Chapter 6 – Accident Benefits

General history

· When a driver is not responsible for an accident, they are in a good position to recover from the responsible party but it may take years b4 liability is established and a settlement reached

· If the driver was AF, there used to be no financial assistance available from automobile insurance

· Original accident benefits – Modest Accident Benefits were introduced in the 1960’s and offered immediate financial assistance w/out regard to fault

· June 1990 saw the implementation of the Ontario Motorist Protection Plan (OMPP) – a “threshold” no-fault plan. It removed the right to sue in all cases except when the injury exceeded a “verbal threshold”

· Verbal threshold – the words or language describing an injury that must be suffered in order to be able to sue

· OMPP threshold – suits for non pecuniary (pain and suffering) and economical loss could only be brought if the injured person had:

o Died or

o Sustained permanent serious disfigurement or

o Suffered permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature

· Effective January 1, 1994 Bill 164 came into being. It created SABS giving increased and wide-ranging benefits. Suits were now permitted for pain and suffering only and only when the injured person had:

o Died or

o Sustained serious disfigurement or

o Suffered impairment of an important physical, mental or psychological function

· Under Bill 164 suits were not permitted for economic loss

· The overall effect of changing the threshold definition was that it became much more subjective and opened the door to additional litigation and increased fraudulent claims

Bill 59 (1996)

· In June 1996 the Automobile Insurance Rate Stability Act (Bill 59) was passed

· Benefit limits were reduced however the right to recover was expanded to include economic losses and medical expenses subject to the provisions in the Act and its regulations

Bill 198 (2003)

· In October 2003, Bill 198 was passed

· It amended the Statutory Accident Benefits – the right to recover from an AF party has expanded to include not just economic losses but also medical expenses subject to the verbal threshold

· Economic loss – no threshold to be met but recovery is limited to 80% of net income suffered more than 7 days after the accident and up to the date of the trial. Post trail, recovery for future losses is calculated on a 100% gross income basis

· Health care expenses – injury must meet a verbal threshold as defined under non-economical losses

· Non-economical loss (pain and suffering) – allows injured persons to sue for non-economical losses provided that the person’s injuries meet the verbal threshold:

o Death or

o Permanent serious disfigurement or

o Permanent serious impairment of an important physical, mental, or psychological function

· The word “permanent” has been reinserted

· A suit for non-economical loss is subject to a per person deductible of $30,000

· If the plaintiff is partially AF, the amount of damages is reduced by the deductible before the award is reduced for contributory negligence

Definitions

· Accident – an incident in which the use or operation of an auto directly causes an impairment or causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device

· Impairment – a loss or abnormality of a psychological, physiological or anatomical structure or function

· Insured person:

o For accidents in Ontario involving the insured auto or other auto

§ The named insured and any person specified in the policy as a driver of the insured auto

§ The spouse or same-sex partner of the named insured

§ Any dependant of the named insured or spouse

§ A person who is involved in an accident involving the insured auto

o For accidents outside of Ontario

§ A person who is an occupant of the insured auto and who is a resident of Ontario or was a resident of Ontario at some point during the 60 days prior to the accident

o Persons who were not actually involved in the accident

§ The named insured, spouse, and any dependant of either NOT involved in an accident but who suffers psychological or mental injury as a result of an accident involving physical injury to defined family members

· Rules that determine from whom an injured person will collect no-fault benefits:

o All persons must claim AB from their own insurer. Multiple policies – claim AB from the policy he was occupying at the time of the accident

o No insurance (person or spouse does not own an auto) – benefits are payable by the insurer of the auto in which he was an occupant

o No insurance on the auto in which person was an occupant – recovery can be made form the insurer of any auto involved in the accident

o If no recovery is possible from any of the above 3 sources (eg pedestrian who does not own an auto and is victim of a hit and run) the benefits will be paid by the Ontario Motor Vehicle Accident Claims Fund

