Premiums and refunds

The reform stipulates that a twelve-month rate freeze will be in effect as of March 17, 2004 as well as minimum premium reductions retroactive to August 1, 2004. The rate reductions apply only to private passenger automobiles; they do not apply to other type of vehicles such as motorcycles, motor homes, snowmobiles, etc. Reductions are the following:

• Third party liability: 9%;

• Collision: 7% to 37%;

• Comprehensive (Fire, Theft, Vandalism, etc.): 19%;

• Specified perils: 16%;

• Uninsured motorists: 11%.

The average overall savings is 15% and clients will receive a refund for the remainder of their policy. Though insurance companies need time to make the necessary adjustments to their clients’ accounts, they are required to issue the refunds as quickly as possible.

Other changes

1. Third Party Liability

   1. New deductible of $2,500 applicable on all pain and suffering claims;
   2. Lost wages will be paid based on 100% of net wages instead of gross;
   3. Compensation from other insurance plans will be deducted from the amount of the award to eliminate double recovery.

2. Underwriting Guidelines

   Insurance companies will no longer be able to deny coverage based on the following:

   1. Not at-fault accidents and claims;
   2. Minor damage where no claim is paid;
   3. Another company refusing to insure the individual;
   4. Lapse in coverage (unless the lapse is caused by a policy cancellation for failing to make payments, to disclose important information that would cause a higher premium, or a driver’s licence suspension for driving with no insurance);
   5. Age, gender or marital status;
   6. Age of vehicle;
   7. Not having other policies with the company (tied selling);
   8. Insured currently in Facility Association.

3. Facility Association (FA)

   Drivers who are not able to obtain insurance through the regular market can turn to the Facility Association (FA). Companies must advise them they are in the FA and state the reason. In addition, insurance companies have to provide these drivers annually a report on their status and the detailed measures that will enable them to qualify for insurance in the regular market.

4. Uninsured Drivers

   Uninsured drivers will see their fine increase from $1,000 to a maximum of $5,000 (depending on the number of offences), their vehicle impounded and their licence suspended for 90 days upon conviction.

   If you have any questions on the reform, we invite you to contact a member of our client services team.