PEI public invited to share views on proposed auto insurance changes

The Government of Prince Edward Island is proposing that the cap on court awards for pain and suffering from minor personal injuries following vehicle accidents increase from $2,500 to $7,500, aligning the province with limits elsewhere in the region.

In line with increasing the minor injury cap (indexed annually by CPI), the definition of minor personal injuries would be amended to include only strains, sprains and whiplash-associated disorders that do not result in a serious impairment, notes a statement issued late last week by the Department of Environment, Labour and Justice.

“My department has been working closely with the insurance industry to improve benefits and bring them in line with the rest of the region,” says Janice Sherry, minister of environment, labour and justice.

“While benefits are increased under these proposed reforms, we have received a commitment from the industry that rates will not increase,” the minister adds.

Changes to the minor injury cap and minor personal injury definition represent one of the two major changes being contemplated as part of PEI’s current automobile insurance reforms. The second proposed change relates to raising no-fault accident benefits to levels now in place in New Brunswick levels.

“These reforms have been implemented in Nova Scotia and New Brunswick and have been received as favourable to consumers,” the government notes in a consultation paper on the draft changes.

The paper points out that Nova Scotia changed the cap and amended the definition in 2010, which reduced the number of injury awards restricted by the cap. New Brunswick also increased its minor injury cap to $7,500 this past July and made a similar change to its definition.

Accident Benefits were introduced by the Maritime provinces in the 1980s as mandatory no-fault coverages under automobile insurance policies. “While our benefit levels have remained unchanged, New Brunswick increased their levels in the 1990s and Nova Scotia made similar changes in 2012,” the paper notes.

The PEI government is proposing enhancing no-fault benefit as follows:

• medical and rehabilitation expenses to increase from $25,000 to $50,000;
• funeral expenses to increase from $1,000 to $2,500;
• death benefits for head of household to increase from $10,000 to $50,000, for spouse of head of household to increase from $10,000 to $25,000, and for dependent to increase from $2,000 to $5,000;
• loss of income to increase from $140/week to $250/week; and
• principal unpaid housekeeper to increase from $70/week to $100/week.

The consultation paper notes that reforms to the cap and accident benefits would theoretically add costs to a policy. “However, these reforms were implemented in Nova Scotia and new Brunswick under their existing rates,” it adds.

The PEI government is asking Islanders to share their views on whether or not to implement either or both of the proposed reforms. Written submission on the proposed automobile insurance reforms by Dec. 2.