How many of you knew that June 28th is National Insurance Awareness Day? I did not until recently. In my legal practice, I deal with insurance companies on a daily basis. Insurance touches almost every part of our lives. If you drive a car, by law you must buy insurance. If you own a home with a mortgage, you will need insurance. Many people protect loved ones by buying life insurance and disability insurance. We buy travel insurance to protect us when we are travelling.

Insurance is everywhere.

National Insurance Awareness Day is a good time to reflect on something that is so integral to our lives.

Insurance is simply a contract that a person or business has for protection against certain specified events. The insured (the person who buys insurance) pays a premium to an insurer (usually an insurance company). For most insureds, they never have to use the insurance; the insurance company collects the premium and does not have to pay out any money. Indeed, even though you pay into insurance, no one wants to have to use insurance, if you do, something bad has happened in your life. The problem is that most insurance companies are very large multi-national corporations. These large corporations have pressure to make money for their shareholders and for their executives. One way to make more money is to not payout on claims. Unfortunately, this strategy is well used by insurance companies across Ontario, Canada and North America. Insurance companies are more than happy to take your premiums but make it very difficult on you when you need the protection of the insurance – when you need the insurance many insurance companies deny coverage. If you need a laugh, Rick Mercer did a very funny skit on insurance and the failed business model that can be seen on YouTube, by clicking here. 

To clarify, Rick Mercer refers to insurance brokers as not paying out on insurance claims. That is not actually accurate. Insurance brokers do not provide insurance coverage and are not responsible for making decisions on claims. Insurance brokers help people obtain insurance from insurance companies that collect your premiums and make the decisions on your claims.

Despite the obvious issues with the insurance model, you may want to check to see if you have enough coverage. 

Auto insurance is particularly vexing. In Ontario, auto insurance helps protect you with no-fault benefits. This is a first-party insurance contract that you have with your insurance company to pay you certain benefits if you crash your automobile. These benefits can include income replacement benefits, medical and rehabilitation benefits and attendant care benefits. These benefits are available even if you are 100 percent at fault for the collision.

Ontario requires a certain minimum level of first-party benefits. For what is usually a nominal cost, you can increase your no-fault coverage. I would encourage everyone to review your auto insurance policies and look at increasing your coverage. For example, if you are earning more than $29,640 per year, which is just about minimum wage, and you don’t have other disability insurance, you should look at buying increased income protection. The basic coverage only pays you 70 percent of your gross income loss up to a maximum of $400 per week. 

The other part of auto insurance is third party claims to pay out claims for injuries caused by negligent drivers. If you drive an automobile, you have liability insurance. This means that if you cause a collision and hurt someone, your insurance will pay the damages to the person you hurt. The biggest unfairness in third party insurance claims is the deductible on pain and suffering damages. In 99.9 percent of third party claims, an insurance company defends the claim and pays out damages caused by its insured driver. What is not fair is that there is a deductible on the innocent person’s pain and suffering damages. This means that if the injured person’s pain and suffering damages are fairly assessed to be $70,000, the insurance company of the bad driver who caused the injuries does not need to pay the first $40,000 of the damages. It may seem unbelievable, but it is the case. 

Why does the insurance system seem unjust in so many instances? The reason is simple – money.

The fact is, insurance companies have long lobbied our provincial government to reduce the money that they have to pay out. This is not fair.

On this National Insurance Awareness Day, we should all consider what we could do to make the system more fair for everyone. While many, if not most people, are concerned with the costs of insurance, we should also keep in mind the cost to those who are innocently injured. It is time to eliminate the secret deductible that only serves to boost insurance companies’ profits at the expense of those innocently injured.

How can you make a difference?

Call your MPP and ask why insurance companies are getting these benefits at the cost to innocently injured people. If auto insurance comes up in conversation tell people about the secret deductible and how unfair the deductible is to injured people. If you get called for jury duty and the case is about an auto crash, explain to your fellow jurors about the unfair deductible on pain and suffering damages. Knowledge is power so get out the information.

Kristian Bonn

Bonn Law