· Case manager – person who provides services related to the coordination of goods or services for which payment is provided by a medical, rehabilitation or attendant care benefit

· Pre-approved framework – a format to efficiently process pre-defined injuries, normally including soft tissue injuries and minor fractures. It is designed to promptly place the injured person into a treatment plan w/out the need for expensive prolonged assessment. The injured person deals w/ his own health care provider who assumes overall responsibility for the pre-approved treatment available

· Treatment plan – a document prepared by a member of a health profession which includes a description of the impairment to be treated and of the resulting disability, estimated duration of disability, anticipated benefits, etc

· Designated assessment centers – independent facilities for the purpose of assessing an injured person’s impairment or disability and determining his abilities w/ respect to life functions and work activities. When an insurer terminates or denies benefits or there is disagreement with respect to the impairment or disability and payment of benefits, the injured person is referred to a DAC for assessment

· For the purpose of the assessment:

o The insured person and the insurer shall provide the center w/ info requested that is reasonably necessary and

o The insured person shall submit to such reasonable physical, psychological and mental examinations

· DAC report – given to the insurer, insured person and insured person’s health practitioner and state whether:

o The person is still disabled

o The expenses for medical, rehabilitation, or attendant care are reasonable and necessary

· The insurer pays the fees charged by the DAC

Interaction with other systems

· Accidents outside Ontario anywhere in Canada of the USA have the choice b/w the Ontario level of benefits and the no-fault benefits available in the jurisdiction where the accident occurred

· Social assistance payments set out how benefits interact w/ it. Auto insurer is first payer of benefits to an insured who is entitled to receive social assistance payments

· Collateral benefits – sources of entitlement outside of the auto policy

· The insurer may deduct the following amounts in calculating the amount of weekly income replacement or non-earner benefits payable:

o Net payments for loss of income that have been received as a result of the accident under the law or any income continuation plan

o Net payments for loss of income that have not been received but are available as a result of the accident if the insured has not applied for them

o Any temporary disability benefits being received in respect of a period following the accident and in respect of an impairment that occurred b4 the accident

o Any other periodic benefit being received in respect of an impairment that occurred b4 the accident

· Certain types of benefits may not be deducted – unemployment insurance benefits and payments under a sick leave plan that are available but have not been received

· Collateral sources for loss of income pay first but insurers are required to top up the loss of income to 80% of net income to a maximum of $400/week

· The insured may choose from whom to collect workers’ compensation – workers’ compensation act or insurer. If the insurer is required to pay the no-fault benefit they will be reimbursed when the final resolution of the tort action is received

Accident benefits coverage

· Every policy must provide the following AB:

o Income replacement

o Non-earner benefit

o Caregiver benefit

o Medical, rehabilitation, and attendant care benefit

o Payment of other expenses

o Death and funeral benefit

o Optional benefits

*** Students should know when and where monetary & time limits & deductible apply

Income replacement benefits

· Qualifications for weekly IRB:

o Employed at time of accident and as a result of and w/in 104 wks of the accident, suffers inability to perform essential tasks of employment

o Not employed at time of accident however,

§ Employed for at least 26 in last 52 wks prior to the accident or receiving unemployment insurance benefits at time of accident

§ At least 16 yrs old or was excused from attending school under the education act

§ As a result of and w/in 104 wks of the accident, suffers inability to perform essential tasks of the employment in which he spent most time during the 52 wks b4 the accident

o The insured person,

§ Entitled at time of accident to start work w/in 1 yr under a contract of employment that was made prior to accident and is evidenced in writing

§ As a result of and w/in 104 wks of the accident, suffers inability to perform the essential tasks of the employment he was entitled to start under the contract

· One wk deductible – not payable for the first wk of disability nor is it payable for more than 104 wks of disability

· The first 104 wks is 80% of net wkly income to maximum wkly income of $400 unless optional benefits were purchased

· After 104 wks if the insured remains eligible, he will receive the greater of the benefit received during the first 104 wks and $185 per wk

