Auto insurance reforms introduced in Ontario during the summer were widely praised for helping to lower premiums in the province. However, Shop Insurance Canada was more cautious and argued that changes to the accident benefits would harm customers. Now that premiums are rising again, focus is back on the reforms. Personal injury lawyers are warning brokers they could be subject to lawsuits because of transfer of accident benefits dispute arbitration to the licence appeal tribunal (LAT).
“We are trying to educate people about understanding the importance of getting higher benefit policies, higher third-party liability limits, and to those that are selling those policies, the importance of educating their clients,” said Jim Vigmond, a former president of the Ontario Trial Lawyers Association.
Vigmond, a partner at personal injury firm Oatley Vigmond LLP, was speaking as part of a panel at the Hilton in Markham. The discussion was about the LAT process for arbitrating disputes over statutory accident benefits schedule (SABS) claims in Ontario.
That process “offloads almost everything to the tort system and until we get those (third party liability auto) limits up, that’s going to be a big problem,” Vigmond warned.
At the panel titles Resort to the LAT of Last Resort, Thomson Rogers partner Wendy Moore Mandel said a victim in a collision “has a valid tort claim, there is no way they are going to proceed through this LAT procedure if … there is enough coverage on the tort side.”
A third panelist was J. Douglas Cunningham, former associate chief justice of the Ontario Superior Court. Justice Cunningham (who has retired from the bench and started a mediation and arbitration practice) was commissioned three years ago to review Ontario’s auto claims dispute resolution system. He made 28 recommendations in a report released in 2014. One of those recommendations was to appoint a “public sector administrative tribunal” for SABS disputes, to fall under Cabinet rather than the Financial Services Commission of Ontario (FSCO).
Benefits for Non-catastrophic injuries are now reduced from a combined $86,000 ($50,000 for medical and rehabilitation and $36,000 for attendant care) to a combined $65,000, although it is possible to increase the coverage (i.e. pay for) to $130,000.
In terms of catastrophic injuries the benefits have been reduced from a combined $2,000,000 ($1,000,000 for medical and rehabilitation and $1,000,000 for attendant care) to a combined $1,000,000 with the option to increase it to $2,000,000 in total.
Bad news maybe. However, minor collision rules have also changes and are likely to be well received considering some drivers will not need to pay if involved in a minor hit. To do this you have to pay the damages yourself if the accident meets the following stipulations:
“On April 1, 2016, the license appeal tribunal (LAT)’s automobile accident benefits service AABS was officially open for business,” Justice Cunningham said Wednesday. “At the same time after 26 years, FSCO’s dispute resoultion group stopped accepting applications, creating apprehension among users, because for many it was better the devil you know. What will this change mean?”
“Fundamentally what we have is a mixed no fault tort regime,” Flaherty McCarthy partner Todd McCarthy said. “We have a court system for tort and an arbitration system for (accident benefits). It does remain to be seen… is there any residual discretion in the court to entertain any type of dispute between an insured and an insurer that is not specifically within the jurisdiction of the LAT?”
“The $200,000 minimum limit was set so long ago, that it’s really no longer relevant,” Moore Mandel said. “If there is anyone in this room who does not have more than $1 million of (third party liability) insurance you should probably go speak to your broker now, and that’s how we counsel people that we talk to, because I think increasingly with the downloading of ABs on to the tort side, the claims will be in excess of $1 million.”
“There won’t be (tort) cases that settle within the limits as much anymore,” Moore Mandel predicted. “There will be litigation against our insureds personally for any personal assets that they may have and it may increasingly put insurance companies in bad faith positions if they don’t resolve claims within limits, so it’s something that you really should all look at.”