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Legal Matters with Chris Richard – The Importance of Purchasing Optional Benefits – A Look at an Individual Policy of Insurance

On June 1st 2016, the new Statutory Accident Benefits Schedule was implemented for every driver in Ontario upon renewal of their policy after June 1st.

Chris Richard, the Managing Partner of Graves and Richard, participated in an episode of Legal Matters on Niagara’s 610 Newstalk Radio with host Lee Sterry in which he discussed the consequences of these changes, and the availability and desirability of purchasing optional benefits in the context of his own automobile insurance policy that had recently come up for renewal.

For each of us, the importance of having a policy of insurance that will provide us with adequate protection in the case that we are injured in a motor vehicle accident cannot be understated. A few moments of thought into the desirability of purchasing optional benefits at the time of renewal of your auto insurance policy, and a relatively slight increase in your insurance premiums, could prove invaluable at a time when you are most vulnerable following an accident.

The Three Components of an Auto Insurance Product

When you purchase an auto insurance policy, you are receiving three products. The first is liability coverage, which represents the amount you are covered for if you cause an accident and compensation in the way of damages is sought against you. These damages are paid for by your insurance company as part of your liability coverage. The second is property damage, which represents damage to your vehicle following an accident. Your insurance company pays for your repairs from the property damage portion of your policy. The third is Statutory Accident Benefits, which are benefits, including Medical Benefits and Income Replacement Benefits, which are available to everyone involved in a car accident regardless of who is at fault for causing the accident.

Government Cuts to Statutory Accident Benefits

After June 1st 2016, significant changes were made to the amounts available under the Statutory Accident Benefits. The most significant changes occurred in the area of Medical Benefits and Attendant Care Benefits.

Prior to June 1st, we all had $50,000 available in Medical coverage and $36,000 in Attendant Care coverage for non-catastrophic injuries sustained in a motor vehicle accident. These amounts sound generous, but in the case of serious accidents, they can be depleted rapidly. Coverage for Medical Benefits includes physiotherapy, massage, and chiropractic treatments, prescription medicine, assistive devices, and occupational therapy. Attendant Care Benefits provide for payment to a Personal Support Worker or some other person who assists with personal care needs following an accident.

After June 1st, the amount available for Medical and Attendant Care coverage in the non-catastrophic injuries classification combined is $65,000. So, rather than have $86,000 available for these benefits, now we have $65,000 available, representing a reduction of $21,000. With respect to catastrophic injuries, the impact is even more dramatic. Before June 1st, we had one million dollars available for Medical and Rehabilitation Benefits, and another one million dollars for Attendant Care Benefits. Since June 1st, that amount has effectively been cut in half. Now, one million dollars is available for both Medical and Rehabilitation Benefits and Attendant Care Benefits.

Purchasing Optional Benefits to Restore You to Your Pre-June 2016 Benefit Coverage

Optional benefits can be purchased to restore you to your pre-June 2016 benefit coverage position.

First, you would be required to purchase benefits to increase the non-catastrophic amounts payable to $130,000 combined. Second, you would be required to increase the catastrophic benefits to $2 million.

Chris shared that with respect to his policy, the cost to him to increase his non-catastrophic benefits to $130,000 per year was $33 per year and that the cost to increase the catastrophic benefits to $2 million was $11 per year. The total monthly cost of purchasing these optional benefits was $3.67.

Other Types of Optional Benefits Available

There are other Optional Benefits available for purchase that may prove beneficial to some depending on their particular life circumstances.

Income Replacement Benefits. The standard Income Replacement Benefit is 70 percent of your gross income up to a maximum of $400 per week. This can be increased to $600, $800, or $1,000 per week. If you don’t have access to long-term disability benefits, and your income is such that receiving $400 per week would represent a significant reduction in your monthly income, purchasing additional Income Replacement Benefits could be beneficial for you.

Caregiver Benefits. This benefit applies to stay-at home parents who are not working, and provides that you receive a payment of $250 per week for your first dependant child and $50 per week for every additional child. This applies in the situation where you are involved in an accident at a time when you are at-home caring for your children, and are rendered unable to continue that care because of the injuries you sustained in the accident.

Death and Funeral Expenses. The amount payable for death and funeral expenses can be increased to a maximum of $50,000 lump sum payable upon the death of a spouse. This option may be attractive to someone who would not qualify for life insurance.

While some of these optional benefits may only be beneficial to some, purchasing optional Medical and Rehabilitation Benefits is a good idea for everyone in the case that personal injuries are sustained in a motor vehicle accident.