Many Ontarians think that car insurance exists simply to cover the cost of property damage when they are involved in an accident. Although this is certainly true, property damage plays a small role in what is a complicated web of coverage.
The standard auto insurance policy includes many different coverages. The most prominent of these are for medical and rehabilitation expenses, attendant care expenses, income replacement benefits and liability coverage. Although a standard policy with standard coverages may be enough for some drivers, there are many reasons to consider purchasing additional coverage.
This post is not a comprehensive breakdown of insurance coverage and does not provide specific analysis, nor does it touch on all aspects of the coverages available to you. If you have questions regarding your entitlement to coverage under an insurance policy, it is recommended you reach out to a lawyer.
Medical and Rehabilitation
The standard automobile insurance policy provides coverage for medical and rehabilitation care that you or a member of your household might need to recover from a motor vehicle accident. Medical and rehabilitation benefits are available to insured persons regardless of fault for causing the accident. Medical and rehabilitation benefits include, but are not limited to physiotherapy, chiropractic therapy, occupational therapy, massage therapy, acupuncture, psychological care, and the cost of certain diagnostic assessments.
Access to comprehensive medical and rehabilitation services is essential for injured persons to recover from accident-related injuries and impairments. Serious, prolonged or permanent injuries require extensive care and basic coverage can be exhausted quickly.
Attendant Care
The standard automobile insurance policy provides coverage for attendant care benefits that you or an insured member of your household might require because of injuries and impairments suffered in a motor vehicle accident. This coverage provides for up to $3,000 per month of attendant care expenses and up to $6,000 if more serious “Catastrophic” injuries have been sustained.
Attendant care can be important if you or an insured member or your household sustain disabling injuries because of a motor vehicle accident. Attendant care covers the cost of support workers that may have to assist the injured person around the house. These expenses can increase quickly, especially where there has been a significant injury with a lengthy recovery or permanent injury.
The standard automobile insurance policy in Ontario provides for a combined total of up to $65,000 in medical, rehabilitation and attendant care benefits or up to $1 million in the event of serious “Catastrophic” injuries.
Optional coverage is available to increase your combined coverage to $130,000 or even up to $1 million. Additional coverage is also available to increase your “Catastrophic” coverage from $1 million to up to $3 million.
Income Replacement
The standard automobile insurance policy provides coverage for income replacement in the event that you or another member of your household have suffered injuries or impairments as a result of a motor vehicle accident that prevent the injured person from working. This coverage provides 70% of pre-accident income up to a maximum of $400 per week.
Income replacement under your car insurance policy comes second in priority to any workplace disability plans you might have access to.
This coverage is best understood through an example.
Without Long-Term Disability Coverage
You earn $50,000 per year but do not have Long-Term Disability (“LTD”) Coverage. This is equivalent to approximately $960 per week. You have been involved in an accident and are unable to work. Your car insurance is required to cover 70% of your gross pre-accident income. 70% of your pre-accident income equals approximately $670. However, you have only purchased standard income replacement coverage. You are entitled to income replacement coverage, but only to a maximum of $400 per week. In this situation there is a $270 shortfall in coverage that could have been covered if you had purchased optional income replacement coverage.
With Workplace Long-Term Disability Coverage
You earn $125,000 per year. This is equivalent to approximately $2,400 per week of income prior to deductions for income taxes and other source deductions. You have been involved in an accident and are unable to work. 70% of your pre-accident income is $1,682 per week. Your LTD coverage provides for coverage of 60% of your pre-accident income which equals $1,442.
Your car insurance benefits are responsible for covering up to 70% of your pre-accident income. Your LTD coverage has contributed 60% which means the remaining 10% will be covered through your car insurance up to the $400 maximum. In this situation you would receive $240 per week from your car insurance company for a combined total of $1,682.
In this situation optional benefits may not be as important to you. However, your LTD insurer and car insurer may make different determinations about your level of disability. If you were denied LTD coverage but approved for income replacement coverage, higher optional coverage would help replace some of your income while you fought your LTD insurer for coverage.
You can increase your income replacement coverage from the $400 per week standard policy amount to increased amounts of $600, $800 or $1,000 per week. As seen above, optional coverage is especially important for persons who do not have access to LTD coverage.
Liability Coverage
A standard automobile insurance policy contains liability coverage in case you or an insured member of your family are sued for damages as a result of a motor vehicle accident. The standard policy provides for $200,000 in liability coverage although most policies sold today include $1 million in coverage.
Optional coverage is available to increase your liability coverage. The amount of optional coverage offered depends on the insurer. Optional coverage is routinely available up to $3 million or even $5 million.
Increased liability coverage protects you and your family from a potential lawsuit. It is also important because your liability limits can be available to you in the event that you or an insured person under your policy is injured by another driver who did not have any or adequate insurance limits.
More information about automobile insurance coverage is available through the Financial Services Commission of Ontario website.
If you have been involved in a motor vehicle accident and have questions about the coverages you are entitled to please do not hesitate to contact me or one of our other personal injury and insurance lawyers.
Stanford Cummings
Associate – Personal Injury and Litigation Law Groups
Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving.