The Wingham Advance-Times, 1974-05-09, Page 6•
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Page 6—The livingham Advance-Tinwo,. ThorulaY. May 0, WM
10)
What's aH ti
no-fault car ins
There's a lot of confusion about no-fault car insurance. Even the
term "no-fault" means different things to different people. -
The Consumers Association of Canada* feels many people don't
really understand what's involved. Professor Alien Linden* ,
k
Osgoode Hall Law School, York University, agrees, In response to
this growing concern about no-fault, CIAG INSURANCE is offering
you some information and a chance to voice your opinion,
What does "fault" mean.
in auto insurance? present system?
What's wrong with our
The "fault" principle goes back beyond Biblical times. The
idea of an eye for an eye, a tooth for a tooth, was adapted by
English common law to mean the guilt) must pay. In"auto in-
surance it. means .if someone damages your ca or injures
you by negligent driving he Must pay for yOur loss.' Most
motorists carry third party liability insurance to pay for
losses they cause.
• The fault principle served well in the early years of the \
automobile. Now, with masses of vehicles; complex roads
andhigher speeds, even a split second counts and it's
sometimes difficult to decide who's to blame and to what
degree.
You might think it's easy: bad drivers cause accidents. Yes,
they do. But good drivers cause accidents too. And bad
Over the years insurance prOgrams have developed which weather and poorly designed roads and unsafe cars cause
ignore fault. Workmen s Compensation, for example, pays accidents. When we try to find the cause of an accident, we
for loss regardless, of who's at fault. In traffic accidents, can't look only at the driver.
however, many people still feel the guilty should compensate.
the innocent. '• Who is paid? Only the "innocent" can recover the full
The fault system theory is that careless driers must pay for
the accidents they cause and its purpose ,is to encourage
drivers to be careful. Insurance premiums are calculated to
corn the cost of claimfowhietkOimerkirtdiffl.erentfatinit,
v_,:vgrotpsriari rispbnsi Ifottottirdiiteid atfreitentostuSy the
;1, averagellability claims cost for married males over 24 was
• less than half that for married males under 20. The liability
coverage premiums for each group reflect this. difference.
How about no-fault?
• No-fault automobile insurance describes the insurance plan
that exists when fault laW does not apply to auto accidents.
Motorists no longer rely on •getting payment from another
motorist for vehicle damage or injury but must provide their
own. protection. Each company pays it own policyholder
regardless of blame.
Pure no-fault automobile insurance does not exist in North -
America. The so-called no-fault plans in some states and
provinces are only partial no-fault programs.
By the way. - don't confuse no-fault insurance with govern-
ment insurance. Although limited no-fault coverage is part of
government automobile insurance plans in western Canada,
no-fault benefits have been offered by automobile insurance
companies in Ontario for some years. CIAG was first to do so
through additional coverage introduced in 1959.
What do we have now?
Motorists insured in Ontario have no-fault benefits broader
than those offered in most other provinces and states and
also have the right to sue a guilty party for loss.
No-fault death and disability coverage is part of all liability
insurance policies issued in Ontario. It provides:
Total disability benefits for:
—an employed person for unemployed person age 21 to 65
who has worked six of the previous 12 months) - 80 per-
cent of wages .up to $70 weekly, for up to 104 weeks, or
for life if disability as permanent. •
—a principal unpaid housekeeper - $35 a week, for up to 12
weeks
Death benefits for:
—head of household - $5,000 (plus $1,000 for each living
dependent after the first)
—a spouse - $2,500
—any dependent child -41,000
Medical and rehabilitation benefits:
—up to $5,000 a person (four-year time limit) and up to
$500 funeral expenees
If an injured person receives Accident benefits from his In-
surance company and recovers from the responsible party,
recovery is reduced by the benefits received. But future
weekly payments are not affected.
amount of their losses. Where responsibility is divided,.
others may recover part of their loss. Where a driver is judg-
ed responsible for the accident, he and often his passengers
recover nothing from the other • party. But they may suffer
TOW 01,4006. ; vehicle datge, serious injury requiring
rehabilitatioti-or a change in ifestyle - all from a momentary
apse of judgment. Their recovery is limited to accident
benefits provided by their own policy.
