Your auto insurance policy is coming up for renewal.
One of two things is happening. You’re either getting a flurry of letters from your broker talking about options that you don’t understand, or it’s dead silence – crickets – you’re hearing nothing from your broker. What to do? Here’s a pro tip, some helpful advice about a benefit you must have.
The OPCF-44R, known as the Family Protection Endorsement is coverage that protects you from underinsured drivers. You need this.
Why is OPCF-44R called an endorsement?
An endorsement is an ‘add-on’. It’s not part of your standard policy. You have to buy and pay for it separately.
Every driver in Ontario who buys auto insurance gets the same basic policy. The wording is the identical no matter what insurance company issues the policy. It’s called the Owners Policy (not very original) and includes coverage for uninsured motorists. Because it’s part of the standard wording, this ‘uninsured motorist’ coverage is built right in. If you get hit by a driver with no insurance, you’re covered for losses up to $200,000.
It’s great to have this built-in protection against uninsured drivers, but there are many circumstances where your claim could exceed the available coverage from the at-fault driver even if they do have coverage. For this coverage, you must have this additional endorsement, the Family Protection Endorsement.
The protection provided by this endorsement is called ‘underinsured’ coverage. Here’s how it works.
If you are hit by a driver with Third Party Liability limits that are less than yours, and your potential claims exceed the available coverage, you claim against your own insurer for the difference between the underinsured driver’s coverage and yours.
Let’s look at an example.
You are injured in a car crash. You suffer a knee injury that will leave you with arthritis and a neck injury that makes it impossible to sit and work on a computer.
The knee injury prevents you from working in heavy labour, or at any job where you need to be on your feet. The neck injury prevents you from working at any job where you need to work on a computer, or spend long hours reading or bending your neck. In short, you can’t work, and you can’t study or retrain. You are no longer employable.
Prior to the crash, you were twenty-years old and would have earned $60,000 per year on average over the remaining forty years of your career. Your income loss is roughly $1,600,000 (the at-fault driver gets credit for any disability benefits you receive). Your claim for pain and suffering is valued at $200,000. You need physiotherapy, massage, knee brace, medication – your future medical expenses are $300,000. You need help with housekeeping and home maintenance in the future which will cost no less than $150,000.
Your claim totals $3,050,000.
The other driver has liability limits of $1,000,000. That’s not enough to compensate you for your loss. He’s ‘underinsured’.
You have liability limits on your car of $2,000,000.
Here, you can claim against your own insurance company for the difference between the underinsured driver’s liability limits and your own. In other words, you can ask the other driver’s insurance company to pay out its limits ($1,000,000) and then you can ask your own insurance company to pay another $1,000,000, which brings you up to the amount of your own liability limits.
But only if your policy includes the underinsured coverage.
The premium is low. One of Kingston’s leading insurance brokers, Scott Richardson of McDougall Insurance, says “Considering the value it provides, the Family Protection Endorsement is literally the least expensive coverage you can buy.”
Check out your policy facesheet. Look for the OPCF-44R. If it’s not there, call your broker and get it added.
Pro Tip: To maximize the benefit of this endorsement, ensure your own Third Party Liability Limits are no less than $2,000,000.
The Family Protection endorsement is critical to keeping you and your family safe.
Why? Because, life in the twenty-first century has become expensive.
- Losing an average wage of $50,000 per year, over a 20-year career will leave you facing a loss of a million dollars.
- Add a claim for pain and suffering on top of that. There’s a huge range in awards for pain and suffering but since we’re talking about serious injury here, assume the number is over $150,000.
- Add an initial amount of money to help pay for housekeeping assistance. Even private cleaners these days are billing between 35 and $50 per hour. Professional companies are billing at higher rates than that. Even if by some miracle it only took 2 hours per week to clean your home, at $50 per hour that’s $100 per week. Housekeeping needs to be done fifty-two weeks a year. Dirt doesn’t rest. This creates an unexpected expense of $5,200 per year. For anyone facing a lifetime of injury from a car accident even twenty years of housekeeping will cost $100,000.
- We haven’t even mentioned the cost of Medical Care medications or therapy.
Injury has a terrible ripple effect. When you can’t work or function without pain, you can’t care for your children or your elderly parents. You can’t do renovations around the home. All of these things cost money. Expenses add up.
In Ontario drivers can get away with as little as $200,000 in third-party liability coverage. If the at-fault driver involved in your collision only has $200,000 in coverage or even $500,000 in coverage it’s easy to see that your claims could exceed that amount. Where does the extra money come from?
The Family Protection endorsement allows you to make a claim against your own insurance company for the value of your loss over the amount of the at-fault driver’s Insurance.
Here’s how Family Protection Endorsement works after a crash.
You do your best to get better. You attempt to return to work. You follow your doctor’s advice. You engage in all recommended therapy. This is called mitigation. Once you’ve made your best effort to fully recover, you take stock of your situation. Only then will you be able to truly know the full extent of your loss.
Your lawyer works with you to present the details of your loss to the other driver’s Insurance company. When it becomes clear that the other driver does not have enough Insurance to satisfy your loss, your lawyer will approach your own insurance company and claim the excess loss through the Family Protection endorsement.
How much can you claim under the Family Protection endorsement? The word ‘underinsured’ means that the other driver does not have as much insurance as you do. If the other driver has $1,000,000 in third-party liability coverage and you have the same amount, there’s no difference. The other driver is not underinsured.
It’s only when you have more coverage than she does that the Family Protection endorsement acts to protect you. Since most drivers in Ontario have at least $1,000,000 in third-party liability coverage, for the family protection endorsement to be of any value, you must ensure that you purchase at least two million dollars in third-party liability coverage.
The Family Protection endorsement is inexpensive. It costs somewhere between $12 and $18 per year.
The additional third party liability coverage will be a little more expensive. Scott Richardson of McDougall Insurance Brokers says, “ “. Even so, it’s worth it.
An uninsured driver, and they are out there, is by definition underinsured. As a result the Family Protection endorsements could technically be the only protection you have. Your uninsured motorist coverage (part of your standard policy) will only pay to a maximum of $200,000 maximum. Your investment in the Family Protection endorsement and in bumping your own third party liability coverage to two million dollars is a no brainer
Most Brokers will add the Family Protection endorsement on to your policy without even discussing details. That’s fine but remember it’s wasted money unless your third-party limits are more and the other than the driver that hits you. You must increase your third party liability limits at least two million dollars and higher if your broker and insurance company will permit if your broker your budget and your insurance company will permit.
Like all legal rights your ability to make a claim against an underinsured motorist is time-limited. You need to speak to a lawyer sooner rather than later after a loss .
The takeaway here is that when the time comes for you to renew your auto policy this year you need to look carefully to ensure that you have the Family Protection endorsement and that your Third Party liability limits are set at the correct amount.
About the Author
Ted Bergeron is a Queen’s University graduate with degrees in Physical Education, Arts, Education and Law.
Ted’s legal career started in insurance defence litigation. He worked at a boutique law firm in Toronto, servicing only insurance companies. He switched to representing only injured clients and their families in 1995. He knows both sides of the system inside and out.
He has lectured extensively in the School of Rehabilitation Therapy, the School of Physical and Health Education and the Faculty of Law at Queen’s University. He has worked in a volunteer capacity with the Law Society of Upper Canada as an instructor in the Bar Admission Course teaching Civil Litigation.