Ontario is making vital adjustments to its car insurance coverage system, and brokers will probably be on the forefront of creating purchasers conscious of them.
Starting July 1, 2026, key accident advantages coverages corresponding to revenue alternative advantages, caregiver advantages, non-earner advantages, and funeral and dying advantages — all of that are presently included routinely in each car coverage — will turn into optionally available purchases.
For insurance coverage brokers, these adjustments signify each a possibility and a problem.
On the plus aspect, a wider vary of optionally available advantages will let brokers higher tailor protection to purchasers’ wants, doubtlessly resulting in value financial savings for customers and improved shopper satisfaction and retention.
However extra optionally available coverages means elevated accountability and higher complexity for brokers when advising purchasers on the out there choices and their suitability for purchasers’ wants.
Make no mistake, these adjustments improve a dealer’s threat of legal responsibility publicity. An insured who experiences a shortfall in accident advantages because of a failure to buy optionally available protection might declare their dealer didn’t totally clarify all of the out there choices, or didn’t inform the shopper of the implications of not buying them.
Shopper confusion is much more seemingly, for the reason that newly optionally available advantages have been beforehand a part of the usual providing.
What courts are saying
Canadian courts have constantly held the usual of care requires insurance coverage brokers to supply adequate info and recommendation to make sure purchasers make knowledgeable protection choices.
Previous Ontario court docket choices in dealer negligence instances illustrate how this normal is prone to be utilized. For instance, in Zefferino v. Meloche Monnex Insurance coverage Co., an insured alleged his dealer did not correctly provide optionally available enhanced revenue alternative advantages as a part of his car coverage, which may have elevated his revenue alternative from the essential $400 per week as much as an optionally available $1,000 per week.
In that case, though the dealer did inform the insured optionally available advantages have been out there to buy, the dealer didn’t make any further inquiries in regards to the insured’s monetary circumstances or revenue stage. The dealer additionally didn’t discuss with the insured to find out if the optionally available advantages could be appropriate.
Considerably, the court docket discovered the dealer’s failure to evaluate the suitability of the optionally available advantages protection with the insured fell beneath the requisite normal of care.
It famous the dealer failed to supply the optionally available advantages protection in any ‘significant’ method and that the provide was “extra within the nature of a point out accompanied by a solicitation of curiosity,” which was not adequate to permit the insured to make an knowledgeable determination about optionally available protection.
In the end, the court docket dismissed the declare. It was not glad the insured would have bought the optionally available advantages protection, even when it had been correctly provided. (The proof indicated the insured had all the time bought the least costly insurance coverage out there.)
A distinct take
That call differs from Godina v. Tripemco Burlington Insurance coverage, an identical dealer negligence declare stemming from an alleged failure to correctly provide optionally available revenue alternative advantages. In that case, the court docket held the dealer met the relevant normal of care.
It famous the dealer suggested the insured of the completely different optionally available advantages out there and, though the dealer didn’t evaluate the insured’s funds or revenue stage, made inquiries about whether or not the minimal protection could be adequate within the occasion the insured was unable to work.
In Godina, the court docket held brokers meet the relevant normal of care in the event that they inform insureds in regards to the existence of optionally available advantages, clarify what these are, and ask if the minimal protection could be adequate if the insured sustained an damage.
Shielding towards dangers
Brokers can do a number of issues to arrange for upcoming adjustments to Ontario’s accident advantages to scale back their threat of legal responsibility publicity for optionally available advantages:
- Educate purchasers completely
Inform purchasers about optionally available advantages out there, and clearly clarify the aim and scope of every profit
Establish and clarify which of the beforehand normal advantages have turn into optionally available for purchasers to buy
- Evaluation and assess shopper wants
Ask purchasers about their particular circumstances and whether or not the minimal protection could be adequate for them within the occasion of an damage
- Doc shopper interactions
Hold detailed data of all shopper communications, significantly about optionally available advantages reviewed, inquiries made about whether or not minimal protection could be adequate, any suggestions made, and the shopper’s remaining determination
- Keep knowledgeable and proactive
Monitor regulatory updates and rising case legislation on this space to make sure compliance with evolving requirements.
Alex Reyes and Sonya Katrycz, are companions specializing in insurance coverage coverages and dealer legal responsibility at Zarek Taylor Grossman Hanrahan. This text is excerpted from one which appeared within the February-March print version of Canadian Underwriter. Characteristic picture by iStock/adventtr
