Public Transit Motor Vehicle Accidents about to Become Non-Accidents

May 2, 2011

UPDATE — Bill 173 received Royal Assent on May 12, 2011. Accordingly, these important changes to the Insurance Act are now in effect.

On March 29, 2011, the Ontario Legislature unveiled its pre-election budget, in Bill 173, otherwise known as the Better Tomorrow for Ontario Act (Budget Measures), 2011. The Budget didn’t raise any eyebrows. The Canadian Press reported:

There’s “not a single new tax cut or credit to be found, just a smattering of strategic investments that will provide insurance for more farmers, expand breast cancer screenings and add new college and university spaces.”

But Schedule 21 of Bill 173 contains some proposed changes to the Insurance Act that are bound to cause a stir in the insurance industry: Firstly, a passenger injured in a public transit vehicle, which has not collided with an automobile or other object, will no longer be entitled to claim accident benefits under section 268 of the Insurance Act as a result of the incident. Meanwhile, the owner and driver of the public transit vehicle will no longer be considered “protected defendants” under section 267.5 of the Act. Schedule 21 provides:

3. (4) Section 267.5 of the Act is amended by adding the following subsection:
Same, public transit vehicles
(6.1) In respect of an incident that occurs on or after the date this subsection comes into force, subsections (1), (3) and (5) do not protect the owner or driver of a public transit vehicle if it did not collide with another automobile or any other object in the incident.

4. Section 268 of the Act is amended by adding the following subsection:
Exception, public transit vehicles
(1.1) Despite subsection (1) and the Statutory Accident Benefits Schedule, no statutory accident benefits are payable in respect of an occupant of a public transit vehicle, in respect of an incident that occurs on or after the date this subsection comes into force, if the public transit vehicle did not collide with another automobile or any other object in the incident.

The “no crash, no cash” scheme will work as follows: Where no collision or crash has occurred, any tort claims for injuries against a public transit authority (owner or driver) would be covered and addressed within the tort system. The plaintiff would no longer need to establish a threshold injury and there would be no damages deductible. But they also would not be entitled to any accident benefits from any insurer (neither there own, nor the public transit’s insurer, nor the insurer of any other vehicle involved in the accident).

The purpose behind the proposed changes is obvious: These days, almost any injury that occurs to a passenger on a bus is an “accident” that entitles the person to access accident benefits. According to FSCO arbitrators, almost any incident that happens once a passenger leaves a bus (even meters away from the bus) is also an “accident”. Often the claimant won’t be covered under any other insurance (might be one reason that they take the bus), so such accident benefit claims would fall to the insurer of the public transit vehicle. Often such incidents aren’t reported at the scene and the transit company isn’t even aware of such incident until their insurer receives an application for accident benefits.

So it is clear the Legislature (and public transit) is, among other things, trying to crack down on suspicious accident benefit claims by passengers who get injured while riding the bus (or streetcar). The changes will likely save the insurers of public transit sizable amounts of money each year by not having to pay any accident benefits in incidents that do not involve a collision.

The proposed changes could cause some problems for automobile insurers. For example, suppose Nick is on the bus waiting to get off at the next stop. As the bus approaches the stop, suddenly a car changes lanes and forces the bus driver to slam on the brakes. Nick falls and gets hurt. There is no contact between the vehicles.

Under the current scheme, Nick would be able to claim accident benefits. He would also sue the public transit company/driver and the owner/driver of the other vehicle (if the identity is known, or perhaps Nick’s own insurer under the unidentified motorist provisions of his policy, if he has one).

But under the proposed scheme, Nick would not be entitled to claim accident benefits as a result of this incident. He would still be able to sue the public transit company/driver and the driver of the vehicle that cut off the bus. The public transit company would not be a protected defendant under section 267.5 of the Insurance Act, which would make up for the loss of accident benefits that Nick couldn’t claim (no threshold, no deductibles, etc).

It appears that the owner and driver of the other vehicle would still be “protected” under section 267.5. However, their insurer would not get a “discount” for any accident benefits that Nick would have received under the current scheme as result of the accident — since he would not be entitled to claim any.

Bill 173, Better Tomorrow for Ontario Act (Budget Measures), 2011 is available online.

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