Brokers must ask for insurer clarification regarding HST

Published: November 27, 2018

Updated: November 30, 2018

Author: Luke Jones



In recent weeks, Harmonized Sales Tax (HST) has been a hot topic in the Ontario insurance industry. 11 of the country’s largest insurance providers are facing lawsuits for ignoring regulations regarding HST payments. Naturally, this has brought those regulations and HST payments into the spotlight.

Many brokers are now rightly asking questions about HST payments, and that’s a good thing according to one expert. Indeed, a lawyer told Canadian Underwriter this week that brokers absolutely should ask insurance companies if they are including sales tax in benefit cap calculations.

Under Ontario tax las, customers must pay 13% Harmonized Sales Tax for any goods and services, although some HST can be included in an accident benefit claim. Under provincial legislation, auto insurance companies cannot use HST when assessing restrictions on benefits, points out Paul Harte, a layer in Richmond Hill.

To ensure car insurance companies are playing by the rules, Harte says brokers “should be asking for written confirmation from the insurance companies” to clarify if they are paying HST or not.

“A broker would be negligent in this environment if they were not advising their client as to whether the insurer they are going with is paying or is not paying the HST.”

Harte is among the legal team suing insurers on behalf of clients in Ontario who say major companies included HST in their calculations for accident benefits.


A report by the Toronto Star earlier this month highlighted lawsuits placed against Intact, Aviva, Unifund Assurance, belairdirect, Certas Direct, and Allstate. Following up, the Star reports Wawanesa, Co-operators, Economical, Commonwell, and Echelon are also facing legal action.

According to the investigation, the companies are accused of withholding hundreds of millions of dollars in Harmonized Sales Tax (HST) benefits payments from car collision victims. Each case is from Ontario and the companies are said to have ignored several calls from the provincial regulator to pay the costs.

The companies are believed to have engaged in “unfair practices” following the introduction of HST in Ontario during 2010. Courts argue the practice of avoiding HST payments is in defiance of regulations created by the Financial Services Commission of Ontario (FSCO).

In total, the 11 lawsuits are seeking $1.1 billion in damages, $100 million from each insurer.