August 27, 2015

Deductible and thresholds and tires… oh my! Recent Changes to Automobile Insurance

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Daniel Macdonald

Earlier this year I had reported on changes to the Insurance Act the Government of Ontario promised to make as part of the 2015 budget. Some of those changes came into effect August 1, 2015 through amendments to the Insurance Act and associated regulations.

Deductible and Thresholds
The focus of the recent amendments is the deductible that applies to non-pecuniary general damages in tort cases. The amendments increase the amount of the deducible and also increase the threshold where the deductible ceases to apply. The amendments also peg both the deductible and the threshold to increase with inflation in the future. The amendments are summarized in the table below.

Ontario Regulation 461/96: Court Proceedings for Automobile Accidents That Occur On or After November 1, 1996, was amended by O. Reg. 221/15. This amendment applies to section 5.1(1) and (2) which sets out the prescribed deductible. A minor change was also made to section 4.0.1(1) where “accident” was replaced with “incident”.

The Insurance Act was amended by Bill 91, Building Ontario Up Act (Budget Measures), 2015. Amendments are made to sections 267.5(8) and (8.1) and introduce subsections (8.3) and (8.4). These sections set out the threshold amount and provide that the threshold is adjusted by inflation each year.

 

Item Old New[1]
Deductible applied to damages for non-pecuniary loss $30,000 $36,540
Deductible applied to damages for non-pecuniary loss under section 61(2)(e) of the Family Law Act $15,000 $18,270
Monetary threshold beyond which the deductible does not apply to damages for non-pecuniary loss $100,000 $121,799
Monetary threshold beyond which the deductible does not apply to damages for non-pecuniary loss under s. 61(2)(e) of the Family Law Act $50,000 $60,899
[1] The new amount applies until December 31, 2015.  On January 1, 2016 the amount will be increased by adjusting for the indexation percentage published under section 268.1(1) for that year.  The amount will be adjusted yearly.

 

With this jump in the threshold there will be more cases where the deductible applies. The threshold will also increase with inflation every year. This means that every year there will be even more cases where the deductible applies. This will have the effect of reducing the compensation available to those injured in a car crash in Ontario.

Costs in an Action
A change was also made to section 267.5(9) of the Insurance Act. This section previously provided that a party’s entitlement to costs in a tort action is made without regard to the effect of the deductible. This has now been reversed so that a party’s entitlement to costs in a tort action is made with regard to the effect of the deductible.

Snow Tire Savings, Eventually
Ontario Regulation 664: Automobile Insurance was amended by O. Reg. 222/15 to add a new Snow Tire Savings provision. New section 14.1(3) requires that insurers include in their risk classification system a discount in the rate of insurance in respect of an automobile that is equipped with winter tires. Rather than prescribe the discount Ontarian should receive, the Government has left it open to the insurance companies to determine what discount a prudent driver gets for equipping snow tires. I may be a skeptic, but I doubt the discount will come anywhere near the cost of snow tires. Moreover, this only applies to contracts issued or renewed on or after January 1, 2016, so you will have to wait for any saving that may apply.

 

If you have questions or comments about this post, contact info@md-lawyers.ca