Changes to auto insurance policies could cost you money

Kevin Marshall

February 14, 2012

Changes to accident benefits by the insurance industry last fall may have resulted in a small decrease in rates to policy holders, but unless they read the fine print and take action.

On Sept. 1, 2010, there were a number of changes to auto insurance, both accident benefits (no fault) and tort (at-fault). If you are to get into a car accident, you are not likely to enjoy the benefits you once had.

“The insurance industry sold this as providing more choice for customers, which is a good thing. But, in fact, if you were to compare what you are getting before these changes and what you are getting after, you will actually end up likely paying more money than you did before.”

“Most people haven’t paid enough attention to these changes. They just assume there’s not a whole lot of difference between what they got by default before Sept. 1 and what they got after that date, but, in fact, there’s been many significant changes to what they receive.”

With the exception of catastrophic injuries (which are very rare), if a person is injured and they need medical treatment, such as chiropractic, massage or physiotherapy, their benefits are now are cut in half. If they cannot work because of injuries from an accident, they now get 70 per cent of the income they earned at the time of the accident as opposed to 80 per cent.

“Another change is that they don’t get any more housekeeping benefits if they can’t perform chores around the home, such as cooking, or cleaning or cutting the grass. They used to be able to get up to $100 a week for housekeeping and home maintenance benefits.”

“If they were looking after somebody such as a young child, they used to be able to get up to $250 per week for the first child, and an additional $50 per week for any other child. Now, they get zero dollars, except in cases where there is a catastrophic injury, which is only about one per cent of cases.”

It is possible to restore the benefits to their prior levels, but the policyholder has to ask for it, and will probably pay more for exactly the same benefits.

“This definitely could have happened to people’s policies without their being aware of it, most people don’t pay a whole lot of attention to auto insurance; they are typically just pleased if there is a reduction in the rates. It’s unfortunate because the only way you might really find out if you’re getting bang for your buck is if you get into an accident.”

All is not lost: “If you do your homework, read the policy very carefully, and ask questions, you can get better insight into exactly what you are getting for the money you pay for auto insurance.

“The reality is, people are getting much less than they got before. The only winner out of these changes is the auto insurance industry.”

While the insurance industry positioned the changes as a positive move for policyholders in terms of choice and savings, “it is a little bit sneaky because the average person has better things to do rather than read some detailed and sometimes confusing information on auto insurance, and they don’t make the changes. The wise customer should read the materials very carefully; the choices may work in their favour. They probably will wind up paying a bit more money but it may well be worth it.

“While they have the opportunity of having a variety of options available it’s imperative that drivers take advantage of this as opposed to what the insurance industry is banking on which is that most of them aren’t paying a lot of attention. Instead, customers should read the fine print very carefully, call up their insurance broker and make the changes, if it’s appropriate.”