Canada: How Much Car Insurance Do I Really Need? – Accident Benefits

Last Updated: October 25 2018
Article by Adam Wagman

Have you ever made a seemingly minor decision that you really thanked yourself for later on? For example, keeping that receipt that you were about to throw away, only to discover months later that you need that receipt for the product warranty? In the case of automobile insurance, making what might seem like a minor decision to purchase optional accident benefits right now is something that you and your family might really be thankful for in future years.

Accident benefits, also referred to as no-fault benefits, are a mandatory part of every auto insurance policy in Ontario. Those benefits pay for treatment, care, income replacement, and some other expenses, if you or members of your family are hurt in almost any type accident involving an automobile (car, truck, snowmobile, ATV, bikes or pedestrians hit by cars, etc.). 

No one expects or anticipates they will ever be in a position where they need to draw upon potentially thousands of dollars in accident benefits. The whole point of purchasing insurance is to pay for something that we hope we will never need! Unfortunately, we all know someone who has been involved in a car accident, and chances are, at some point during your lifetime, you or someone in your family will need to access those benefits. Tragically, each year in Ontario, tens of thousands of people are involved in collisions that result in personal injuries. Several hundred of these people will sustain catastrophic injuries that leave them with debilitating injuries and permanent disabilities that will profoundly affect their lives and the lives of their loved ones.

Fortunately, anyone involved in a motor vehicle accident in Ontario can make a claim for benefits under the Statutory Accident Benefits Schedule (SABS). Unfortunately, with recent reductions to these benefits, you may not be adequately covered if you sustain a significant injury.

In this blog post, I'll outline what's covered in the SABS and what other types of coverage you may have, and finally explain why you should consider adding optional benefits to your auto insurance policy.

What Are The Standard Accident Benefits?

Any person injured in a motor vehicle accident in Ontario – even if they are at fault for the accident – is eligible to claim accident benefits proscribed by the SABS. Whether you're a driver, passenger, pedestrian or cyclist, if you're injured you will be able to make a claim:

  • through your own auto insurance policy;
  • through the policy of another motorist involved in the accident if you do not carry auto insurance, or;
  • through the Ontario government's Motor Vehicle Accident Claims Fund if no one involved in the accident has insurance

The SABS outlines the standard accident benefits that must be made available in every insurance policy. The maximum amounts you can claim for the various benefits (and the definitions used to qualify for those benefits) have changed frequently over the years. Currently, the SABS categorizes injuries as catastrophic, non-catastrophic and minor. Depending on the extent of your injuries and whether you satisfy specific qualifying criteria, standard benefits may cover the following expenses:

  • Medical & Rehabilitation;
  • Attendant Care;
  • Housekeeping & Home Maintenance;
  • Income Replacement;
  • Caregiver;
  • Non-Earner, and;
  • Cost of Examinations

Howie, Sacks & Henry has created a handy chart showing the amounts of these basic entitlements.

What Other Coverage Do I Have?

In an earlier blog I outlined the other mandatory parts of every auto insurance policy in Ontario. Every Ontario driver is required to have a policy with a minimum of $200,000 in third party liability insurance (though $2 million is recommended), direct compensation (to cover property damage if you are not at fault in the accident), and uninsured automobile coverage (to protect you in the event of a hit and run or if you are involved in an accident with an uninsured or underinsured driver).

I also discussed some of the types of optional coverages you can add to your policy, including the Family Protection Endorsement. This endorsement will allow you and/or dependant family members to claim up to the amount of your third party liability insurance coverage if an at-fault driver cannot cover the amount of your damages claim with their own third party liability insurance limits.

It's important to remember that while standard auto insurance policies provide a minimum amount of coverage, in the event of a serious accident, this coverage can be exhausted quickly.

How Has SABS Changed?

If you clicked the link to the SABS chart above, you will have seen how the government has made changes to the SABS benefit limits over the years. The changes in 2016 substantially lowered the amount an injured person is able to receive in Medical, Rehabilitation, and Attendant Care benefits.

Prior to the changes in 2016, those victims with a catastrophic injury could access up to $1 million in Medical and Rehabilitation benefits plus up to $1 million for Attendant Care benefits over their lifetime, for a total of $2 million. Injured victims with non-catastrophic (but not "minor") injuries could access $50,000 for Medical and Rehabilitation benefits over 10 years and up to $36,000 over 2 years for Attendant Care benefits, for a total of $86,000.  As recently as 2010, the total available for those non-catastrophic benefits was $172,000!

The cuts to benefits in 2016 were very significant. Catastrophically injured victims can now only access $1 million combined for Medical, Rehabilitation, and Attendant Care benefits over a lifetime, a 50% reduction from the previous limit. Victims with non-catastrophic injuries can now only access a combined $65,000 for these benefits, over 5 years, over a 60% reduction from the limit in 2010 .

As an experienced personal injury lawyer who has represented clients with significant, life-altering injuries, I can tell you that the current SABS benefits (both catastrophic and non-catastrophic) are woefully inadequate for many of my clients. The cost of caring for victims with catastrophic injuries – particularly if they are younger – can be astronomical. For example, if you or a loved one sustains a traumatic brain injury or spinal cord injury that requires ongoing rehabilitation therapy and prevents you from living independently, the benefits could well be exhausted in only 5-10 years!

Without additional insurance coverage, your or your loved ones will have to pay for this care and therapy out of pocket. These expenses can eat away at any savings you have, force you to sell any assets you might have, and create huge debt.

Victim's rights advocates, including personal injury lawyers, have warned the government that the cuts to the SABS have the potential to put people in financial jeopardy, but so far it seems that the desire to save insurance companies some money has trumped the need to protect the injured.

What Are Optional Benefits and Do I Need Them?

While the mandatory minimum insurance limits will likely come up short if you are ever critically injured in an accident, fortunately there are ways to better protect your family.

Insurance companies must offer optional benefits packages that provide additional levels of coverage.  You can purchase the following optional benefits to increase the Medical, Rehabilitation and Attendant Care coverage:

  • in the event of a non-catastrophic injury, up to $130,000
  • in the event of a non-catastrophic injury, up to $1 million and in the event of a catastrophic injury, up to $2 million
  • in the event of a catastrophic injury, an additional $1 million

We encourage everyone to speak with their broker or insurance company to find out the cost of adding any of these coverages to your policy. Generally, for just a few dollars a month, you can purchase the optional benefits to protect your family.

Other optional benefits can:

  • Increase the weekly income replacement benefit from $400 to $600, $800 or $1000 (consider this option if you don't have a long term disability policy through work or privately)
  • Expand the caregiving or housekeeping benefit to persons with non-catastrophic injuries (consider this option if you or your spouse are a stay at home caregiver for young children)
  • Increase the death and funeral benefit (consider this option if you don't have, and cannot otherwise get, life insurance)

For your own peace of mind and to protect your loved ones in the event of a serious injury, I highly recommend purchasing optional insurance benefits for Medical, Rehabilitation and Attendant Care. These can be significant drains on your finances once the mandatory limits are exhausted. Deciding to add other optional benefits will depend on a number of factors, including your income level and your desire and need for extra care or coverage.

The likelihood that you will be involved in a motor vehicle accident where you sustain a life-altering injury is low. But if you ever have the misfortune of becoming one of the thousands of Ontarians each year who do suffer significant injuries, you will really thank yourself for taking the time to talk to your insurance provider to ensure you have adequate coverage for you and your loved ones.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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