' • A committee appointed by. the Ontario Minister of Con-
sumer and Commercial Relations in 1970- to inquire into
claims adjusting practices concluded:
'The public simply does not understand the nature of in?.
urance coverage (and auto insurance particularly) nor do
hey understand the • manner in which claims are
ettled . . . . Most of the complaints which we received had
o do with automobile damage claims and we think that
uch of the problem and public resentment which may exist
gainst insurers results from the adversary system of resolvr
ng such disputes." •
t
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inety percent of accidents involve vehicle damage,
nly and account for 70 percent, of total claini
ayments.
Consumerism, the law, and competition' among insurance
ompanies have not created satisfactory claims service
ecause of a crucial gap in the system. When you are
olved in an accident you deal with the other person's com-
any - not the one you chose yourself.
• Many people feel automobile insurance costs too much.
But how does it relate to other costs? In major metropolitan: -,
areas it can cost twice as much to park a car ($2-$3 per day)
as to insure it; 15 hours auto repair time at current rates of
$1G-$15 costs as much as the average annual insurance
premium. People may be more concerned about paying
automobile premiums because they feel they have nothing to
show for it until they- have an accident.
Why are people 'talking
about no-fault?
• The Ontario government has announced its intention to ex-
tend the no-fault benefits now in existence.
• People hope that no-fault will reduce or control the rising
cost of automobile insurance. • ,
• Publicity in the United States about no-fault plans as the
solution to insurance problems has spilled over into Canada
and caused confusion. American problems are not quite the
same is ours. The U.S. legal system is different. Ontario
automobile insurance costs are substantially lower.
1972 average annual premiums
Toronto $192
Chicago 470
Brooklyn 576
Hamilton $194
Buffalo 286
Minneapolis 263
Kitchener $170
Akron 258
Sacramento 284
• Some people believe the government can solve all our
automobile insurance problems with a no-fault monopoly.
• Times are changing rapidly and so are social conditiont.
To keep pate, institutions are examined and modified more
often.
• The Insurance Bureau of Canada has proposed a no-fault
plan to pay for vehicle damage and a substantial portion of
wage loss and out-of-pocket expenses for personal injury.
The plan would maintain. the right to sue for additional ex-
penses \and for pain and suffering only in case's. of severe in-
jury. The proposed coverage would pay medical and
rehabilitation expenses up to $20,000 per person, lost earn-
ings up to $250 a week for up to three years, and a deatti,
benefit of $1,000 for dependents under 18. -
• The Ontario Law Reform Commission has recommended
compulsory, no-fault automobile insurance and the abolition
of court action to determine blame for traffic accidents. The
Commission recommends that all traffic victims beCompen-
satedi7for medical expenses, lost wages and propecty
dam144,14fittriigyptopkWJAPLI
Wt.
•
Is no-fault. the answer?
• The question of service: Will a change in the law.improve
insurer attitudes - towards claimants? Taking the emphasis„
off theadversary fault system and having drivers deal entire-
ly with their own insurers could help.
• The question of rights: The fault system permit compen-
sation of the innocent victim not only for actual out -of -
pocket -expenses, but also for pain and suffering. It denies
• compensation,to the person at fault in the accident. No-fault
seeks to rehabilitate all victims regardless of fault and the
extra funds. are provided by eliminating the right to sue in
'whole or in part.
While some rights may be lost, no-fault would bring new
rights more important than money compensation, like the
right to rehabilitation and help in adjusting to the new situa-
tion created by an accident. Rather than focusing on the
allocation of guilt and innocence, no-fault emphasizes solv-
ing the victim's problems.
• The question of responsibility: Advocates of the fault
System suggest that when careless drivers must pay for the
accidents they cause, they are more careful. No-fault sup-
porters argue that a careless driver does not pay, but his in-
, surance company does. They say because 95% of Motorists
are insured, merely making them theoretically responsible
does not reduce accidents. Nor does an extra premium
charge change the attitude of a person who has caused an
accident.
