Car Insurance
MYTH: When I’m injured in a car
accident, all my medical expenses are paid for by my government provincial
health plan.
FACT: Car insurers pay out more for
medical rehabilitation costs in Canada than do government health insurance
plans, workers’ compensation plans or private health care plans
combined.
Helping you return to health if you are in a car collision is one of the
most important things car insurers do. Every year, car insurers pay at
least $2 billion for the medical rehabilitation of injured Canadians.
Insurers pay in three ways:
- Through the Accident Benefits portion of car insurance policies.
Accident benefits (or no-fault benefits) are paid directly to a person
injured in a car collision, regardless of who caused the injuries.
- Through the tort system. If you're in an accident that was caused
by someone else and your medical and other needs are more than what
is covered by the Accident Benefits portion of your policy (the amount
of coverage differs from province to province), you may be able to sue
the at-fault driver for the additional costs. The insurer of the at-fault
driver pays for what you receive as a result of your court case.
- Through health care levies. Often, medical costs resulting from car
accidents are paid through government health care plans rather than
car insurance policies. But car insurers pay governments back for these
costs through provincial health care levies. In total, Canadian car
insurers paid about $200 million in health care levies last year.
MYTH: If I’m in a car collision
(in NB, NS, PEI), for all that I have to go through all I get is $2,500.
FACT: This cap on court awards for pain and suffering continues to cause
some confusion. Here are the facts:
- The cap does NOT apply to payments made by your own insurance company
(regardless of who caused the accident) for medical treatment of your
injuries or for lost income if you miss work.
- The cap does NOT apply to awards for medical and/or other economic
losses that you might recover in court if you sue the at-fault driver.
- The cap applies ONLY to awards for pain and suffering, and only if
the injury is minor. Pain and suffering awards compensate you for any
loss of enjoyment of life you may have suffered because of your injuries.
Minor injuries are those that will not have a serious effect on your
life, such as neck or back pain that doesn’t linger too long.
So, to sum up, the cap would not necessarily apply if you were in a car
accident and it would not limit what you would receive to help you heal
from your injuries.
MYTH: No-fault insurance eliminates responsibility and fosters bad driving.
FACT: No-fault insurance is a system in which those injured in a car
accident receive compensation and benefits from their own insurance company,
regardless of fault. It is designed to reduce the delays of an adversarial
legal (or “tort”) system and provide treatment and benefits
to injured victims as quickly as possible.
Most provinces in Canada have some form of no-fault accident benefits
that are paid to all accident victims. The difference is the degree to
which tort (the right to sue) or no-fault (access to accident benefits)
is emphasized. For example, Quebec has a pure no-fault system that eliminates
the right to sue, but provides substantial accident benefits. Ontario
has a “hybrid” system, which blends no-fault and tort.
No-fault insurance does not mean that drivers are never at fault in accidents.
There are still fault-based rules of the road, which are enforced by police.
If you are at-fault in an accident, your insurance premiums will be affected
and, depending on the nature of the accident, you may be charged with
an offence. These offences are governed by either provincial motor vehicle
legislation, or federal legislation, such as the Criminal Code of Canada.
There is no evidence that no-fault insurance leads to increased numbers
of accidents or fatalities/injuries. While some argue that a tort system
provides a deterrent against poor driving behaviour, there is no correlation
between the type of insurance system and the road safety record of the
jurisdiction. Ontario, Quebec, Saskatchewan and Manitoba all have either
pure or hybrid no-fault insurance systems. Ontario has one of the best
road safety records in North America. British Columbia, Alberta and the
Atlantic provinces have tort-based systems. BC has consistently had one
of the highest incidences of highway injuries and fatalities of any province
in Canada.
MYTH: Insurance companies are the only ones who pay for high or excessive
legal settlements.
FACT: Insurance companies collect premiums from consumers and use these
funds to pay for claims. Money to pay for large legal settlements comes
directly from these funds, or in other words, directly from the pockets
of each and every policyholder. If claims costs increase, insurers adjust
premiums to keep pace.
Until limits were put in place recently, pain and suffering awards for
minor injuries, such as sore necks or backs, exceeded $20,000 in many
tort-based provinces. This may have benefited a few claimants, but it
cost the majority of policyholders in the form of higher premiums.
MYTH: No-fault insurance will increase your premiums.
FACT: There is no evidence that no-fault insurance is more costly to
consumers; there is no conclusive proof that insurance rates are less
expensive in a tort-based system. Insurance premiums are a reflection
of a number of different factors, including driver’s experience,
driving record, and geographic location, to name a few. Insurance companies
use these factors and deductible levels selection to determine the appropriate
premium for the coverage. Comparisons of premiums in tort and no-fault
systems across different provinces and cities in Canada are often misleading
because they don’t take into account factors such as where a driver
lives, levels of coverage, driving experience and driving record.
MYTH: Most provinces that have experimented with no-fault insurance have
repealed it and reintroduced tort-based systems.
FACT: In Canada, Quebec, Saskatchewan and Manitoba have the “purest”
no-fault auto insurance systems. Quebec’s no-fault system was introduced
in 1978, with Manitoba following in 1994 and Saskatchewan in 1995. (In
2003, Saskatchewan introduced an option for persons in the province to
recover as though within a tort system. A very small number have requested
that option.) In 1990, Ontario introduced a no-fault insurance system
that is a “hybrid” system that blends no-fault insurance with
the legal right to sue in certain circumstances. All of these provinces
have retained strong, no-fault characteristics in their insurance systems.
MYTH: Insurance companies keep changing the rules on what's covered and
what isn’t.
FACT: The business of car insurance is actually highly regulated by
provincial governments, who set the minimum coverage levels. Governments
also keep tabs on how much insurance companies charge for their products.
Insurance companies can change neither the basic coverage nor premiums
without government approval.
MYTH: Being caught without a seatbelt doesn't make me a dangerous driver, so my insurance premiums shouldn't go up.
FACT: It may be true that
you do not pose a danger to other drivers when you don't wear a
seatbelt, but you do pose a serious hazard to yourself. If you are in a
collision and you are not wearing a seatbelt, you are much more likely
to be injured. For example, think of the difference between the whiplash
injuries you may experience if you are wearing a seatbelt during a
collision and the more serious injuries you might sustain if you are not
wearing a seatbelt and get thrown out of a flipped car or go through
the windshield.
When you are injured in a car crash, it is your insurance company that
pays your medical expenses. The cost of the rehabilitative care for a
whiplash-type injury is lower than the cost of treatment for injuries
sustained as a result of getting thrown out of a car during a collision.
Therefore, if you do not wear a seatbelt you are a greater risk to your
insurance company because you are more likely to submit high-cost
claims. This is why insurance premiums may increase when you are
convicted of driving without a seatbelt.
As far as your insurer is concerned, driving without a seatbelt does make you a more dangerous driver.