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Eye Popping Theft Premium Surcharges on Auto Insurance Policies

On June 22, 1990, the Ontario Government introduced the threshold for general damages in car accident cases. This meant that each injury needed to be deemed as a “serious and permanent impairment” of an important physical or psychological function. If the personal injury did not meet the medico legal threshold in the eyes of a Judge, then the case on damages for pain and suffering would fail,; regardless of fault. This seemed rather harsh to an innocent accident victim, but it was the new state of car accident law in the Province of Ontario.

The reason the threshold was introduced by the Ontario Government was to reduce the amount of personal injury claims. The fewer claims, the less money that insurers would need to pay out. This would save insurance companies huge sums of dollars. Those savings were intended to be passed along to every day drivers; like you and me. This is important because having car insurance in Ontario is mandatory when you drive a car. That makes car insurance a hot button election issue. Drivers want cheap insurance. Cheaper insurance was the promise from insurers and the government when the threshold was introduced. This was the trade off and the handshake deal between insurers and the government.

Unfortunately, that handshake deal of keeping premiums down since the introduction of the threshold in 1990 has not realized itself.

Ask yourself, have your car insurance premiums gone down in the past 10 years? The likely answer is that they have increased, rather than increased. This is despite the fact that the laws are actively being changed to best support the interests and the profits of large insurance companies at the expense of everyday people like you and me.

What happens when the laws aren’t changed to go in the favour of insurers?

Well, insurers will introduce to charges to bolster their profits and to minimize their exposure.

Take this example:Brian-Goldfinger-03-200x300

Yesterday I received a letter from my car insurer. The letter states:

With a significant rise in vehicle thefts in Ontario, we’re reaching out to customers whose vehicles are identified as being at a high risk of theft (identified by who?). We’re concerned for the safety of your vehicle(s) and are committed to helping you protect what matters with solutions that help you choose from the best anti-theft options on the market. 

Please take steps to protect your vehicle(s) as soon as possible and get a discount. With a professionally installed aftermarket anti-theft tracking system or electronic engine immobilizer the theft premium adjustment(s) will be removed, and you’ll be eligible for a discount.

Until such time, the following theft premium adjustment(s) impact(s) your premium:

THEFT PREMIUM ADJUSTMENT : $2,500

What does this mean?

It means that if you don’t get a professionally installed aftermarket anti-theft tracking system or electronic engine immobilizer, that the insurance company will charge you an additional $2,500 on top of the premiums which you are already paying. It’s a way for the insurer to justify an additional charge.

In plain English, this is a cash grab. There is no other way to describe it.

If this sort of draconian change were introduced as law, voters would riot and immediately overthrow the government. Changes like this, into law, get governments voted out of office.

If a thief wants to steal your car, they will. An after market tracking system or a engine immobilizer won’t stop them. This is a cash grab for insurers. It’s a justification for them to charge an additional premium on a vehicle which they have identified based on their own interpretation of data as a high risk theft vehicle. There are no objective metrics as to what separates a high risk of theft vehicle from a vehicle which is not high risk of theft. Soon, every vehicle can be put on this so called high risk theft list to justify attempting to charge the consumer an additional $2,500 theft premium.

I find it odd because most modern vehicles, especially the expensive ones, come with a factory installed tracking device or engine immobilizer. It makes you wonder what’s wrong with the factory installed anti theft systems? Are they too easy to remove? Why don’t they work as advertised? If they aren’t effective, why are they being used in these vehicles in the first place? If the after market solutions are so much better, then why aren’t they being used to begin with to curb theft right when the vehicles leave the assembly line? Or, is this craze all some sort of money grab.

It’s these sort of insurance policy changes, threats and passive aggressive demands which should cause people to question the motivations behind them. Are they entirely about protecting vehicles from getting stolen. Or, are they motivated by increased profits. Usually in these situations, if you follow the money, you will find your answer. Especially when dealing with large, sophisticated insurance companies.

When your regular car insurance premiums are $3,000/year, and the anti theft auto surcharge is $2,500, it really makes you wonder where these premium figures are coming from in the first place. A catastrophic accident claim can cost up to $1,000,000 to the auto insurer and the premium is around $3,000/year. In stark contrast, having a car stolen (which has the potential to be recovered) costs $65,000-$110,000for the vehicle, yet the premium being charged is $2,500, which is around $500 less than having up to $1,000,000 in catastrophic accident coverage. It almost makes it sound like regular accident benefit coverage is a bargain (it’s not). It illustrates how expensive this auto theft surcharge really is.

The final note from today’s edition of the Toronto Injury Lawyer Blog Post will come from the world of a large class action lawsuit. Canadians who applied to be part of the claim against Life-Labs are now receiving their payouts. KPMG is administering the payouts and there are more than 900,000 claims which were received. Valid claimants will receive an e-transfer of $7.86. Those receiving cheque will receive $5.86 after deducting a $2.00 administration fee. The Court approved a $9.8 million dollar Canada wide settlement in this case.

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