• The question of cost: The cost of automobile insurance
reflects the amount paid out for claims. No-fault will not
reduce the number of accidents or the amount of damage -
it's only a change in law.
Only entirely "innocent" traffic victims receive full payment
• for their injuries under the fault system. Under no-fault, more
people will be compensated. If the guilty are also paid, the
cost of insurance will rise. The Insurance Bureau of Canada
and the Ontario Law Reform Commission recommend reduc-
ing or eliminating payment for pain and suffering and other
"general damages' to provide funds for out-of-pocket losses
of all injured motorists.
Under no-fault proposals, the young, single driver will pay
relatively less in premiums and the middle-aged husband
and father may pay slightly more. The reasons: the younger,
unmarried person usually drives a lower -value car and has
lOwer income. The older driver heals more slowly and
because of generally higher intome, must receive more and
higher benefits. No-fault insurance rates for each rating
group are based on the amount of benefits expected to be
paid to each group.
• The Consumers Association of Canada, a nonprofit
organization of consumers which brings their views
to the attention of government and producers;
publishes CANADIAN CONSUMER, which features
product studies and buying guides.
Milan Linden has studied automobile accident com-
pensation systems)* a decade, In the early Sixties
he completed a study which preceded sIgnific,ant
reforms In Ontario's System of auto Insurance.
CIAG
INSURANCE
85 SOUTH STREET,
GODERICH N7A 3Z2
519-524-2138
1.1
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ce?
Is there a single best
answer?
Please consider the following questions, then complete and.
return the coupon to indicate your IlieWS.iCIAG will report the
response to,the Ontario Ministry of etinSuMer and Commer-
cial Relations.
• Are you in favor of scrapping entirely the'fauft aPprOaCkto
vehicle damage Claims? in other words, you and anothor
driver would collect for vehicle repairs from your own in-
surers regardless of who caused the accident. This could
avoid the delays that concern most claimants.
Premiums would reflect the benefits paid rather than who
• was- at fault. If you're not satisfied with the service from your
company you can change to another.
• Would you favor removing the right to sue for pain and
suffering *in the case of some or all injuries? Each injured
person would be paid out-of-pocket expenses, and trained
• for other employment if disability prevented his resuming a
previous occupation. •
IOVIA.G INSURANCE
t • 1.1.111 )11, 1,,114%141 t t 1 41
CIAG„ Ontario's leading automobile insurer, 49sures more .
tit 0,00ItOntario vehicl owned alJ,tontrolled by
,sao flitattoli§L.!Fi Ontario Credit
Union League, the Ontario Federation of Agriculture and
• United Co-operatives of Ontario. Among CIAG's primary ob-
jectives are:
—to provide policyholders with gOod insurance service and
value-
-to act honorably and to be fair to all claimants, whether
• policyholders or not
—to be a good corporate citi2en, and to try to be known for
enterprise, promptness, honesty and fairness
it
In 1973, CIAG used its earned premium dollar this way:
CLAIMS - 72c
(22c for injuries)
f p..
OPERATING COSTS - 22c
PREMIUM TAX - 2c
%INCOME TAX - 2c
RETAINED EARNINGS - 2c
It isn't possible even in this full-page
report to provide all the information
you may want. You can get more
from CIAG's local office or bymall-
ing this coupon.
To: CIAG INSURANCE
No-fault Information
Priory Square, Guelph
N1H 6P8
From: name
address
I. would prefer (for little change in premium):
CI to keep the present insurance system in Ontario
O to have a broader no-fault plan (to be paid for vehi-
cle damage and expenses of most injuries by my
own insurer while keeping the right to sue for
severe Injuries)
O to have as complete a no-fault plan as posslb!e
(with my out-of-pocket loss paid by my insurance
• company regardless of whO's at fault and giving up
all right to sue)
My major concerns about automobile insurance are:
O delays in settling claims
• 0 other people getting my money because I've never
had a claim
O having to pay a deductible when I have a claim
. 0 poor service from 0 my agent
O my company
o my adjuster
O another company
O another company's adjuster
O other
O I would like to have more information about no-
fault car insurance.
4 Os OOOO ff OOOOOO
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