OPCF-49 and Optional Benefits

You Could Now Be Forced to Pay for the Damage Someone Else Causes to Your Vehicle

How much do you know about what your car insurance policy covers? More importantly, how much do you know about what your car insurance policy does not cover? 

When it comes to buying auto insurance, most Ontarians are focused on finding the policy with the lowest price. On a surface level, this impulse makes sense. After purchasing a new or used vehicle, drivers have to budget for monthly car payments, regular maintenance and service, gas, and more.  The last thing anyone wants to consider is how much more to pay for an insurance policy that most people assume they will never really need.  

Unfortunately, this attitude can put car owners in a very difficult position should they ever be involved in a motor vehicle accident. Even the most cautious driver can be involved in a collision, and without sufficient insurance coverage, the aftermath of an accident can be expensive. 

Insurance companies know that, when shopping for car insurance, price is the single most important factor to consumers. Insurers try marketing reductions in insurance premiums to prospective policyholders by cutting out significant benefits, many of which would be wise investments for almost every consumer.  

The provincial government also wishes to keep insurance premiums low. As the minimum requirements for insurance are continually reduced by the government, standard car insurance policies cover less and less. 

The most recent development in this regard is the OPCF-49 Agreement Not to Recover for Loss or Damage from an Automobile Collision. This policy change would force drivers to pay for their own car repairs following an accident, even if the damage was caused by another party. 

This means that, even if you are a responsible driver and another driver damages your vehicle, you will need to pay the entirety of your vehicle repair costs on your own. 

Reading the Fine Print

Effective January 2024, insurers will market this new optional benefit, which will allow policyholders to reduce their monthly premium costs. In exchange, however, they must give up any coverage that would otherwise reimburse them for “any loss or damage to the vehicle, including repair costs, the value of the vehicle, the loss of use of the vehicle, a replacement for the vehicle, or loss or damage to the vehicle’s contents.” 

The option further states that, if “you lease or finance the vehicle, you should not sign this form without consulting with the lease or financing company because you may be personally responsible for its loss or damage.”  

This option contains an example scenario to further illustrate its terms. The example contained in the option states: “Another vehicle hits your vehicle from behind. Your vehicle is damaged requiring repair, and you need a replacement vehicle while repairs are done. Even though you are not at fault, your insurance will not cover this or help you with the loss. You must arrange for your repairs and rental vehicle, all at your own effort and expense. You cannot claim reimbursement from the driver or owner of the vehicle that hit your vehicle or from their insurer.” 

Naturally, these terms are all located in the fine print. Consumers are unlikely to see these details or read the document they are signing in detail, even when their insurance broker provides a thick policy booklet of information (which is often described as “standard stuff,”). 

The Unintended Consequences of Insufficient Insurance

Imagine you lease or finance a vehicle that is worth $40,000.00. You decide to use OPCF-49 so that you can reduce your monthly insurance payment by a whopping $100.00 per month. When you purchase your new vehicle, these savings make it seem like you are getting a good deal.  

A few years go by, and you find yourself sitting in traffic when another motorist strikes the rear of your motor vehicle. In addition to dealing with any personal injuries arising from this accident, OPCF-49 would require you to pay the entirety of the repair bill, replacement fees, and even car rental costs out of your own pocket without any recourse against the driver that struck you. Depending on the damage caused to your vehicle, your $100.00 monthly reduction in premiums could really cost you anywhere between $5,000.00 and $40,000.00 every time you are involved in an accident.  

If price is really the most important factor one considers when purchasing insurance, the true costs of any potential reductions in premiums should be considered as well. 

More Causes for Concern

OPCF-49 is particularly dangerous to consumers when considered in the context of other changes to auto insurance policies and regulations. Take, for example, the OPCF-44 endorsement. This is an optional benefit that governs situations where an accident is caused by an uninsured or underinsured motorist. If you are injured by an uninsured motorist and you have elected against the OPCF-44, the maximum amount of compensation you can receive in a third-party claim is $200,000.00. This compensation will not go very far if you have suffered injuries that take you out of the workforce or permanently reduce your overall quality of life.  

Moreover, Ontario’s recent changes to alleviate the requirement for motorists to obtain updated licensing stickers each year have made it more difficult for authorities to identify uninsured motorists on the road. Until an uninsured motorist is stopped by police for a traffic violation or for causing an accident, it can be nearly impossible to detect their presence on the road.  

If a consumer opts out of important provisions (such as OPCF-49 and OPCF-44) and is injured by an uninsured motorist, that victim may find themselves in pain, unable to work, unable to claim more than $200,000.00 in damages, and now required to continue paying for the financing or leasing of a vehicle that has been destroyed. In such a situation, one might begin to wonder why he was paying insurance premiums in the first place.  

The Importance of Research Before Purchasing Insurance

Auto insurance policies are mandatory for motorists. They ensure that people injured by motor vehicle accidents will have the recourse to obtain compensation for their injuries and damages. However, under the guise of keeping insurance costs low, auto insurers may collect premiums for policies that might be of little to no use when the time comes to use the policy as intended.  

Many jurisdictions in the United States have adopted this model. It is not unusual to see injured Americans receive as little as $25,000.00 even when their damages are worth hundreds of thousands of dollars. This paltry sum may not even cover the replacement costs of a vehicle that has been involved in a collision.  

It is becoming increasingly important for consumers to educate themselves, research different policy options, and consider these issues when purchasing their auto insurance policies. For more on optional benefits, please click here. 

For many Ontarians, shopping around for car insurance means comparing prices between different auto insurers. However, very few people think about what a standard policy really includes or what it could include, had the right questions been asked.  

When shopping for car insurance, consumers should ask what the policy will do for the motorist and their loved ones in the event of a serious accident. As insurance companies and the governmental bodies attempt to reduce coverage to keep premiums low, consumers must be mindful that insurance policies should provide adequate compensation in the event of a serious car accident.  

Unfortunately, with the option to take advantage of the small savings OPCF-49 affords policyholders, auto insurance policies may not even cover the damage someone else caused. 

This article was written by Jonathan D. Lerman.