Starting in the summer of 2010, Ontario vehicle operators will see some changes to their auto insurance. These changes are aimed at providing injured parties with more choices with for financial and medical assistance. Drivers now have the ability to choose their levels of coverage and the subsequent benefits that they want to have access to if they are injured in an automobile accident.
Since 1980, the premiums for auto insurance in Ontario have been forced to increase dramatically to keep in line with increasing benefit payments. Insurance companies in Ontario are losing large amounts of money each year and the resulting increasing premiums make it difficult for many families and individuals to afford full coverage car insurance. Many car buyers are even faced with taking their second or third choice of vehicle because their first choice is too expensive to insure.
Change #1 – Differentiated Levels of Benefits and Deductibles
The purpose of this change to the Ontario insurance system is primarily to help insured persons adjust their coverage to account for personal disability coverage. Those with separate (third party) disability insurance coverage (i.e. through their employer) can opt for lower auto insurance coverage or a higher deductible on this coverage in order to reduce their insurance premiums. Drivers who do not have personal disability coverage from another source can increase this portion of their auto insurance coverage, or opt for a lower deductible to make the benefits more accessible in the case of an accident.
With the changes taking place, benefit payments should stabilize, and there should be positive long term effects. Car insurance companies should be able to operate more profitably, ultimately reducing insurance premiums for consumers over the long term. In addition, certain consumer protection methods will prevent drivers from being overcharged. However, consumers may find that they are getting less coverage for the same amount of money on their renewal this year – which is why every insured driver should carefully check their policy renewals for changes.
Bottom line: Drivers need to ensure they have the right coverage in case of an injury, and should check their insurance policies for changes upon their annual renewal – especially this year.
Change #2 – Introducing Consumer Protection
The secondary purpose of these insurance changes is to provide Ontarians with consumer protection measures – such as banning objectionable practices, including the use of credit scores to decide how much for auto insurance a driver should pay. Currently in Ontario, credit scores are not used to determine insurance premiums, and it is in the best interests of consumers to maintain this as the status quo.
Bottom line: Protecting the rights of Ontario drivers is paramount, and insurance companies will be held accountable to a higher standard of consumer protection.
Change #3 – Reducing Administration Costs
Finally, some of the changes introduced are intended to help streamline insurance administration and claims processes in order to create a smoother, less complex system. This should result in reduced transaction costs. For example, caps are being applied to certain routine procedures – such as assessments, completion fees, and insurer exams. Time limits are being introduced to reduce the time it takes for claims to be processed and paid. By reducing overhead costs, more revenue from premiums should be available for insurance claims – particularly for accident victims.
Bottom line: Lower overhead costs will result in larger awards for injured parties.
In the end, Ontario insurance legislation changes are intended to reduce frivolous claims while improving access to benefits for injured parties. These improvements, coupled with increased protection for consumers will hopefully lead to better overall insurance coverage for drivers and lower premiums for everyone in the long run. If you’re concerned with the adjusted premiums when you receive your insurance renewal this year, checking for cheap car insurance is easy – get an auto insurance quote, to see where your premiums measure up.