New Ontario auto catastrophic impairment definition starts in 2016

A new definition of catastrophic impairment, for vehicle accident injuries, takes effect next year, the Financial Services Commission of Ontario suggested in a recent bulletin.

The new definition of catastrophic impairment, in Ontario’s standard accident benefits schedule (SABS), “includes new and/or updated definitions and criteria for traumatic brain injuries for adults and children, amputations, ambulatory mobility, loss of vision, and mental and behavioral impairments, and introduces a new process for combining physical with mental and behavioral impairments,” FSCO said in a bulletin Tuesday.

Those criteria apply to vehicle accidents on or after June 1, 2016, FSCO noted.

Also next year, the province will ban auto insurers from using “minor” collisions under certain circumstances – even where the insured is at fault – as a basis for setting rates or even whether to provide coverage.

It is part of a package of reforms designed to help reduce auto premiums in Ontario. In 2013, when the Liberals had a minority government, the New Democratic Party agreed to support the 2013-14 budget only on the condition that the Liberals also force auto insurers to reduce private passenger auto premiums, by 15%, over two years.

At the time, NDP MPPs were claiming the Ontario auto insurance industry made an “extra $2 billion in profits” in 2011 compared to 2010, though what actually happened was the industry made a profit of $233.2 million (on premiums of $10.3 billion) in 2011 after losing $1.7 billion in 2010.

So that August, the Liberals passed the Ontario Automobile Insurance Rate Stabilization Act (AIRSA), which established an “industry-wide target reduction,” by 15% over two years, of the average private passenger auto premium.

That average was down by 7% as of last April, Finance Minister Charles Sousa told reporters when he tabled the budget at Queen’s Park in Toronto. He noted at the time that Ontario is the only province that provides catastrophic coverage in auto insurance.

In the budget document, the ruling Liberals announced that the mandatory policy will be changed such that catastrophic injuries will have one $1-million limit for medical, rehab and attendant care.

The revised definition of catastrophic impairment “also provides for an automatic designation of catastrophic impairment for children with traumatic brain injuries in specified circumstances,” FSCO noted Aug. 31.

Currently, the accident benefits insurance that all Ontario vehicle owners must buy provides for $1 million in medical and rehabilitation coverage for catastrophic injuries. On top of that, mandatory AB insurance also covers $1 million in attendant care coverage, for catastrophic injuries.

For non-catastrophic injuries, the coverage limits – under the mandatory AB policy – are $50,000 for medical and rehab benefits and $36,000 for attendant care. That will be reduced, to a $65,000 limit for medical, rehab and attendant care combined.

“A new combined optional medical, rehabilitation and attendant care benefit of $130,000 will be available to consumers in addition to the existing optional $1 million combined medical, rehabilitation and attendant care benefit that is available currently,” FSCO stated Aug. 31. Like the new cat definition, the new optional additional coverage would apply to accidents on or after June 1, 2016. “A new optional benefit for catastrophic impairment of up to an additional $1 million for medical, rehabilitation and attendant care will be available, if the insured person sustains a catastrophic impairment. The current optional $100,000 medical and rehabilitation benefit and $72,000 attendant care benefit have been eliminated.”

Several other changes to Ontario auto policy will apply to accidents on or after June 1, 2016.

One of those is a prohibition on changing an insured’s rate – or deciding whether to renew, cancel or issue a policy – in what the provincial government calls “minor” accidents.

The province considers it “minor” if no personal injuries are sustained, the cost of property damage does not exceed $2,000 and the cost of all such damages is paid by the at-fault party and no payment is made by any insurer for property damage.

The province provides an exception if the vehicle was involved in a total of more than one minor accident in the previous three years, and in each accident the driver of that vehicle was at fault.