard Accident Benefits Schedule states that the time limits do not apply to an insured person who suffers a catastrophic injury or to an insured person ‘who is entitled to optional medical, rehabilitation and attendant care benefits under paragraph 4 of subsection 28 (1)’.

Paragraph 4 of subsection 28 (1) states, in part, that every insurer shall offer an optional $1,000,000 for medical, rehabilitation and attendant care benefit for non-catastrophic injuries and that this particular option must not limit the period of time for which expenses are to be paid.

Paragraph 3 of subsection 28 (1) states that every insurer must also offer an optional limit of $130,000 for these same benefits. Policyholders who opt for the $130,000 limit are still subject to the five-year and age-28 limits outlined in Section 20 (1).

All of this is a roundabout way of saying that, if a policyholder is planning to increase the $65,000 limit for medical, rehabilitation and attendant care benefits for non-catastrophic injuries, there is a strong argument to go for the gusto and select a limit of $1,000,000 rather than the much more modest limit of $130,000.

As I look at the pricing schedule for two of the largest personal lines carriers, in both cases the price for the $1,000,000 option is exactly double the price for the $130,000 option.

Considering that the higher limit provides almost eight times the coverage amount and that choosing the higher limit allows for lifetime benefits following an accident, the choice might seem obvious. With that said, at the end of the day, it is up to the consumer to decide what coverage to add or to leave off her or his policy. All an insurance intermediary can do is offer professional advice.

Accident Benefits is a no-fault coverage. As such, even the best driver in the world can end up being in an accident that calls upon these benefits. In my opinion, the $1,000,000 option for a non-catastrophic injury offers much better protection to a consumer. Advising a client of this option also offers the best protection for a broker wishing to avoid an errors and omissions lawsuit.