Your Auto Insurance Policy Explained

What’s in a Standard Auto Insurance Policy?

If you own a vehicle in Ontario, you are required to, at the very least, purchase the following automobile insurance coverage:

Third-Party Liability Coverage:

This section of your automobile insurance policy protects you if someone else is killed or injured, or their property is damaged. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage.

Statutory Accident Benefits Coverage:

This section of your automobile insurance policy provides you with benefits if you are injured in an automobile accident, regardless of who caused the accident including supplementary medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits.

Direct Compensation – Property Damage (DC-PD) Coverage:

This section of your automobile insurance policy covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, to the extent that another person was at fault for the accident. It is called direct compensation because even though someone else causes the damage, you collect directly from your own insurer, instead of the person who caused the damage.

Note: Coverage under the DC-PD section of your automobile insurance policy only applies if the following conditions are met:

  • the accident took place in Ontario;
  • there was at least one other vehicle involved in the accident; and
  • at least one of the other vehicles is also insured by an insurance company that is licensed in Ontario or has signed a special agreement with FSCO to provide this coverage.
  • If these conditions are not met, then you can make a claim on your optional Collision coverage (if you have it), whether or not you are at fault. If you don’t have Collision coverage, you may be able to pursue recovery from the at-fault driver to the extent you were not-at-fault for the accident.

Uninsured Automobile Coverage:

Protects you and your family if you are injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to your vehicle caused by an identified uninsured driver.

Increasing Your Liability and Accident Benefits Coverage

In addition to the mandatory minimum coverage that are required by law, you may purchase higher liability limits under your Third-Party Liability Coverage, as well as increased Accident Benefit Coverage. You now have more choice and flexibility over your coverage and price you pay for auto insurance.  These options will allow you to customize your policy to better suit your needs.

Your insurance representative will be able to help you decide what level of coverage is best for you.

Increased Third-Party Liability Coverage:

While you are legally required to carry a minimum of $200,000, you may want to increase this coverage. The cost to increase your Third-Party Liability coverage to $1 million or $2 million is small in most cases.

Optional Accident Benefits Coverages:

You may also want to consider increasing your Statutory Accident Benefits coverage by buying any or all of the optional benefits listed below.

Income Replacement Benefits: If you cannot work as the result of an automobile accident, you may be eligible for basic weekly income replacement benefits of 70 per cent of your gross income up to $400. If this is not enough to cover your current after tax income level, you may want to consider buying optional income replacement benefits to increase your maximum weekly protection to $600, $800 or $1,000.  When considering the amount of coverage you will need, keep in mind you are required to first claim wage loss benefits from a disability plan you have purchased or workplace benefits that you have access to.

Medical, Rehabilitation and Attendant Care Benefits: The standard maximum amount for medical and rehabilitation expenses, such as physiotherapy, chiropractic treatment, dental expenses, etc., is $50,000. If you are catastrophically injured, the standard maximum is $1,000,000. The standard maximum for attendant care is $36,000. If you are catastrophically injured, the standard maximum is $1,000,000.  You can buy optional benefits which will cover up to $100,000 or $1,100,000 in medical and rehabilitation expenses and $72,000 or $1,072,000 in attendant care expenses, and up to $3,000,000 in combined medical, rehabilitation and attendant care expenses for catastrophic injuries.  Keep in mind that many health care expenses are not covered by OHIP, or only partially covered, including physiotherapy and chiropractic treatment, mobility devices (crutches, wheelchairs), modifications to your home and car that you may require, and other specialized goods and services.  Minor injuries may only require several thousand dollars in treatment.  The most serious injuries (brain injuries, amputations) are permanent and may require hundreds of thousands of dollars in specialized goods and services on an ongoing basis.  You may need the services of an attendant 24 hours a day.  Review any extended health care plan you and your spouse have access to through work to help you decide how much coverage you require.

Caregiver Benefits: If you are providing care full-time to dependants and can no longer provide that care as the result of an automobile accident, you may be eligible for caregiver benefits if you need to hire someone to care for your dependants. The  maximum amount for caregiver benefits is $250 per week for one dependant, plus $50 per week for each additional dependant. The standard coverage is only available to those who are catastrophically injured in an auto accident.  You can extend coverage to all injuries by purchasing the optional benefit.  If you have children you need to consider who will look after them if you are injured in an auto accident.

Housekeeping and Home Maintenance Expenses:  If you are unable to perform your usual housekeeping or home maintenance duties, these corresponding benefits pay for someone to perform the duties.  The maximum benefit payment is $100 per week.  The standard coverage is only available to those who are catastrophically injured in an auto accident.  You can extend coverage to all injuries by purchasing the optional benefit.  If you normally do the cleaning and maintenance of your home, you need to consider who will look after these things if you are injured in an auto accident.

Dependant Care Benefits: This optional benefit can only be claimed if you were employed at the time of the accident, are not receiving a caregiver benefit, and have to pay for additional childcare expenses as a result of the accident. Optional dependant care benefits cover up to $75 per week for the first dependant and $25 for each additional dependant.

