Expect a letter soon about your auto insurance. It will include false advertising.
Regulators have ordered insurers to warn us that Ontario’s standard auto policy is to change Sept. 1, and to turn to our insurer or insurance representative, or to government or industry websites, for more information.
The standard notice will make no mention of price increases or price reductions, only the promise of more choice and greater influence over price. Any invitation to pay more, or less, is to come later.
The false advertising that every company must include in the Early Warning Mailing is this:
“Your policy will remain unchanged until your next renewal.”
It’s true the wording of your policy and the price you pay will be unchanged, and this could important to you. You will get to keep most of the coverage you have now without having to pay more money.
But your coverage will certainly change.
If you suffer a minor injury on or after Sept. 1, you will be limited to claiming $3,500 for therapy.
If you need an assessment of your injury, you will be limited to paying $2,000.
If you go for an assessment that costs $2,000, it will come from the medical and rehabilitation portion or your accident benefit coverage.
If you have a minor injury, paying that much for an assessment would leave you with only $1,500 to pay a physiotherapist, chiropractor, massage therapist or whomever.
These changes are all intended to save policyholders money over time, particularly motorists in the Greater Toronto Area. We are paying exceptionally high premiums and deserve a break. But our underlying coverage will have to change.
You will have to wait for a second mailing from your insurer to point out the $3,500 limit for minor injuries will apply, regardless of the level of coverage you have now or purchase in the future.
When your current policy expires you will have the choice of reducing or maintaining other aspects of your accident benefit coverage.
You will have a choice of the limit for medical, rehabilitation and attendant care coverage for non-catastrophic injury, whether to pay for caregiver, housekeeping and home maintenance coverage, and whether to have less deducted from a court award for pain and suffering.
What’s still not known is whether the choice of maintaining your coverage (apart from treatment for a minor injury) will remain the same or go up.
That will depend on how much profit, if any, your particular insurer has been making from selling auto insurance policies to drivers with your particular risk characteristics.
“Every auto insurance company in Ontario was required to file rates by April 15th based on the reforms that take effect on September first,” said Rowena McDougall, the spokeswoman for the Financial Services Commission of Ontario.
“Several filings have been approved and the companies have been notified.”
Policyholders who have seen substantial increases in premiums during the past 18 months. But, the increases have not been enough — on average — to pay all accident claims and provide insurers a profit on their Ontario auto business, according to one of the province’s leading actuaries.
Ron Miller estimated in a report from MSA Research Inc. and Baron Insurance Services Inc. in April that premiums for the existing level of coverage would be about 9 per cent short of what insurers would like.
He estimated premium revenue could be just enough or 7 per cent short depending on how insurers respond to rate filing guidelines set down by regulators. He did not return a telephone request to discuss his estimates.
Consumers should seek advice about the coverage limits they choose, regardless of the price