Ontario's shift to optional auto coverage is likely to do more than leave drivers with thinner protection. It could pull the brokers and insurers who advised on that coverage into the litigation that follows a serious crash, according to Kaitlyn MacDonell (pictured), a partner at Toronto personal injury firm Howie, Sacks & Henry, who acts for injured plaintiffs.
The reform is built around consumer choice, MacDonell said – the ability to lower premiums by taking less coverage. The trade-off is that lower premiums mean thinner protection, and even under the previous mandatory coverages, a catastrophic injury could outstrip the available limits.
"What we expect is that there's going to be more gaps going forward," she said. When those gaps appear, the question of who advised the policyholder to accept them becomes central.
That, in her telling, is where the people who sold and underwrote the policy come into it. Brokers and insurers occupy a fiduciary relationship with the insured, MacDonell said – they hold specialized knowledge and owe a duty that goes beyond a simple transaction.
"It's not just like a sales product where I'm going in and buying a phone," she said. As gaps widen, plaintiff lawyers will look harder at what the broker did to know their client, borrowing the kind of know-your-client scrutiny that governs fiduciary relationships in finance. "That will be part of the investigation more so than it has been past," she said.
The mechanics, MacDonell said, do not necessarily mean more lawsuits, but they might mean more defendants.
"I don't know about the number of lawsuits, but the number of people potentially who are exposed will increase." An injured person still sues the at-fault driver at first instance; what changes is who else gets drawn in as the search for coverage runs into the limits of a stripped-down policy.
She walked through how that could unfold. Suppose a driver with minimal coverage hits a cyclist who is left with catastrophic injuries and damages far beyond the policy limits. The cyclist sues the driver – but the driver is now personally exposed for everything above those limits.
At that point, MacDonell said, the driver's own defence lawyer may have to advise them to seek independent legal advice and investigate a claim against the broker or insurer over the gap. "That's probably another avenue that I expect my defence colleagues may have to take going forward," she said.
The people most exposed under the changes, MacDonell said, are the ones with the least between them and a catastrophic loss. Cyclists and pedestrians top her list, because they are at the mercy of the at-fault driver's coverage rather than their own. So are people without income-replacement protection, contract workers and the many employees whose jobs carry no short-term disability coverage. "That is a luxury that isn't offered in most workplaces," she said. Off work for a prolonged recovery, those claimants have little to fall back on.
Against that, the premium savings look slim to her. Ontario's financial services regulator has pointed to average savings in the range of a few percentage points, and asked whether that trade is worth it, MacDonell was blunt. "It is not worth it," she said.
Her reasoning turns on who absorbs the cost the policy no longer does. Catastrophically injured claimants who exhaust their coverage fall back on public systems – disability support, an already strained health system – and MacDonell argued the government had not fully reckoned with where that burden lands. In her view, the savings for individual drivers are paid for collectively, by everyone.
MacDonell expects little to change in the first year, with most renewals predating the reform and insurers largely auto-renewing existing coverage. The real shift, she said, comes as drivers begin making the “a la carte” choices the reform allows, and the investigations into coverage gaps follow. When they do, the cost of a cheaper premium may land far from the driver who chose it.
"All of us," MacDonell said, "will be suffering for these insurance cost cuts."