Death and Funeral Benefits: In the event that you die as a result of an auto accident, the standard amount which will be paid is $25,000 to your eligible spouse, $10,000 to each dependant, and a maximum of $6,000 for funeral expenses. If you buy optional benefits, you can increase these amounts to $50,000 to your eligible spouse, $20,000 to each dependant, and $8,000 for funeral expenses.

Indexation:  This optional benefit provides for the automatic adjustment over time of Income Replacement, Medical and Rehabilitation, Attendant Care and other benefits, in response to changes in inflation, determined according to the Consumer Price Index of Canada.

If you have benefits from your employer, you may already have some level of coverage for some or all of the optional benefits listed above.  You should consider these benefits as you review your coverage options.

Extra Coverage for Loss or Damage to Your Vehicle

In addition to the standard policy coverages you may also buy extra coverage for loss or damage to your vehicle including:

Specified Perils Coverage:

This coverage pays for losses caused by one of the following perils: fire; theft or attempted theft; lightning, windstorm, hail, or rising water; earthquake; explosion; riot or civil disturbance; falling or forced landing of an aircraft or parts of an aircraft; or the stranding, sinking, burning, derailment or collision of any kind of transport in, or upon which an insured vehicle is being carried on land or water.

Comprehensive Coverage:

This coverage pays for losses, other than those covered by Collision or Upset, including perils listed under Specified Perils, falling or flying objects, missiles and vandalism.

Collision or Upset Coverage:

This coverage pays for losses caused when an insured vehicle is involved in a collision with another object, including another vehicle, or rolls over. “Object” includes: another vehicle or a trailer that is attached to the vehicle that is covered by your insurance policy; the surface of the ground, and any object in or on the ground.

All Perils Coverage:

This combines Collision or Upset and Comprehensive coverages. In addition, it covers loss or damage caused if a person who lives in your home steals the vehicle that is covered by your insurance policy. All Perils also covers you if an employee who drives or uses, services or repairs that vehicle, steals it. For example, if you take your vehicle to a garage for repairs and an employee involved in the repair of your vehicle steals it, All Perils would cover you.

Note: A deductible may apply to all of the above coverages.

Other Optional Enhancements to Your Coverage

Additional optional enhancements, also known as policy endorsements or Ontario Policy Change Forms (OPCF), are special agreements that allow you to change, add or reduce the amount of coverage for certain situations.

The six most common policy endorsements are:

Rented or Leased Vehicles (OPCF 5):

This endorsement extends coverage to a vehicle that you drive, but that is owned by a leasing company.

Loss of Vehicle Use (OPCF 20):

This coverage covers the cost of a rental vehicle while your vehicle is being replaced or repaired, if the damage or loss is caused by a peril for which you are insured.

Liability for Damage to Non-Owned Automobile(s) (OPCF 27):

This endorsement provides physical damage coverage to vehicles that you may operate but do not personally own – such as a vehicle that you have rented or borrowed – subject to a deductible.

Removing Depreciation Deduction (OPCF 43):

This coverage removes the insurer’s right to deduct depreciation from the value of your vehicle when settling a claim for loss or damage caused by a peril for which you are insured.

Family Protection Coverage (OPCF 44R):

This coverage protects you, or an eligible member of your family, to the same limits as your Third-Party Liability coverage if you are involved in an automobile accident where you are not at fault, with someone who carries less insurance, no insurance, or is an unidentified driver (e.g., hit and run).

**Please keep in mind that these are only some of the many policy endorsements available for purchase. Ask your broker, agent or insurance company which policy endorsements would benefit you.

Exclusions

Recognize that:

  • Mechanical failure or breakdown, rusting, wear and tear, freezing or explosion within the engine and damage to tires, are not covered unless they result from an insured peril (such as a collision).
  • Your insurance company is allowed to deny payment for loss or damage caused to the vehicle in an accident, if you or anyone you let drive your vehicle:
    • was unable to maintain proper control of the vehicle because you (or he and she) was driving under the influence of alcohol or drugs; or
    • is convicted of one of the following Criminal Code offences (or any similar offences under any other law in Canada or the United States) relating to the use, care, or control of the vehicle:
      • causing death or injury by criminal negligence,
      • dangerous operation of a vehicle,
      • failure to stop at the scene of an accident,
      • driving a vehicle when impaired or with more than 80 mg of alcohol in the blood,
      • refusal to provide the police with a breath sample,
      • causing injury when driving a vehicle while impaired or with over 80 mg/100ml of alcohol in the blood, or
      • driving the vehicle while disqualified from doing so.

Except for certain accident benefits, there is no coverage for anyone, including passengers, if:

  • Your vehicle is driven by a person without your consent, or by someone specifically excluded from your policy by the OPCF 28A (Excluded Driver Endorsement).
  • The vehicle is used to carry explosives or radioactive materials.
  • The vehicle is used as a taxicab, bus, or sightseeing vehicle, or to carry paying passengers.