Area of Law: Highway Traffic Law
Answer # 517
Automobile insuranceRegion: Ontario Answer # 517
In Ontario, all automobile owners are required by law to carry a minimum level of automobile insurance. If you are found driving without valid auto insurance, you can have your driver’s licence suspended and your vehicle impounded.
The four types of insurance coverage required by law, which are included in most standard insurance policies, are:
1. Third Party Liability of $200,000
Third Party Liability coverage insures you if the driver of your vehicle injures or kills someone, or damages someone else’s property. Although the minimum coverage is $200,000, most owners purchase liability insurance of between $500,000 and one million dollars.
2. Uninsured Automobile
Uninsured Automobile coverage insures you, to the extent that you were not at fault, if you are injured or killed, or your vehicle is damaged by a driver who is uninsured, or who is an unknown hit-and-run driver.
3. Statutory Accident benefits
Statutory Accident benefits provide coverage for a number of benefits if you are injured or killed in an automobile accident. This coverage applies regardless of who was at fault for the accident. Basic accident benefits in Ontario include various benefits, such as income replacement of up to $400 per week (based on 70% of your gross income), long-term disability, medical and rehabilitation expenses, attendant care, death and funeral benefits, and benefits for non-earners such as students, caregivers, and seniors.
4. Direct Compensation – Property Damage
Direct Compensation – Property Damage coverage insures you against damage to your vehicle and its contents, caused by another vehicle. This insurance may have no deductible and a claim for this compensation does not affect your premiums. The amount of your compensation depends on your degree of fault as determined by the Fault Determination Rules established under the Insurance Act.
In addition to these mandatory coverages, you can purchase a number of additional types of insurance coverage, such as:
1. Increased Accident benefits
You can purchase a variety of Increased Accident benefits, in addition to the mandatory Statutory Accident benefits. For example, you can buy coverage that will index your income replacement benefits to the cost of living. This means that if you receive benefits, the amount will increase as the cost of living increases from the time of the accident. You can also purchase coverage that will increase the maximum of your income replacement benefit from $400 to $600, $800 or $1,000 per week. You can also purchase increased coverage for medical, rehabilitation, death benefits, and benefits for caregivers.
2. Collision or Upset coverage
Collision or Upset insurance covers accidents where you are at fault, or where the damage is the fault of an unknown individual. It will cover property damage to your vehicle if your vehicle is in a collision with another vehicle or object.
3. Specified Perils and Comprehensive insurance
Specified Perils insurance covers damage to your vehicle as a result of things other than a collision, such as fire, theft, earthquake, lightening, hail or floods. Comprehensive insurance includes everything covered under Specified Perils, as well as damage caused by flying objects and vandalism.
4. All Perils insurance
All Perils insurance combines Collision and Comprehensive, and also covers loss or damage caused if a person who lives in your home steals your vehicle; or if an employee who drives, services or repairs your vehicle, steals it.
Innocent accident victims who were not at fault for the accident may also sue to recover certain economic losses and some non-economic losses.
How much does automobile insurance cost?
The cost of your automobile insurance will be affected by several factors, including:
- your age
- your sex
- your driving record
- the age and model of the vehicle
- how much you drive
- whether the vehicle is driven for commercial or personal use
- the amount of coverage you purchase
- the type of additional coverage you purchase
- where you live, or where the vehicle is parked overnight
The cost of insurance will also depend on the deductible amount. The deductible amount is the amount you pay before the insurance company is responsible to cover the balance of the loss. For example, if your deductible is $1,000, it means that you pay the first $1,000 of damages and the insurance company only has to pay damages that are above $1,000. If the deductible is higher, your insurance premium is lower. Conversely, if your deductible amount is lower, your cost of insurance is higher.
Certificate of Automobile Insurance
A Certificate of Automobile Insurance is issued by the company that provides you with your insurance coverage, and it must:
- list the vehicles that are insured and the coverages purchased,
- provide a description of how you were rated for the premiums charged, and
- indicate the period during which you are covered by insurance.
No Fault system
Although the current system is commonly referred to as a “no fault” system, “no fault” actually only applies to compensation for specific personal injury accident benefits, and not for property damage, economic loss or certain serious injuries where compensation can be obtained from the person at fault. As well, “no fault’ insurance does not mean it does not matter who caused the accident, rather, it means you deal with your own insurance company, regardless of who caused the accident. If you are found to be at fault, you will have to deal with the consequences, which might involve an increase in your insurance premiums.
Benefit of “no fault” insurance
The benefit of a “no fault” system for bodily injury is that you will receive compensation for your injury much more quickly than under a fault system, where you would have to wait for a decision about who was at fault. If you are injured in an accident, you deal with your own insurance company, regardless of who caused the accident. In other words, you don’t have to go after the at-fault driver for such things as health care and income replacement benefits to which you are entitled.
How do insurance companies determine “fault”?
While your benefits will be paid regardless of who is at-fault in an accident, insurance companies always determine the degree of fault to be assigned to each driver. This is done so that the at-fault driver’s premiums are adjusted appropriately. In Ontario, Fault Determination Rules are set out in the Insurance Act. The Act contains examples of common types of collisions and describes how fault is assigned for insurance purposes. After an accident is reported to the insurance company, they will investigate the circumstances of the accident and then make a decision as to who was at fault based on these rules.
Fault can be assigned anywhere between 0 to 100% fault, meaning fault can in fact be shared in a accident and in some cases shared equally. Any driver who is more than 0% at fault will subsequently have an “at-fault” accident on their insurance record and their automobile insurance premiums may increase. If you were not at fault, your premiums will not be affected. In either case, you will still receive compensation for your injuries.
No fault insurance does not apply to claims for property damage
Unlike claims for bodily injury, insurance claims involving property damage are still based on fault. If you are at fault for an automobile accident involving property damage, you will only be covered if you have purchased additional coverage such as “all perils” or “collision.” These types of coverage are not mandatory in Ontario. If you have purchased this extra coverage, your claim will be paid, regardless of fault, but your insurance premiums may increase.
If the other driver is at fault for the accident, and it caused property damage, you will usually be covered under either your Direct Compensation – Property Damage coverage or your Uninsured Automobile coverage. Both types of insurance are mandatory for drivers in Ontario. Your claim will be paid by your insurance company. Depending on your particular insurance policy, you may or may not have to pay a deductible. However, because the other driver was at fault, your insurance premiums will not increase as a result of making the claim.
If the other driver cannot be identified, you will only be covered if you have purchased optional Collision or All Perils coverage.
Regardless of who is at fault, if you are in an automobile accident, you should begin by phoning the police. By law, when someone is injured in an accident, or any of the drivers involved are suspected of a law violation such as driving while their ability was impaired, or there is property damage over $2,000 (total, combined damage to both vehicles), you are required to contact the police before leaving the scene of the accident. The police may require you to wait for them to arrive, or they may instruct you to take your car to a Collision Reporting Centre.
Insurance rates vary widely between different companies. An insurance broker can help you find the best rate.
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