ConsumerInfo on Auto Insurance

Ontario Automobile Insurance Legislation: Facts and FAQs

Adapted from a brochure titled "What you should know about car insurance in Ontario: Auto Insurance Rate Stability Act, 1996," produced by the Insurance Bureau of Canada and sponsored by the automobile insurers of Ontario.

As of November 1, 1996, the Auto Insurance Rate Stability Act, the legislation for automobile insurance in Ontario, allows accident victims to be compensated for their losses through the courts in a "tort" action and/or from their own insurer through "no-fault" coverage.

Here are some of the changes that the legislation, also known as Bill 59, will bring to consumers:

  • The Act specifies basic accident benefits for almost anyone injured in a motor vehicle accident, and higher coverage for those catastrophically injured.
  • Consumers may buy additional income-replacement coverage that reflects most closely their income level.
  • Innocent victims of vehicle accidents may sue an "at fault" party for pain and suffering, and loss of income and future earnings when accident benefits coverage is insufficient. A victim who suffers a catastrophic injury may also sue for health-care costs that exceed the benefits provided by "no-fault" coverage. NOTE: If you do not have insurance and you are injured while driving or occupying your own uninsured vehicle, you cannot sue, regardless of who was responsible for the accident.
  • The Act gives insurers powers to control insurance costs. For example, insurers are required to inspect certain vehicles they are insuring for the first time within 10 days of the policy taking effect and to report information about insurance coverages and claims to a central data bank.
  • The Act contains measures to cut insurance costs by prosecuting uninsured motorists, and by reducing insurance fraud committed by claimants, auto-body repair shops, health-service providers, and others.
  • The Act requires a government insurance Ombudsman to investigate a consumer's complaints about business practices of an insurer. Each company has established a complaint-handling protocol. For details, contact your agent or broker.
  • Ontario automobile insurance coverage applies only to claimants of automobile accidents that occur in Canada and the United States of America.
  • Insurers must offer a premium discount to retirees aged 65 or older, and to younger retirees too, if they are receiving a Canada or Quebec Pension or a pension registered under the Income Tax Act. Retirees will be required to sign a Declaration for Retiree Discount to qualify.
  • Brokers and agents will tell you which insurers they represent, identify the companies they get quotes from, and show you those prices on request.

Frequently asked questions about the Auto Insurance Rate Stability Act (Bill 59).
(Supplied by CIBC Insurance®)

Q. Why should I wait until my "natural" policy renewal date before making any changes to Accident benefit coverages?

A. You will be provided with the mandated optional benefits, which excludes indexation, and maintain your deductibles until renewal. The new accident benefits are provided to you automatically, at no cost.

If you choose to cancel and purchase each of the new options, to the maximum, it could result in an increase to your premium. As part of the new Act, indexation is available only upon request.

Q. How do I qualify for the Retiree discount?

A. The new premium discount, which applies to the Accident Benefits portion of your premium, is available to retirees aged 65 or older. If you are younger than 65, but receive a Canada or Quebec pension or a pension registered under the Income Tax Act, you are also eligible to receive this new premium discount.

Ask your insurer or broker for the new Declaration form for the Retiree Discount. It must be signed and returned before the discount can be implemented.

Q. Why is there an optional deductible for Direct Compensation - Property Damage, when there never used to be one?

A. A deductible is part of a claim for damages to your vehicle you must pay for. Higher deductibles usually result in lower premiums, but higher financial risk to you.

As part of the new legislation, under the Direct Compensation-Property Damage section of your policy, if you are not at fault in an accident in Ontario involving another Ontario insured vehicle, there will be no deductible -- UNLESS YOU HAVE SELECTED ONE TO LOWER YOUR PREMIUM.

If you have selected a deductible, you will be required to pay to the extent to which you are not at fault for the accident. For example, if you are in an accident and the police report states that you were 50% at fault, you will be required to pay 50% of your selected deductible amount, which will go toward the repairs to the vehicle.

Q. What is the minimum deductible for collision and comprehensive?

A. If you have purchased optional coverage for collision or upset, or all perils -- and if you are fully or partially at fault for the damage to your vehicle, a new standard minimum deductible of $300 will apply -- UNLESS YOU HAVE SELECTED ANOTHER AMOUNT. As part of the new Act, at renewal, your deductible for these coverages will automatically be changed to the new minimum of $300. If your current deductible is higher than $300, it will remain at the higher amount at renewal.