· Benefits will be adjusted downward starting at age 65

Non-earner benefit

· Eligible persons who suffer a complete inability to carry on a normal life and,

o Do not qualify for IRB or

o Cease to receive a caregiver benefit or

o Were enrolled on a full-time basis in elementary, secondary or post-secondary education at the time of accident or had completed their education less than one yr b4 the accident and were not yet employed in an employment that reflected that education and training

· 26 wk deductible – not payable for the first 26 wks after an accident nor until the person reaches age 16

· Benefit = $185 per wk

· Those who qualify by being enrolled in education or having recently completed their education, after 104 wks the benefit become $320 per wk

· Payable only so long as the person suffers a complete inability to carry on a normal life

· Adjusted downward at age 65

Caregiver benefits

· Eligible primary caregivers:

o The insured person was residing w/ a person in need of care and

o The insured person was the primary caregiver for the person in need of care and did not receive any remuneration for engaging in caregiving activities

· Accident must result in the person suffering inability to engage in caregiving activities and must occur w/in 104 wks of accident

· Insurer not required to pay benefit beyond 104 wks of disability unless as a result of the accident the person suffers a complete inability to carry on a normal life

· Benefit reimbursement:

o Up to $250 per wk for expenses in caring for 1 person plus

o Additional $50 per wk for each additional dependant

o Is an indemnity and is equal to the reasonable expenses incurred in caring for a person

o Figures are maximum amounts

o Higher limits can be purchased

· May not received this benefit if receiving IRB or non-earner benefit

Medical, rehabilitation and attendant care benefits

· Medical benefit

o Pays for all reasonable and necessary medical expenses that are not payable under another insurance plan or law

o Benefits payable:

§ Medical, surgical, dental, optometric, hospital, nursing, ambulance, audiometric, speech-language pathology services

§ Chiropractic, psychological, occupational therapy, physiotherapy services

§ Medication

§ Prescription eyewear

§ Denture and other dental devices

§ Hearing aids, wheel chairs, or other mobility devices, prosthesis, orthotics, and other assistive devices

§ Transportation for the insure person and an aide or attendant to and from treatment sessions

§ Other goods and services of a medical nature that the insured person requires

o If a person uses his own auto, no payment may be made w/ respect to the first 50 km per round trip to a treatment session

· Rehabilitation benefit

o Pays for reasonable measures to reduce or eliminate the effects of any disability resulting from the impairment

o Coverage includes expenses for:

§ Social rehab including training, counseling, home renovations, vehicle modifications

§ Vocational rehab including counseling, vocational and academic training, workplace modification

§ Transportation to and from sessions

§ Other good and services required

· Attendant care benefit

o Payment of all reasonable expenses incurred by or on behalf of an insured person for:

§ Services provided by an aide or attendant or

§ Services provided by a long-term care facility including a nursing home, home for the aged or chronic care hospital

o Maximum payment is $3,000 per month to a limit of $72,000 unless the person sustained a catastrophic impairment in which case max payment is $6,000 per month w/ a $1,000,000 max life-time limit

o Not payable for more than 104 wks unless catastrophic impairment or optional benefits purchased

· Case manager services

o An insurer must pay all reasonable and necessary expenses for a person sustaining a catastrophic impairment for services provided by a qualified case manager in accordance w/ a treatment plan

· Limits

o The maximum medical and rehabilitation benefit is $100,000

o It is payable for the period commencing w/ the date of the accident until the later of either 25 yrs minus the person’s age at the time of the accident or10 yrs

o W/ a catastrophic impairment, $1,000,000 is available for medical and rehabilitation benefits – there is no limit on the period during which payments may be made

o If the person purchased $1,000,000 optional benefit, there is no limit on the time during which the expenses must be incurred

o Fees of case manager are payable w/in the limits for the medical and rehabilitation benefits

