No minor injury cap for Newfoundland and Labrador

The government of Newfoundland and Labrador is amending legislation to strike a balance between stabilizing insurance rates for consumers while maintaining access to justice for victims.

No minor injury cap for Newfoundland and Labrador
The Government Legislature (Confederation Building) in St. John's (Shutterstock).

The government of Newfoundland and Labrador is amending legislation to strike a balance between stabilizing insurance rates for consumers while maintaining access to justice for victims. The legislation follows on the heels of a 166-page report from the Public Utilities Board that investigated the rising cost of automobile insurance claims.

While that review did not make formal recommendations, it reached numerous conclusions and the provincial government’s new legislation is reading between the lines. Changes to the Automobile Insurance Act and the Insurance Companies Act, which have now received royal assent, will reshape the insurance landscape in Newfoundland and Labrador. With respect to the most controversial issue — a compensation cap on minor injuries — the government has taken the safe road. No cap will be introduced, but there will be an increase in the deductible for bodily injury claims to $5,000 from $2,500.

The increase is a compromise, Service NL Minister Sherry Gambin-Walsh admitted to reporters. In meetings with lawyers and the insurers to discuss the PUB’s report, she said, “We could not find a common ground.”

Several changes are also being made to less contentious issues. These include:

  • treatment protocols for common injuries as the primary payer;
  • no access to the Uninsured Automobile Fund for losses by uninsured motorists;
  • direct compensation for property damage;
  • a requirement for insurance companies to notify the Registrar of Motor Vehicles of the cancellation or expiration of insurance policies;
  • changes to procedural rules for motor vehicle collision claims.

As well, the proposed amendments will provide a mandated insurance discount for winter tire usage, implementation of underwriting guidelines concerning the optional use of telematics and changes to the rate-setting process. The government is also eliminating the retail sales tax on automobile insurance, a change that will be retroactive to April 16, 2019.

The new amendments are intended to keep rates as low as possible and help bring stability to the industry, says Gambin-Walsh. However, she says, “We recognize that we cannot provide a single quick fix for the high insurance rates in our province.”

According to the Insurance Bureau of Canada, drivers in Newfoundland and Labrador currently pay 35 per cent more, on average, for automobile insurance than drivers in the neighbouring Maritime provinces.

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