Auto Insurance Reform Online Survey (Deadline: March 6, 2020). No-fault Insurance Will Have Serious Consequences for Injured People. What You Need to Know.

March 3 2020

You may have heard that the Alberta Government is looking to reform the province’s Auto Insurance system. An online survey has been set up to collect input from Albertans. No details have been provided on what the new system would look like, but there has been reference to moving to a no-fault system.

We encourage all Albertans to take part in the survey and let the Government know what you want (and what you don’t want). You can find the link to the survey at the bottom of this post.

Before you provide your input, it’s important to understand in practical terms what a shift to a no-fault system will mean if you, or a loved one, is seriously injured in a car accident.

No-fault Automobile Insurance

A no-fault auto insurance system is like WCB-style insurance where you get compensated the same whether you caused the accident or were the innocent victim of someone else’s negligence. This is very different than our current fault-based system.

There are other problems with a no-fault system, particularly if you are the one who has been seriously injured. They include the following issues:

  1. Under a no-fault system, for-profit insurance companies will decide whether your ongoing health issues were caused by the accident (as opposed to other stressors, pre-existing health conditions, etc.), and then determine the amount of benefits, if any, that you should receive. So, the entity that stands to make a profit if it keeps the cost of your claim low is also the entity deciding whether you get benefits and how much you get.
  2. Under a no-fault system, injury victims will not be eligible to receive lump-sum payouts, which allow injured people (or their care-givers) to decide how to best care for their injuries and move on with their lives. Instead, you will be dependent on the insurer’s discretion to determine whether you meet eligibility criteria to receive benefits. And, you will be at the mercy of care decisions made by the insurance company. We encourage you to read about how this has played out for the people of Manitoba where a public no-fault system is in place:
  3. Injury victims without a regular family doctor will be at a particular disadvantage because medical eligibility for benefits will be determined wholly by the insurer and their hired medical experts.
  4. If an insurance company decides to terminate benefits, a no-fault system effectively precludes legal recourse unless you can afford the legal fees involved in reversing that decision. This results in a significant access to justice issue, given the knowledge and power imbalance between the insurance company (staffed by insurance professionals, including lawyers) and an injury victim, may have no experience with insurance claims and is already coping with trying to recover from an injury.Under a no-fault system, injury victims will receive income loss benefits that reflect their income at the time of the accident. Usually, these benefits are based on a percentage of your income at the time of the incident up to a maximum amount that is established by the government and the insurance companies. In other words, you are unlikely to receive the full amount of your income losses. In addition, such benefits do not take into consideration your future earning potential, career advancement, or lost opportunities.  This is particularly unfair if you are a young person with an uncertain career path (i.e., young people like the Humboldt bus survivors would fall into this category), or a woman who has taken time out of the workplace to raise a family.
  5. A no-fault system, by definition, eliminates deterrence (and accountability) for bad driving. As noted, under this system, at-fault drivers will be entitled to the exact same benefits as innocent victims. A no-fault system also removes or significantly restricts compensation for pain and suffering, and loss of enjoyment of life. While compensation for injuries never puts a victim in the place they were before they were injured, it does help provide a sense of closure in the sense that a wrong has at least been partially “righted.”

The reason the government is looking at changing the current system is because insurance companies claim that they are losing money and have no choice but to raise your insurance premiums. However, this does not appear to be the case based on recent Alberta government statistics. You can learn about this for yourself here:

Our Current Auto Insurance System

Right now, if you are injured in a road accident, you are already eligible for medical and disability benefits (also called “Accident Benefits”) on a no-fault basis. These medical benefits are limited to $50,000, and they are payable to you for two years following the accident.

However, the critical difference between our current system and the no-fault system preferred by insurance companies is that under our current system, if you suffer damages because of the actions of an at-fault driver, you can negotiate compensation directly with the at-fault driver’s insurer, or you can sue the at-fault driver in court to recover your damages from the at-fault driver’s insurance company.

If you are injured, and you are not at-fault, you can also make additional claims against the at-fault driver for:

  • care costs that are not covered by the publicly-funded health system
  • lost income while you are recovering and can’t work
  • pain and suffering

Further, you don’t have to go up against an insurance company on your own. You can get help from legal professionals who know how to negotiate for the best compensation possible and who can represent you in court, if that is necessary to get a fair result.

If you were 100% responsible for the accident that led to your injuries, you are still able to claim for the no-fault medical and disability benefits that are available to you under your car insurance (Accident Benefits). This means that while seriously injured Albertans who are at-fault can’t bring a personal injury claim, they still do have access to some benefits. It is a trade-off, but a trade-off that also acts as a deterrent to bad driving.

Under the current system, you have access to compensation that provides a more accurate reflection of what you have lost because of an automobile accident. You have help from people who represent you and are not making decisions about your claim based on keeping claims costs down and who know how to represent you so that the full impact of your injuries is taken into consideration. Further, you have access to the courts to ensure that insurance companies treat you fairly.

Thank you for taking the time to read about this important issue. We encourage you to take the survey to let the government know how you feel. Please note that the deadline for survey responses is March 6th.

The Government survey link is here:  Survey