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The Goderich Signal-Star, 1974-05-09, Page 180 °r] ° A p MAY 9,1974 PAGE 2A•�-�-GQDERICil SIGNAL-STA11�, THL�RS �kY, , • 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 Allen Lindenf it& af4„ tolA-0•Ta ‘, car in n•� 4 s about, uran 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 What's .wrong with our in auto insurance?present system? The "fault" principle goes „back beyond Biblical times. The idea of. an eye foran eye, a tooth for a tooth, was adapted by English common law to mean the guilty must pay. In auto in- surance it means if someone.damages your car 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. ""' Over the ,years insurance programs, have developed which ignore fault. Workmen's Compensation, for example, pays for loss regardless of who's at fault. ,In traffic accidents, however, many people still feel the, guilty should compensate the innocent. • • The fault system theory is that careless drivers must pay for. the accidents they cause and its purpose is to. encourage drivers to be careful: Insurance premiums are calculated to .cover the cost of claims for which drivers in different rating groups 'are responsible. According to • a° recent study the average liability 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 exist$ 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 its own policyholder regardless of blame. Pure no-fault automobile insurance doe's not exist in North America. The so-called no-fault plans ip 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 coverageintroduced in 1959. What- do we have now? Motorists insured in Ontario- have:;ro=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 (or unemployed person age 21 to 65 who has worked six of the previous 12 months) - 80 per- cent of`"ikages up to $70 weekly, for up to 104 weeks, or for life if disability is 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 - $1,000 • ;Medical and rehabilitation benefits: - -up to $5,000 a person (four-year time limit) and up to . °-: $500 funeral expenses If an injured person receives accident be▪ nefits 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. 4 • The fault principle 'served well in •the early years of the automobile. Now, with' masses of vehicles, complex roads • and higher , 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 'weather and poorly designed roads and unsafe cars cause. accidents.When we try to find the cause of an accident, we can't Zook oily at the driver. • Who is paid? Only the "innocent" can, recover the full 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 hispassengers recover nothing from the other party. But they may suffer loss, -.of.wages. vehiele da nage;., erious injury. requiring •rehabilitation'or4chnge in lifestyle -all from a momentary lapse 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- surance coverage (and auto insurance particularly) nor do they understand 'the manner in which claims are. settled ,. Nibs./ of the complaints which we received had to do •with at5'tomobile damage claims and we think that much of the problem and public resentment which may. exist against insurers results from the adversary, system of resolv- ing such disputes." Ninety percent of accidents involve vehicle damage only, and account for 70 . percent of total claim payments. • Consumerism, the law, and competition among insurance companies have not created satisfactory claims service because of a crucial gap in the system. When you are in-' volved in an accident you deal with the other person's com- pany - 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 $10-$15 costs as much as the 'average annual insurance premium. People may be more concerned about paying automobile premiums becalse they'feel;they have nothing to show for it until they,have an accident. Whyare 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 in' ur. ance problems has spilled over into Canada and caused confusion. American problems are not quite the same as ours. The U.S. legal systein is different. Ontario automobile insurance costs are substanti.Ily 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 conditions. To keep pace, 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 pin and suffering only in cases 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 death benefit of $1,001 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 tr ffic victims be compen- s,ed for medical expenses, lost wages and property damage, -.but notefor pain and suffering.. Is no-fault the answer? • The–question of service: Will 'a change in the law improve insurer attitudes towards claimants? Taking the emphasis off the adversary fault `system and having drivers deal entire- ly with their own insurers could help. • The question of rights: The fault system permits 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 seeksto rehabilitate all victims>regardiess 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 'rightsmore 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 vicffMTr'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.eost 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 taw. 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. e ', ti Is there a single best answer? - Please. consider the following questions, then complete and return the coupon to indicate your views. CIAG will report the response to the Ontario Ministry of Consumer and Commer- cial Relations.. ° • Are you in favor ofvscrapping entirelyihe fault approach ie vehicle damage claims? In. other. words, you and another driver would collect for vehicle repairs from your own in- surers regardless of who caused the accident. This could avoid the delay's 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 prevent d.ttis resuming* previous occupation., .> kIAG INSUR ANC ('O OPEHATORS 1Ntil CIAG, Ontario's leading automobile: iiistirerz insures mOre than 32-0,000 Ontario vehiclet. It is owned d:c0ntrolied IIS democratic co-operative organizations –the Ontario Credt Union League, the Ontario Federation of Agriculture and 'United Co-operatives of Ontario. Among CIAO's primary ob- jectives are: , —to provide policyholders with good insure service art value —to. act honorably and to be fair to all claimants, whether policyholders or not —to be a good corporate citizen, and to try 10 known for- enterprise, promptness, honesty and fairra In 1973, CIAG used its earned premium CLAIMS 72c . (22c for injuries) 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 income, must receive more an / higher benefits. No-fault insurance rates for each ratin group are based on the amount of, benefits expected to e paid to each group. , '''The Consumers Association,,pQf Canada, a nonprofit organization of consumers *hich'brings their views ,to the attention of government and producers, publishes CANADIAN CONSUMER, which features product studies and buying guides. tAlleh Linden has studied automobile accident com- pensation systems for a decade. In the early Sixties he completed a study -which preceded siprrificcnt reforms inkOntario's system of 7atito insurance: CIAG INSURANCE 85 SOUTHSTREETGODERICH N7A327' ' 514-524-2138 isOriyr:. OPERATyNG COSTS - 22i PREMIUM TAX - 2c \INCOME TAX - 2c RETAINED EAf ANDS 2t lt'isn't possible even In this futl-page , repot to provide 'all the information you may want. Yoti: can' get more froCIA G's local office or by main , in this coupon. . To; CIAG INSURANCE No-fault Information i Priory Square, Guelph ' N1H 6P8 From: n/ me 'address I.w,uld prefer (for little change in premium): ❑ to keep the present insurance syr in Ontario 0 to have a broader no-fault n (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 els possible (with my out-of-pocket loss paid by any insurance company regardless of who's at fault sod giving up all right to sue) . My major concerns about automobile insurance are: ❑ delays in settling claims ❑ other people getting my money because I've never had a claim- . C] having to pay a, deductible when, I have a claim O poor service from 0 my agent - 0,, O my company– 4 O My adjuster ' ._ O another,company O another compaay's4djuster • b other 0, I would like to have more information about no- t fault car insurance. ».+./fro• �...� (re i H ro , a�� l 11