Government of Newfoundland and Labrador: Insurance and Pensions Division

August 26/2003

Automobile insurance reforms focus on cost reductions and fairness to consumers.

BACKGROUNDER
AUTOMOBILE INSURANCE REFORM
PUTTING CONSUMERS FIRST

In Newfoundland and Labrador, all drivers are required by law to carry public liability insurance for protection in the case of an automobile accident.

Government has researched and studied rising insurance rates for many years. A Select Committee of the House of Assembly reported on this industry in March 1998. Since that time, extensive consultations and analysis have taken place.

In December 2002, government introduced a bill which addressed the fair treatment of consumers. The time has come to reduce insurance rates that have escalated to the point where some people cannot afford to drive. Our goal is to provide an accessible and affordable insurance system that is fair to all consumers. This bill has now been strengthened to legislate a reduction in the cost of public liability insurance.

Every driver has the same basic insurance policy because it is mandatory. Many drivers carry extra liability, accident benefits, collision and comprehensive coverage and choose their deductibles. We will take coverage for pain and suffering that is not permanent and serious out of mandatory insurance and add it as a new optional coverage. By law, consumers will retain the right to carry this coverage at current prices for the next 12 months.

Newfoundland and Labrador has put consumers first. Our reform package is one of the most comprehensive in the history of Canada

What Reform Will Mean for Consumers

Affordability

– 30 per cent savings on mandatory public liability for all drivers.

– 60 per cent approximate savings for many young drivers, seniors and others.

Accessibility

– Companies cannot refuse to insure you for reasons such as not-at-fault claims, lapse in coverage, NSF cheques or other factors not related to driving record.

Fairness

– Companies cannot use age, gender, marital status or any factor not related to driving record to determine the cost of your insurance.

Choice

– You will automatically receive mandatory coverage at 30 per cent less, or choose to keep your present coverage (which includes pain and suffering) at your current price.

Basic Public Liability Coverage

Examples

Before 

Four drivers purchase basic mandatory liability insurance for the same type of vehicle. Although these drivers have been driving for five years without an accident, they pay different rates.

New System 

These four drivers would now pay the same rate because the new reform package will treat all drivers fairly.

Public Liability Insurance

Twelve Month Freeze on Insurance Rates

Government will freeze automobile insurance rates for a period of one year. Beyond the 12 month period, insurance companies must prove their case before the PUB in order for rates to go up.

Other Reforms

Ability to Pay Insurance Monthly 

Allows you to budget your money over time; protects you from loss of money if your insurance company goes bankrupt.

Exclude People from Your Insurance Policy

Allows owner to exclude individuals from using their vehicle, thereby reducing the cost of your insurance.

Requirements to Provide Information to Consumers

Ensures insurance companies and brokers make information available so you are well informed.

Flexible Methods of Compensation for Injury 

Allows you to request that your settlement be paid over a period of time versus one up-front lump sum.

Improved Claims Practices 

Ensures your claims are settled quickly and fairly.

Removal of Minimum Insurance Rates Set by PUB

Enhances competition in the insurance industry.

Protection from Losing Money Paid for Insurance

Ensures consumers will not lose money if their insurance company goes bankrupt.

Increased Penalties for Uninsured Drivers 

Intended to reduce the number of uninsured drivers on our roads.

Contact Information

For more information on this program, please contact:
Insurance and Pensions Division
Department of Government Services and Lands

P. O. Box 8700
St. John’s, NL A1B 4J6
Telephone: (709) 729-4834
Facsimile: (709) 729-3205

or visit our website at www.gov.nl.ca/gsl

Ability to Pay Insurance Monthly

– You will automatically receive mandatory coverage at 30 per cent less, or choose to keep your present coverage (which includes pain and suffering) at your current price.

– Companies cannot use age, gender, marital status or any factor not related to driving record to determine the cost of your insurance.