Understanding car insurance benefits key to being prepared

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By Jennifer Pritchett, Associate Editor

A major part of ensuring you are financially prepared for the unexpected costs in the aftermath of an accident involves checking car insurance policies to make sure you understand the coverage, says Easy Legal Finance Inc. president and CEO Larry Herscu.

“It can cost a great deal to heal from an accident. There has to be an awareness of your insurance benefits and why they are important to you.”

Herscu notes Ontario brought in changes to statutory accident benefits for auto insurance in June 2016 that meant some reduced costs for substantially reduced coverage.

The most significant change involved medical and rehabilitation care, which was combined with attendant care as a single benefit for both catastrophic and non-catastrophic claims, says the Financial Services Commission of Ontario (FSCO.)

For non-catastrophic injuries, medical and rehabilitation was combined with attendant care for a total benefit of $65,000, down from $86,000.

For catastrophic injuries, medical and rehabilitation was combined with attendant care for a total benefit of $1 million, down from $2 million.

Insurance holders need to be aware of these changes and what the impact may be, Herscu says.

“While we often don’t take the time to review the changes in our insurance policies and understand the impact, it’s important to do that,” he says.

FSCO recommends insurance holders take four steps to ensure they know what they are paying for:

  1. read the “Important changes to your policy” note;
  2. compare the new policy to see what changes have been made;
  3. understand the policy and call your representative with any questions; and
  4. shop around to compare at least three quotes before making a decision when buying a new policy.

Herscu says your insurance representative can help identify options that you can consider in light of the changes to protect yourself after the reduction in coverage. Sometimes it’s a small cost to bump up your insurance benefits to make sure you have adequate coverage if you get into an accident, he says.

“While most people know they are required by law to have automobile insurance, many don’t understand this recent change,” he says. “Unless people take the time to understand their policy, I think they should reach out to their insurance representative and ask questions.”

While different provinces have different insurance regimes, Herscu says the basic trend is that benefits have been decreasing dramatically over the years in all jurisdictions.

“Yet the cost of care is increasing,” he says.

Herscu points to the Insurance Bureau of Canada report on the Ontario Health Claims Database, released April 2017, which provides a statistical overview of medical and rehabilitation costs involved in automobile insurance health claims and the recovery process.

“This report shows the gravity of the situation one can find themselves in and how much rehabilitation can cost,” he says.

When someone is involved in an accident, often they are unable to work and are in need of rehabilitation. Sometimes, they need to retrofit their homes to accommodate a disability, Herscu says.

Without benefits to cover the cost of these expenses, it could spell financial ruin for an individual and a family, he says.

“If you don’t realize there is a wait to receive your income replacement benefit and you’re going to make less in terms of salary, and that there is less money available for rehabilitation, you could find yourself in a difficult financial situation,” Herscu says.

“Many Canadians are already stretched these days with more debt than they can afford on their balance sheet. Even a minor injury under these circumstances could present financial risks.”

Preparation is key, Herscu adds.

If you have adequate coverage to insulate you from financial ruin, it will give you peace of mind now and protection later, should you be involved in an accident, he says.

Easy Legal is a settlement loan firm that focuses on litigation funding for Canadians with pending personal injury claims.

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