Answers to Consumer Questions about Changes to the Automobile Insurance Legislation
While much of the details on how the changes are being administered will be available by contacting your insurance company, the Provincial Government is committed to helping consumers understand the changes to the legislation. The website of Service NL has been updated to include key information on those changes and we will continue to update the website to provide further information and guidance to help consumers.
Where can I find the Automobile Insurance Act and Regulations?
- An electronic version of the Automobile Insurance Act and Regulations can be found on the Provincial Government website.
- Click on the following link to access the Act: Automobile Insurance Act
- Click on the following links to access the Regulations: Automobile Insurance Regulations, 2019, Automobile Insurance Prohibited Underwriting Regulations, and Fault Determination Regulations
- Printed copies of the Act and Regulations are available for sale from the Queen’s Printer Bookstore.
Why did Government change the automobile insurance legislation?
- Our number one priority is the consumers throughout Newfoundland and Labrador.
- Our goal through the review of the automobile insurance legislation was to identify opportunities to keep rates as low as possible while maintaining benefits for consumers and help bring stability to the automobile insurance industry.
- We also want to ensure that insurance is there to help people recover from injuries and repair or replace their vehicles as quickly as possible.
- A modern and robust regulatory framework is necessary to deliver consumer protection to the driving public of Newfoundland and Labrador, while also ensuring the needs of industry are taken into account.
- The Provincial Government has achieved this balance through the revised legislation and regulations which addresses concerns raised by both industry and consumers.
What are the changes to the Automobile Act and Regulations for January 1, 2020?
The following changes will be effective in 2020:
- Where a person has sustained a bodily injury, they are required to apply for accident benefits coverage where those benefits are available.
- The claim adjustment and settlement process for bodily injury claims will be streamlined and injured persons will be required to notify the insurer of their intention to commence an action within 120 days.
- All bodily injury claims are subject to a deductible for pain and suffering awards. This deductible will double from $2,500 to $5,000.
- Motorists already deal with their own insurance company for accidents in which they are at fault. This is now expanded so that motorists will also deal with their own insurance company on property damage claims where they are not at fault. This will contribute to a faster resolution of the claim and a more consumer friendly experience. More information is available at: What is Direct Compensation for Property Damage?
- Insurers will be required to report a cancellation of any auto insurance policy to the Registrar of Motor Vehicles.
- Full filings will be required by insurance companies every three years, and there will be a mechanism for quick approval of rates where changes are no more than three per cent in a given year, and no more than six per cent cumulatively over three years.
- Fleet rated risks will be outside the Board of Commissioners of Public Utilities (PUB) process, allowing taxi companies and others to negotiate their rates with willing insurers.
- Auto insurance legislation will be reviewed at least every five years.
- Insurers will be permitted to offer usage based insurance using telematics, which is technology capable of collecting information about where, how and when vehicles are driven. Drivers will have the option to participate in any telematics program offered by their insurer.
- Insurers will be required to provide a discount for winter tires.
What are the key changes that consumers should be aware of?
- Motorists already deal with their own insurance company for accidents in which they are at fault. This is now expanded so that motorists involved in an accident in which they are not at fault, will also deal with their own insurance company on property damage claims, and no longer deal with another insurance company. The insurance company will communicate on motorists’ behalf. More information is available at: What is Direct Compensation for Property Damage?
- Persons injured in an automobile accident must notify their insurer within 120 days of the accident if they intend to commence an action.
- Motorists that have winter tires installed will receive a discount on their insurance as their policy renews.
- Cancellation of automobile insurance will be reported to the Registrar of Motor Vehicles and reflected in the motor vehicle system.
- Victims of accidents with bodily injury claims that are claiming costs for pain and suffering will have to pay a $5,000 deductible, instead of a $2,500 deductible.
- Direct compensation for property damage (DCPD) allows insured drivers to be compensated by their own insurer for property damages resulting from an automobile collision caused by another party. Working with their own insurer allows drivers involved in an automobile collision to complete the claims’ process more quickly.
- Fault Determination Regulations are required for the implementation of DCPD to determine the degree of fault of an insured for loss or damage arising out of the use or operation of an automobile. These rules cover more than 40 accident situations, using diagrams to illustrate specific occurrences; can be applied to almost every possible road collision scenario; and are applied regardless of road or weather conditions, visibility, point of impact on the vehicles, or the actions of pedestrians. Fault is allocated to each driver based on which accident scenario most closely resembles the accident. These Regulations can be viewed at: Fault Determination Regulations
- Where the insured driver is completely not at fault, the accident will not impact their insurance rating or premium.
- This system is in place in Nova Scotia, New Brunswick, Prince Edward Island, Quebec and Ontario.
With Direct Compensation for Property Damage, do consumers still have the right to sue for damages?
- Direct compensation for property damage will not change the consumer’s right to sue for damages.
How much of a discount will consumers receive for having winter tires?
- While all insurers will be required to offer a discount to customers with private passenger vehicles, the amount of the discount is up to the insurer. The discount will be applied at time of policy renewal.
How will consumers benefit from the increase in deductible for pain and suffering awards?
- Not all consumers experience an accident resulting in pain and suffering. However, generally all consumers pay a higher premium to offset a low deductible. Increasing the deductible should result in reduced premiums. Consumers experiencing accidents resulting in pain and suffering can still sue for damages. The deductible will not impact other types of bodily injury claims, including:
- Past and future loss of employment income;
- Past loss of other income;
- Past and future medical/rehabilitation/care;
- Past and future replacement services;
- Funeral expenses;
- Pain and suffering net of deductible; and
- Legal fees.
Will these changes result in a reduction to my insurance premium?
- Our goal through the review of the automobile insurance legislation was to identify opportunities to keep rates as low as possible to benefit consumers and help bring stability to the automobile insurance industry. We are confident that an appropriate balance has been achieved. For specifics on insurance premiums, please contact your insurance company.
- Government has also made changes to the Highway Traffic Act that will help reduce the number of automobile accidents, which, in turn, will reduce accident claims and therefore should also contribute to lower premiums. These recent improvements to the Highway Traffic Act include:
- The use of highway cameras as a means of increasing compliance with rules of the road;
- New offences for driving without due care and attention or without reasonable consideration of others, excessive speeding, street racing and stunting;
- New move-over law regarding speed reduction when passing a stopped emergency vehicle;
- New one-meter rule to protect cyclist and pedestrians; and
- Increased fines and tougher penalties for impaired driving, using hand-held cellular phones while driving, driving without due care and attention, and a number of offences that were previously less than $100.