This article has been updated on December 28th, 2023.
The Ontario government has proposed a “Care, Not Cash” default clause in our auto insurance policies, forcing auto insurance coverage to pay for treatment rather than cash settlements. David Marshall recommended this reform in his 2017 review of Ontario’s auto insurance system. The government has proposed allowing Ontarians to be still eligible to negotiate a cash settlement by purchasing an optional benefit when they buy auto insurance. In doing this, the Ontario Government has suggested that insurance premiums decrease. As an Ottawa firm of accident lawyers and Ontario drivers, we decided to take a closer look at this new policy.
How does this affect accident victims?
So, the “Care, not Cash” insurance clause proposed by the Ontario government would change how accident victims receive compensation for their injuries. Instead of receiving a cash settlement, victims would have their treatment expenses covered by their auto insurance policies. This means that accident victims would be guaranteed necessary medical care without worrying about negotiating a settlement. However, it also takes away the potential for receiving a lump sum as compensation. Under the default, insurers would not be permitted to negotiate a cash settlement with an insured person except when one or more of the following applies:
- The insured person is catastrophically injured;
- The claim is for costs not related to medical, rehabilitation and attendant care benefits (e.g., costs to repair vehicles, income replacement benefits);
- The policyholder purchased an optional benefit that makes them eligible to negotiate a cash settlement or
- Extenuating circumstances require an exception (e.g., the injured person moves out of the country).
Accident lawyers weigh in on the new policy.
Speaking from the perspective of an Ottawa accident lawyer who has dealt with many car accident cases, we view this as a big problem. The proposed changes to the Ontario auto insurance program create an access to justice issue. Victims of vicious car accidents will find it very difficult to get legal representation on their Accident Benefits (AB) claims, regardless of fault.
In most cases, accident lawyers operate on a “contingency” basis, meaning they only receive payment if there is a cash settlement. In such cases, the lawyer receives a percentage of the settlement funds. However, if there are no settlements, lawyers may not be willing to take on the case. This puts car accident victims at risk of being taken advantage of by insurance companies who may deny treatment or send them for “independent” insurers’ examinations (IEs).
These IEs are conducted by doctors who prioritize the insurance company’s interests over those of the client because they are paid by the insurers themselves. Accident victims need to seek legal representation and understand their rights in such situations to ensure fair treatment and compensation.
Is it in anyone’s interest to settle the claim?
With the rate at which treatment plans are denied, it is in the interest of the insurer and the car accident victim to settle the accident benefits claim. Why? The insurance company will save money on expensive IEs, and the car accident victim will get cash to spend on desperately needed treatment at their own pace, without the interruption of the insurance company.
Yes, settling the accident benefits claim can be in the best interest of both the insurance company and the car accident victim. It saves the insurer money on expensive independent examinations and allows the victim to have control over their treatment without interference from the insurance company.
Summary
- The “Care, not Cash” insurance clause in Ontario is a policy that requires individuals involved in motor vehicle accidents to use the insurance money they receive for their medical care rather than keeping it as a cash settlement.
- This means that if an individual is injured in a car accident, their insurance company is responsible for covering the cost of necessary medical treatment and rehabilitation services rather than simply providing a lump sum of money as compensation.
- This provision was introduced in 2016 as part of the Ontario government’s efforts to reduce auto insurance premiums while still ensuring accident victims receive appropriate and timely care.
- The “Care, not Cash” clause applies to all accidents that occur on or after June 1, 2016.
- This policy aims to ensure that accident victims receive proper and necessary medical treatment instead of using the funds for other purposes.
- It also helps to control healthcare costs by reducing fraud and overbilling in the insurance system.
However, this clause has faced criticism as it can limit an individual’s ability to seek alternative or more costly medical treatments necessary for recovery.
We hope Ontario drivers and insurance companies realize that the ‘care not cash’ proposal is bad!
