Consumers in Ontario are faced with a plethora of choices when considering auto insurance coverage that extends beyond what is legally required. Ontario has rather steep fines for those without valid auto insurance which is obviously the first concern for auto owners which are outlined in the Insurance Act of Ontario.
For example, financial penalties can be imposed, vehicles impounded and auto owners who are caught driving without insurance may then be considered “high-risk drivers” and have to pay higher premiums or may even be refused coverage altogether.
It is not only important to have adequate coverage that meets the basic legal requirements, but there are also many smart optional coverages that can assist auto owners in positioning themselves for the best possible protection regardless of the circumstances. However, the optional coverages that are available are not necessarily a one size fits all for every auto owner.
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Basic Coverage Requirements
By way of general background, Standard Auto Insurance Policies in Ontario require Third Party Liability Coverage, Statutory Accident Benefits Coverage and Direct Compensation-Property Damage (DC-PD) Coverage.
The basic Third-Party Liability Coverage that is required is $200,000 but that may be increased by the purchase of optional coverage above the minimum requirements. Third Party Liability Coverage is intended to cover the driver if another person is injured or killed as a result of an accident or if there is damage to the injured party’s property.
Statutory Accident Benefits Coverage is an additional part of the insurance policy that provides benefits to an injured party in an automobile accident, regardless of who caused the accident. Included in this coverage are items such as medical, rehabilitation, caregiver, non earner and income replacement coverages.
There are also options to increase the coverage in these types of benefits as well. The last required type of coverage is referred to as Direct Compensation-Property Damage (DC-PD) Coverage. This coverage is designed to cover damage to an auto owner’s vehicle and contents and also for the loss of use of an auto owner’s vehicle or contents. If someone else is technically at fault for the accident, the auto owner still collects directly from their own insurer, if certain conditions are met.
The other type of coverage that is required in Ontario is uninsured automobile coverage which protects parties who are injured or killed by drivers that uninsured or perhaps in instances of a hit and run accident. This also applies to protect damage to vehicles in these situations.
Optional Coverages Available
Many of the optional coverages mentioned below essentially provided for increased coverage amounts for required coverages that already exist in standard policies. There are also a few items that are strictly optional coverages that are also mentioned below and certainly are worth consideration by auto owners.
Increased Third Party Liability Coverage
Auto Owners in Ontario can select to increase their Third-Party liability coverage to amounts more than the legally required amount of $200,000. This is often a very smart and cost-effective option that provides good additional protection to auto owners. Given that the statutory minimum coverage is a relatively low amount, this is something that auto owners should give serious consideration to.
Income Replacement Benefits
Increased coverage can also be purchased to cover loss of income in the case that someone is unable to work as a result of an auto accident. The basic coverage would cover income replacement up to 70 percent of gross income up to $400 per week. The optional coverage can increase that amount up to $1,000.
Medical, Rehabilitation and Attendant Care Benefits
While basic coverage is provided in this area automatically for medical, rehabilitation and attendant care expenses, there is an option to increase this coverage to $130,000 for non-catastrophic injuries and up to $2,000,000 for catastrophic injuries. This can be really important because many health care expenses are not covered by either the basic coverage or basic health insurance coverage under the OHIP so this can provide an important safety net.
This benefit is very helpful for those who are not employed but have full time responsibilities for the care of dependents. While a basic benefit is available, an optional coverage can be purchased so this benefit can be claimed for all injuries suffered in an auto accident, not just those that are deemed “catastrophic”. The benefit pays $250.00 per week for the first dependent plus an additional $50.00 per week for each additional dependent.
Housekeeping and Home Maintenance Expenses
The basic benefit offered in this area to provide housekeeping and maintenance duty only applies in cases of catastrophic injury. The optional coverage that may be purchased extends coverage so that it can be claimed for all injuries, not just those deemed to be catastrophic.
Death and Funeral Benefits
While basic coverage is also provided in this area, auto owners can elect to increase coverage up to $50,000 payable to an eligible spouse, $20,000 to an eligible dependent and $8,000 for funeral expenses. This typically very cost-effective option can supplement other life insurance benefits should there be any to assist with payment of various expenses related to the death of a loved one in an automobile accident.
Dependent Care Benefits
This is an optional benefit that is not provided in standard coverage auto policies. This would pay dependent care benefits up to $75.00 per week and $25.00 for each additional dependent that may assist with payment of child care expenses. This is only available to individuals who were employed at the time of the accident, are not receiving a caregiver benefit and have to pay additional childcare expenses as a result of the accident.
Indexation for Inflation
This also is a truly optional benefit which is not provided in any standard auto policy. This provides for an inflation adjustment for other benefits purchased to ensure that benefits increase at the same rate as inflation.
What Should Auto Owners in Ontario Consider when looking at Optional Insurance Coverage?
From the information outlined above, it is clear that there are many different options available to Ontario auto owners to provide the best protection for themselves and their families. In evaluating the options above, auto owners should evaluate their risk exposure in the various categories as discussed above.
For example, it may be even more important in a family with small children that the additional caregiver and housekeeping and maintenance expenses coverages are added because those items represent real out of pocket costs for the family in the event that a caregiver is seriously injured in an automobile accident. It is also worth considering what optional coverages can be bundled together so that an auto owner is getting the best value for the coverages selected. Selecting optional coverages that manage risk and provide the most comprehensive coverage for a particular situation is of key importance. No one has a crystal ball that allows perfect information as to when an accident might occur or how that could impact our families. It is important to consider all of the moving parts that may be at play, for example, how will our children be cared for if the caregiver is injured? Will I have to hire someone to perform household chores?
These are issues that are very often forgotten in the quest to evaluate and purchase the most cost-effective auto insurance. Therefore, it is important to carefully evaluate the risk exposure, budget and areas in need of greatest protection, consumers can package their optional coverages to maximize their own security and safety as well as that of their family so that the entire picture is considered when trying to provide for the best possible outcome in the unfortunate event of a serious auto accident.