Payment of other expenses

· Educational expenses

o Reimbursement for reasonable expenses incurred in respect of tuition, books, equipment in respect of the program term or year enrolled at the time of the accident

o Maximum limit $15,000

· Expenses of visitors

o Pays for reasonable expenses incurred in visiting the injured person by a spouse, child, parent, grandchild, grandparent, brother, sister

o No monetary limits

o No amounts are payable beyond 104 wks after the accident unless a catastrophic impairment

· Housekeeping and home maintenance expenses

o Pays for reasonable and necessary additional expenses if the insured person suffers an inability to carry out the housekeeping and home maintenance services he normally performed

o Maximum repayment of $100 per wk for a max 104 wks from the date of the disability unless a catastrophic impairment

· Damage to clothing, glasses, hearing aids, etc

o Pay for all reasonable expenses in repairing or replacing:

§ Clothing worn by the insured person at the time of accident

§ Prescription eyewear, dentures, hearing aids, prostheses, and other medical or dental devices that are lost of damaged in accident

· Cost of examination

o Pays all reasonable expenses in arranging and attending an examination or assessment including fees for this service

o Pays fees charged by a person who provides a treatment plan and transportation expenses

Death and funeral benefits

· If an insured person dies w/in 180 days or w/in 156 wks there has been continuous disability and is survived by at least 30 days by a spouse or a dependant then the benefit pays:

o $25,000 to surviving spouse

o $10,000 to each surviving dependant

o If the insured person is not survived by a spouse, the $25,000 is divided among his dependants

o If the insured is survived by a former spouse whom he was obligated to support - $10,000 is payable

o If the deceased was a dependant, $10,000 is payable to the person depended upon

· Funeral benefit

o Maximum $6,000 is payable

Summary of optional benefits

· An increase in the max IRB to $600, $800, $1,000 per wk

· An increased caregiver benefit that sets the max benefit at $325 per wk for the first person in need of care and $75 per wk for each additional. A dependant care benefit of up to $75 per wk for the first dependant and $25 per wk for each additional w/ a max of $150 per wk to reimburse working parents for additional dependant care expenses resulting from the accident

· An additional $1,000,000 that could be allocated to medical, rehabilitation or attendant care benefits or any combination of theses benefits

· A death benefit increased to $50,000 payable to a spouse and $20,000 to each dependant and funeral benefit increased to $8,000

· Indexation of the max benefits payable and individual or aggregate limits based on the CPI on an annual basis

· May be purchased any time b4 an accident in respect of which a claim is made

Exclusions

· Insurers are not required to pay income replacement or non-earner benefits, educational expenses, expenses of visitors, and housekeeping and home maintenance expenses (to the driver):

o Convicted of operating an auto while impaired by alcohol or a drug

o Failure to provide breath sample

o Operating auto while not insured

o Driving w/out license

o Excluded driver under the policy

o Operating auto w/out owner’s consent

· The insurer will not pay benefits to any person:

o Material misrepresentation or failed to notify of a change in material risk

o Knew or ought to have known driver operating auto w/out owner’s consent

· The insurer will hold these benefits if the person is charged w/ a criminal offence but must pay them if the person is found not guilty

· Excluded persons are eligible for other than the above mentioned benefits

Sample Review Questions - Automobile Insurance (Part 1)

1. Verbal Threshold – the words or language describing an injury that must be suffered in order to be able to sue.

2. The significant feature of the OMPP that made it different from earlier policies was it removed the right to sue in all cases except when the injury exceeded the verbal threshold. Injured parties could only recover the benefits specified in the no-fault benefits schedule from their own insurer.

3. OMPP threshold – suits for non pecuniary loss (pain and suffering) and economic loss could only be brought if the injured person had:

a. Died or

b. Sustained permanent serious disfigurement or

c. Suffered permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature

4. Bill 164 created a SABS giving increased and wide-ranging benefits as well as modifying the threshold for lawsuits. Suits were now permitted for pain and suffering only and only when the threshold was met. The overall effect was that it became much more subjective and opened the door to additional litigation and increased fraudulent claims.

