Reduced Accident Benefits And Insurance Broker Liability
On July 1, 2016 significant reductions in the Standard Accident Benefits (which are part of every Ontario automobile insurance policy) came into force. These are the benefits that are available to everyone injured in a car accident usually from their own insurance company.
In years when there have not been changes to Accident Benefits most insurance intermediaries (agents and brokers) simply mail out a renewal notice to each of their clients a short period of time prior to their renewal date. This is an efficient and inexpensive way to renew a policy that does not require any changes. With the significant reductions in Standard Accident Benefits that came into force on June 1, 2016 this type of “through the mail” renewal may no longer be sufficient to protect an intermediary from being found liable if their client is under insured following up car accident.
As a result of the reduction in Accident Benefits we can anticipate that insurance intermediaries who fail to take the time to give their customers the information and advice they require to make informed decisions about buying Optional Benefits will face potential liability. In order to encourage insurance intermediaries to advise their clients of the effect of accident benefit reductions and the options available to increase coverage the Registered Insurance Brokers of Ontario and the Financial Services Commission of Ontario have published bulletins summarizing the relevant changes as well as emphasizing the obligations of insurance intermediaries to inform their clients.
The combination of significant and varied reductions in Accident Benefits combined with the various options for purchasing additional coverage creates a real challenge for insurance intermediaries to undertake the necessary detailed discussions with each of their clients. It may simply not be sufficient to notify clients of the reductions and the options available. An assessment of the individual insured’s needs may now be required. These needs encompass not only Accident Benefits but also Third Party Liability Limits.
If an insured suffers injuries in a car accident and subsequently exhausts the Standard Accident Benefits provided by their policy questions may be asked about what advice they received when renewing their policy. In particular were the reductions in the Standard Accident Benefits reviewed and the available Optional Benefits discussed? Furthermore was the option of increasing Third Party Liability Limits reviewed as a means of “self-insurance” through an OPCF 44 Family Protection Endorsement?
Not only should insurance intermediaries discuss these topics with each insured they should also document the discussion and the insured’s decision, especially when the decision is to decline the opportunity to purchase Optional Accident Benefits or increase their Third Party Liability Limits.