Since January 1, motorists in Ontario can waive one of the sections of their insurance contract that was until now mandatory. This choice could save them hundreds of dollars annually, but industry experts say that for most drivers, it’s not worth the effort.
Ontarians now have the option of not purchasing direct compensation coverage in the event of property damage.
This section of an automobile insurance contract notably offers coverage for damage caused to the vehicle of a driver involved in an accident for which he is not responsible. A rear-end collision is a common example.
If you waive this protection, you will have no coverage [pour ce type d’accident]explains Suzanne Pountney, president of the Insurance Brokers Association of Ontario.
You will only be covered for bodily injuries sustained in the accident, she adds.
The Financial Services Regulatory Authority of Ontario (FSRA) announced this regulatory change imposed by the provincial government in December 2022. The agency then said it promotes innovation in the insurance sector in Ontario and the choices offered to motorists.
The initiative stems from a blueprint established by the Progressive Conservatives in 2019 to reduce the cost of insurance for motorists in the province.
Before this year, Ontarians’ auto insurance was required to include four sections: liability, statutory accident benefits, uninsured automobile accident coverage, and direct compensation for property damage.
The direct compensation guarantee thus joins collision insurance as an optional component of automobile insurance.
According to FSRA figures, this protection cost Ontario drivers an average of $359 in 2022. Last June, the average annual auto insurance premium was $1,737 in Ontario, up 4.8% compared to June 2022.
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Ms. Pountney says that like the total amount of a car insurance premium, the cost of direct compensation varies depending on several factors. However, the price and age of the vehicle are predominant variables.
Someone driving a brand new, more expensive vehicle could save more money by removing this coverage than someone driving an older, less expensive vehicle, she illustrates.
The price of direct compensation is indicated on each insurance policy.
Not just coverage for the vehicle
By email, a spokesperson for the Ontario Ministry of Finance indicates that owners of older vehicles that are worth less than the cost of their insurance could benefit from this important change imposed by the government.
Anne Marie Thomas, director of industry and consumer relations at the Insurance Bureau of Canada, points out, however, that the direct compensation guarantee does not only cover vehicle repairs.
[Cette] insurance pays for towing the car, for storage, for renting another car and for damage to property inside the vehicle during the accident, she says.
She therefore recommends that motorists who are considering removing this protection ensure that in the event of an accident, they will be able to pay these costs, which can reach thousands of dollars.
It’s almost self-insurance, to a certain extent.
It also explains that motorists who waive direct compensation will not be able to attempt to obtain compensation from the insurer of the driver at fault or pursue the latter in court.
Rappel :
Since 1990, Ontario has had a no-fault auto insurance system. So, it is your insurance company that covers damage to your vehicle and compensates you if you are injured in an accident, regardless of who is found responsible for the accident.
Ms. Pountney of the Ontario Insurance Brokers Association believes that the regulatory change could especially be beneficial to companies that own a large fleet of vehicles and that have the means to pay the costs when one of them between them is damaged.
There aren’t many situations where it would be financially advantageous for someone who has personal auto insurance to remove that coverage, she adds.
2024-01-06 09:06:36
#Auto #insurance #change #rules #Ontarians