5. The differences b/w the OMPP threshold definition and Bill 164 are: OMPP makes no mention that the injury must be permanent. Bill 164 expanded to include impairment of mental or psychological functions.

6. Bill 59 permitted suits in many more situations. Benefit limits were reduced in many cases but the right to recover was expanded to include economic losses and medical expenses.

7. Economic losses – no threshold to be met but recovery is limited to 80% of net income suffered more than 7 days after the accident and up to the date of the trial. Post trial recovery for future losses is calculated on a 100% gross income basis.

Health care expenses – injury must meet a verbal threshold defined below.

Non-economical loss (pain and suffering) – the person’s injury must meet verbal threshold:

a. Death or

b. Permanent serious disfigurement or

c. Permanent serious impairment of an important physical, mental or psychological function

8. An insured person is:

a. For accident s in Ontario,

i. The named insured and any person specified in the policy as a driver

ii. The spouse or same-sex partner of the named insured

iii. Any dependant of the named insured or spouse

iv. A person who is involved in an accident involving the insured auto

b. For accidents outside of Ontario,

i. A person who is an occupant of the insured auto and who is a resident of Ontario or was a resident of Ontario at some point during the 60 days prior to the accident

c. Persons who were not actually involved in the accident,

i. The named insured, spouse, and any dependant of either NOT involved in an accident but who suffer psychological or mental injury as a result of an accident involving physical injury to defined family members

9. The insurance act determines from whom an injured person will collect no-fault benefits.

10. Priority of payments of no-fault benefits:

- all persons must claim AB from their own auto insurer

- if there is no such insurance (does not own auto) benefits are payable by the insurer of the auto in which he was an occupant

- if recovery cannot be had (no insurance on the auto in which the person was an occupant) recovery can be made from the insurer of any auto involved in the accident

- if no recovery is possible from any of the 3 sources (pedestrian who does not own auto and victim of hit and run) benefits will be paid by the Ontario Motor Vehicle Accident Claims Fund

11. Case manager – provides services related to the coordination of good or services for which payment is provided by a medical, rehabilitation, or attendant care benefit.

12. Treatment plan – a document prepared by a member of a health profession which includes a description of the impairment to be treated and of the resulting disability, the estimated duration of the disability, the proposed goods and services, their estimated costs, their anticipated benefits, their person who will be providing them, etc

13. DAC (Designated Assessment Centers) – independent facilities that are designated for the purpose of assessing an injured person’s impairment or disability and determining his abilities w/ respect to life functions and work activities.

14. Ontario residents injured in auto accidents outside Ontario anywhere in Canada or the USA have a choice b/w the Ontario level of benefits and the no-fault benefits available in the jurisdiction where the accident occurred.

15. W/ regards to how benefits interact w/ social assistance programs, auto insurer are the first payer of benefits to an insured person who is also entitled to received social assistance payments.

16. Collateral benefits – sources of entitlement outside of the auto policy.

17. Collateral benefits affect payments under SABS by allowing the insurer to deduct the following amounts in calculating the amount of wkly income replacement or non-earner benefits payable to the insured:

a. net payments for loss of income that have been received as a result of the accident

b. net payments for loss of income that have not been received but are available as a result of the accident if the insured has not applied for them

c. any temporary disability benefits being received in respect of a period following the accident and in respect of an impairment that occurred b4 the accident

d. any other periodic benefit being received in respect of an impairment that occurred b4 the accident

18. Worker’s compensation and no-fault benefits; the insured person may choose from whom to collect. If the insured person elects to proceed w/ a tort claim, the insurer is required to pay the no-fault benefits until final resolution of the tort action. The insurer will be reimbursed.