Q. Why are my deductibles being increased to $300 at renewal?

A. As part of the new legislation, your renewal will include the new minimum allowable deductible of $300 for All Perils, Collision, Comprehensive, and Specified Perils. This will occur only on the current renewal; any subsequent renewals will have the deductible that you have chosen or that you qualify for.

At renewal, you can choose to reduce or increase your deductible to its previous amount or to a new amount, and this will result in a corresponding change to your premium.

Q. What optional coverages are you giving me until renewal?

A. New optional Accident Benefits that will be automatically added to your policy until renewal include:

  • the new plan's standard of up to 80% of net income to a maximum of $400 weekly income replacement will be increased to a maximum of $1,000.
  • the benefit for injured caregivers will be increased from the plan's maximum of $250 per week to a maximum of $325 per week.
  • the new death benefit for the surviving spouse of the "named insured" will be increased to $50,000 from the basic plan limit of $25,000.
  • the new basic plan's funeral limit of $6,000 will be increased to a maximum of $8,000.
  • $1,000,000 of coverage for medical, rehabilitation, and attendant care expenses will be available, and
  • existing deductible for loss or damage to your car will be retained.

Q. Why were the Accident Benefits part of my policy before, and now they are options that I have to pay for separately?

A. This new Act -- Bill 59 -- tries to reflect the basic needs of the average driver in Ontario and offers the option to top up to a level that is a reflection of the financial position of the individual. As a result, only those who need the higher coverage limits will buy it. This leads to a plan that is fair to everyone, but also one that is ultimately more expensive for those that require and purchase the top-up.

Q. I heard that, under this new Act, I have the right to sue. Why would I sue -- won't my insurance cover me for all my losses?

A. Your auto insurance will cover you only for losses to a maximum limit which is listed on your Certificate of Insurance and in your policy booklet. Under the previous plan, Bill 164, you were allowed to sue for non-economic losses, such as pain and suffering, if your damages fell within the "verbal threshold" AND if you were an innocent victim (not at fault) in an automobile accident.

Economic or financial loss is not covered under your standard auto policy, so if you were injured and were not ever able to return to work, your contribution to the household income would be eliminated. Under the previous auto plan, there was an additional endorsement, Excess Economic Loss Endorsement, OPCF 45, that you could purchase for this type of situation that also gave you the right to sue for future potential financial losses. With the new Act, Bill 59, this endorsement is no longer available.

Q. What kinds of losses can I sue for?

A. There are two types of situations when a policyholder might seek to recover certain types of damages under a right to sue. These are:

  • Non-economic loss - losses such as pain and suffering, serious disfigurement, or serious impairment of an important physical, mental, or psychological function. These types of losses are called "verbal threshold," which describes in very broad terms what is within this category for seeking damages.
  • Economic losses - financial loss as a result of an automobile accident.

With the introduction of this new Act, Bill 59, the right to sue is being expanded to once again include the opportunity to recover economic losses. Along with this opportunity to seek recovery of economic losses, the "verbal threshold" is being reconsidered. Consult the chart below to see how the Accident Benefits under the new legislation compare to those under Bill 164.

Comparison chart - what I can sue for:

  Before November 1/96 After November 1/96
Pain and suffering and other "verbal threshold" losses For death, or serious physical, mental, or psychological injury, minus a $10,000 deductible The same, except injury must also be "permanent." Deductible adjusted to $15,000; $7,500 in family law claims, such as loss of companionship
Economic/financial losses Law suits for financial loss not available For all injuries, minus other insurance benefits received. Maximum award is 80% of after-tax income before trial, 100% of gross income after trial

Note: The above information is intended to provide a brief overview of the new automobile insurance legislation, and is not meant to be exhaustive. For more information on the Auto Insurance Rate Stability Act, 1996, contact your insurer or your broker, or:

Insurance Bureau of Canada, telephone 1-800-387-2880; in Toronto area, 416-362-9528. Internet:

Ontario Insurance Commission, telephone 1-800-668-0128; in Toronto area, 416-250-7250