I was recently at an insurance seminar and the topic was automobile claims and the presenter showed a vehicle that was involved in an accident with minor rear end damages. At first the picture represented many claims we see in our office – minor in overall damage to the vehicle and usually something that is repaired quickly. This accident was like most involving two cars one driver was unfortunately not paying attention and struck another vehicle from behind. These types of accidents are a regular occurrence and somehow this particular accident startled me as an Insurance Broker.
What made me stand up and take notice in this particular accident was that the driver of the vehicle that was struck became paralyzed from the ensuing impact. I would argue that for most of us we would equate great personal injury with a horrific accident but not in this case. Yes the vehicles would be repaired without much payout but the severity of the injuries to the innocent driver would cross an injury threshold that would allow him or her the right to sue the negligent driver and this brings up the ultimate insurance question – do we as automobile drivers in Ontario have the proper liability limits to protect ourselves in this type of scenario. My personal opinion is no!
Traditionally the common trend for many automobile insurance policy holders is to have a $1,000,000 dollar liability limit. I quote this particular limit daily. I know many insurance professionals are trying to educate and recommend higher liability limits but the policy holder has the ultimate decision on the liability limit they want to purchase. The reality is the minimum liability limit that is required by the Province of Ontario to drive a vehicle is only $200,000 dollars. Increasing automobile insurance cost has made the decision for many policy holders to increase their liability limits a luxury that they are not willing to entertain. My argument is that $200,000, $1,000,000 or even a $2,000,000 dollar liability limit is not sufficient to protect ourselves as drivers against an accident that causes such severe personal injury to an innocent third party.
Recent case law in our province shows the need for increased liability limits. In 2009 a record setting judgement in the amount of $18.4 million was awarded to a 22 year old girl who received a brain injury from an accident that occurred on August of 2002. The award includes approximately $15 million for future care costs and $1.3 million for future loss of income. This is believed to be Canada’s largest award to date, surpassing a $17 million dollar award that was recently issued to an injured Ontario man. Undoubtedly the age of the injured girl played a large part in the overall outcome of this judgement but this award has once again raised the bar and set new precedent in Ontario.
I think there is a common thought amongst many Ontario drivers that if they caused an automobile accident which resulted in severe personal injury the opposing legal team would only sue for the limits of their liability policy. The above mentioned case law clearly shows this form of thinking is unfortunately flawed. I am not suggesting all automobile accidents will equate to the $18.4 million award for personal injuries but the truth lies some where in between. It’s also important to realize that the insurance company is only responsible for the liability limit that is currently shown on your automobile policy. Therefore the difference between your liability limit and the final judgement lies solely on the owner of the vehicle and the person driving the vehicle.
I would strongly recommend you contacting your insurance provider to discuss this matter further and also to find out what insurance products are available to you as a consumer to better protect yourself and your family. I would personally recommend an Umbrella Liability policy that extends over both your Automobile and Property policies.
The Umbrella policy gives the consumer the ability to increase their liability limit by an additional $5 million dollars and typically the additional premium for this product is very reasonable.
Well enough of me – I am signing off! If you would like to discuss this topic further, have an insurance question or need insurance advice, don’t hesitate to contact me at todd@wnatkinson.com