You will get a three page letter with your renewal (or new policy documents) that has a detailed grid outlining your new choices. Like most people, you will first look at the cost of your renewal and see that it has either dropped or gone up, depending on a lot of factors (where you live, how long you've been riding, etc.). Wow, more choice! You're vaguely suspicious because you know that nothing is free in this world, but hey, insurance was so high that in all likelihood the government forced the insurance companies to toe the line, tighten their belts, and get their collective act together, right? If that's what you think, you had better read on, because that's not exactly the reality.
It's true that insurance costs have been spiralling out of control. Accident Benefits claims are expensive; badly injured people require costly care that can be an ongoing draw from the insurance companies' coffers for years. The snowball effect of old claims continuing to cost money and new claims adding to that outlay has made it difficult for insurance companies to maintain rates and show a profit to their shareholders. So the increasing cost of insurance has led to a general unhappiness in the populace, and the populace elects the provincial government that promises to keep those rates under control.
A fix isn't simple. Government-run insurance, a solution in some people's minds, has proven to be no less costly to both government and individuals in those provinces that have it. A system that relies entirely on suing the other person for injuries is also less than satisfactory for many reasons: cost to the individual, stress, delays, etc. The Accident Benefits structure that we currently have in Ontario started as an almost carte blanche coverage when Bob Rae's NDP government introduced it in the mid-‘90's. And although the standard coverage has been tightened and buy-ups introduced subsequently by the Mike Harris government, Accident Benefits claims have continued to be expensive. The new, further restricted standard coverages are an attempt to limit the cost of Accident Benefits claims in order to allow the cost of a policy to stabilize for the consumer.
The devil is in the details. And the details upon comparison will demonstrate to you that the coverage you're buying at the new standard (basic) coverage is significantly less than you had before, and has some serious shortcomings in the instance of serious injury.
Therefore with the new policy you will have a few more fields in the grid of buy-up options. Most Ontarians will look at this new expanded grid; some will look into it in a sincere effort to see what they should do; most will realize that increasing their coverage will cost more money so they will choose to leave their policy at the new, lower standard levels of coverage.
Let's also make it clear that this isn't the first time you have been able to choose your level of Accident Benefits coverage. You could increase your coverages before, as you know, because every insurance salesperson and customer service representative in Ontario, regardless of which company they worked for, brought this issue up to you. Letters from your broker urged you to consider the options. You could increase certain limits in your Accident Benefits coverages depending on your circumstances and preferences. You HAD choice. Here's the issue: your basic, standard coverage was essentially (arguably) adequate for most people, and very few policyholders increased their limits. Besides, increasing your limits would cost more, and the bottom line to most people is... the bottom line. They want to pay as little as possible.
The new, post-September 1st basic/standard policy might cost less, or at least keep increases in premium under control. The new standard has been nipped and tucked to the point that there are some holes showing in the coverage. The new standard is NOT adequate for most people if they have serious Accident Benefits losses. Although it's a bit like that bag of chips that keeps shrinking in size and costing almost the same, it's far more serious than that. So in this series of articles we intend to get into extreme detail about the inadequacies of the new standard coverage and why you should put time and effort into understanding your policy and making some decisions that could cost more in the short term but could be of enormous benefit if you are one of the unlucky few who end up having to use their Accident Benefits coverage. So check out the grid (Accident Benefits Changes FSCO) and become familiar with it before the next article in this series appears.
