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An Open Letter to Ontario Drivers Re: LAT vs. FSCO

Dear Ontario Drivers:

I am writing to update you on recent legislative changes that affect your car accident claim; in particular your Accident Benefits claims with your own insurer. There are two sides to any car accident lawsuit; the Accident Benefits file with your own auto insurer, and the main action against the driver who caused the accident. The Accident Benefits file is meant to provide money up front to cover things like income replacement (in part) and treatment expenses. It is important to get everything you can from the Accident Benefits side of the law suit so that you can maximize your recovery and reduce the losses from the car accident. The changes to the law are on the Accident Benefits side.

As you may know, when your insurer refuses to pay for a benefit, you have the right to apply to the Financial Services Commission of Ontario (FSCO). The process starts off with a Mediation teleconference where we try to convince the insurer to pay. If that fails, we proceed to the next step, being the Arbitration, where an Arbitrator makes an official ruling as to your entitlement, or lack thereof, to the benefit in dispute. The insurance company has to pay a $3,000.00 fee towards the Arbitration – we only pay $100. The Arbitrators who decide on the issues are known to be quite fair and whenever there is an ambiguity in the law, they tend to interpret the rules in favor of the injured party. Furthermore, the Arbitrators’ decisions are binding on one another, so if an Arbitrator makes a general ruling about an issue, the insurance companies tend to accept it easier knowing that another Arbitrator will likely make the same ruling. For the above reasons, the FSCO process is an acceptable form of dispute resolution although it is far from perfect and there are often long delays before you get a decision. 

Unfortunately, the government has decided to shut FSCO down. All insurer disputes as of April 1, 2016 will be heard by the Licence Appeal Tribunal of Ontario (LAT). This is not a favorable move for injured persons for several reasons. Firstly, the LAT have never dealt with automobile insurance disputes and thus, they are not experienced/knowledgeable in Accident Benefits. Secondly, they are not bound by prior FSCO decisions and can interpret the laws as they wish. Thirdly, the LAT does not provide cost awards which means the process costs you more money regardless of whether you win or lose. Lastly, the LAT has some prior experience with home owner’s insurance disputes and tends to be biased towards the insurance companies. To make matters worse they are understaffed and will not be able to handle the caseload in a timely manner. FSCO handles upwards of 10,000 claims a month. Last year the LAT handled under 1,000 cases over the entire year. While they say they are hiring and expanding I expect we will still be dealing with long delays and overworked adjudicators for many years to come and they will be inexperienced as well.mdaf

If your accident benefit file is already at the Arbitration stage with FSCO; then that won’t change. These changes will apply to any further benefits that may be denied by your accident benefit insure after April 1, 2016. In that case, it will not be beneficial that you to proceed with a full dispute or arbitration with LAT.

It is important to remember that any medical or income replacement benefits not paid by your Accident Benefits provider are recoverable from the main action – the lawsuit against the person that caused the accident. In order to claim the denied benefits through the law suit however, you are legally obligated to “try your best” to get the insurance company to pay them. There is no “double-dipping” allowed so if the Accident Benefits paid you Income Replacement Benefits for 1 year, the law suit doesn’t have to pay you income losses for that year. For obvious reasons in the main action the defence lawyers prefer that you get benefits from someplace else.

In the past when we showed that we did Applications for Mediation and Arbitration at FSCO to the defence lawyers in the main action (against the driver who caused the accident), it proved you had undertaken “best efforts” to obtain maximum benefits from your insurer. With the LAT however, we can use the high costs and unfavorable results as an excuse to forego the LAT Arbitration application and request that the law suit pay for all the denied benefits upon settlement.

Overall, the down side of losing a resolution tool on the Accident Benefits side is the lack of benefits you will receive waiting for the lawsuit to settle. The pro is that it will now be easier to get payment for expenses and income losses from the law suit. As you know, insurance laws are quite stringent and the qualifying criteria makes it almost impossible to claim many auto benefits. In the main action your right to claim all losses is still there so being able to claim more on that end is a good thing.

It is unfortunate that the Government has chosen to close down FSCO and attempt yet another bureaucratic entity for dispute resolution. With the recent changes they have also drastically reduced the benefits available for Catastrophically injured people. There are several other changes to the law being proposed by the insurance companies and it’s likely that they will pass. That change will further limit the benefits available to you through automobile insurance coverage. Instead, they increasingly rely on already overwhelmed Government services like OHIP, CCAC services, ODSP and Ontario Works which we fund through our taxes. You should always ensure you have Short and Long Term disability benefits available through your employer and speak to your auto insurance agent to ensure you have placed “optional accident benefits“.  Frequently the premium to place these optional benefits is very cheap and there is no point in having insurance if it is not enough when you need it. Some of the options are to add Housekeeping benefits and to increase the income replacement benefit cap from $400.00/week to $600.00/week and more.

You may want to consider writing to your Provincial Member of Parliament to object to these changes. They are considering more changes on the basis that most Ontarians want lower auto insurance premiums regardless of the reduction to benefits. Insurance is meant to be consumer protection legislation and to provide peace of mind when injuries occur. We pay more and more each passing year for less and less benefits. Financial studies show Insurance Companies are still highly profitable and considered a solid investment. They are taking advantage of the lack of interest in auto insurance coverage in the general public to convince the Government to continually reduce your benefits. Having been in an accident you know how important it is to have adequate insurance.

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