19. The SABS contains the rules for and gives legal force to the no-fault benefits.

20. Every policy must provide the following no-fault benefits:

a. Income replacement

b. Non-earner

c. Caregiver

d. Medical, rehabilitation, attendant care

e. Payment of other expenses

f. Death and funeral

g. Optional

21. Eligibility for IRB:

a. Employed at the time of the accident and as a result of and w/in 104 wks of the accident suffers an inability to perform essential tasks of that employment

b. Not employed at time of accident but,

i. Was employed for at least 26 in the last 52 wks prior to the accident or was receiving UI at time of accident

ii. Was at least 16 yrs old or was excused from attending school

iii. As a result of and w/in 104 wks of the accident suffers an inability to perform the essential tasks of the employment

c. The insured person,

i. Was entitled to start work w/in 1 yr under a contract of employment that was made b4 the accident and is evidenced in writing

ii. As a result of and w/in 104 wks of the accident suffers an inability to perform the essential tasks of the employment under the contract

22. Persons eligible for non-earner benefits: people who suffer a complete inability to carry on a normal life and,

a. Do not qualify for IRB or

b. Cease to receive caregiver benefit

c. Were enrolled on a full-time basis in elementary, secondary, or post-secondary education a the time of the accident or had completed their education less than one yr b4 the accident and were not yet employed in a employment that reflected that education and training

23. Caregiver – taking care of someone in need of care.

24. Primary caregivers who are disabled may receive caregiver benefit if at the time of the accident,

a. The insured person was residing w/ a person in need of care and

b. The insured person was the primary caregiver for the person in need of care and did not receive any remuneration for engaging in caregiving activities

25. Expenses included under medical benefit are:

o Medical, surgical, dental, optometric, hospital, nursing, ambulance, audiometric, speech-language pathology services

o Chiropractic, psychological, occupational therapy, physiotherapy services

o Medication

o Prescription eyewear

o Denture and other dental devices

o Hearing aids, wheel chairs, or other mobility devices, prosthesis, orthotics, and other assistive devices

o Transportation for the insure person and an aide or attendant to and from treatment sessions

o Other goods and services of a medical nature that the insured person requires

26. Rehabilitation benefit pays for reasonable measurer to reduce or eliminate the effects of any disability resulting from the impairment.

27. Attendant care benefit pays all reasonable expense incurred by or on behalf of an insured person for:

a. services provided by an aide or attendant or

b. services provided by a long-term care facility including a nursing home, home for the aged or chronic care hospital

28. The function of a case manager is to provide services related to the coordination of goods or services in accordance w/ a treatment plan for which payment is provided by a medical, rehabilitation, or attendant care benefit.

29. The maximum medical and rehabilitation benefit expenses under Bill 59 is $100,000.

30. The other benefit included in the optional medical and rehabilitation benefit is that there is no limit on the time during which the expenses must be incurred.

31. Expenses that will be reimbursed under the payment of other expenses section include:

a. Educational expenses

b. Expenses of visitors

c. Housekeeping and home maintenance expenses

d. Damage to clothing, glasses, hearing aids, etc

e. Cost of examination

32. The insurer pays all reasonable expenses incurred in arranging and attending an examination or assessment including fees for this service.

33. The following are entitled to a death benefit:

a. Spouse

b. Dependant(s)

c. The person depended upon

d. Former spouse obligated to support under a domestic contract or court order

e. Any person to whom he has an obligation under a domestic contract or court order to support them

34. Limit on funeral expenses can be increased by purchasing optional benefits.

35. Optional benefits available are:

· An increase in the max IRB to $600, $800, $1,000 per wk

· An additional $1,000,000 that could be allocated to medical, rehabilitation or attendant care benefits or any combination of theses benefits

· A death benefit increased to $50,000 payable to a spouse and $20,000 to each dependant and funeral benefit increased to $8,000

· Indexation of the max benefits payable and individual or aggregate limits based on the CPI on an annual basis

36. Benefits not paid under certain circumstances are:

a. Income replacement or non-earner benefits

b. Educational expenses

c. Expenses of visitors

d. Housekeeping and home maintenance expenses

37. The above mentioned benefits are not paid when the driver: