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Optional auto insurance offers huge relief for a small cost: Herscu

By Kirsten McMahon, Managing Editor

Purchasing optional coverage through your auto insurer is money well spent considering the additional protection provided in the event of an accident, Easy Legal Finance Inc. president and CEO Larry Herscu tells AdvocateDaily.com.

“There is a range of extra coverage options for relatively small premium increases,” he says. “If you are involved in a car accident where the at-fault driver has insufficient insurance — or none at all — you want to know you and family will be covered.”

He points to a recent Toronto Star article that reports the victims of the 2018 Yonge St. van rampage — which killed 10 people and injured 16 — may be denied the insurance benefits they would have received in a typical collision case because the act was allegedly “premeditated and intentional.”

The newspaper states the victims might be offered “a reduced payout of as little as $200,000 — the statutory minimum for coverage — no matter how much the driver was insured for, and that amount would be shared among the many victims.”

Herscu says when it comes to tragic events like this, the scariest part often happens after the fact.

"Tragedy happens in a second, but it doesn't prepare you for the years of pain and suffering following a serious accident,” he says. “The hard part is living the rest of your life with the implications it causes mentally, physically, emotionally and, ultimately, financially.’

Easy Legal offers financial support to those who have been hurt in an accident to help them pay the bills while their lawyer fights for a fair settlement.

"All we do is see clients in perilous situations. When you compound injury with the financial impact, it's horrendous,” he adds.

Although amendments to the province’s benefits and coverages in a standard auto insurance policy changed in 2016, Herscu says many drivers are not aware what those changes mean in the event they are injured an accident.

He says that pedestrians involved in the van attack were catastrophically hurt and their medical and rehabilitation costs are likely astronomical. While they may be able to turn to their own insurers, it might not be enough to cover the bills.

“Prior to June 2016, you used to receive up to $1 million for medical and rehabilitation support and $1 million for attendant care for catastrophic injuries,” Herscu says. “Those categories have now been combined and reduced to a total $1 million.

“That reduction of $1 million can be unbelievably damaging to a family,” Herscu adds.

Most auto insurance policies have an optional coverage called the OPCF44, also known as Family Protection Coverage, which is a safeguard if you're hurt in a no-fault situation, he says.

“If you have $2 million liability coverage, you would turn to your own insurance company and have more available to you to help with your recovery,” Herscu says.

He says policyholders might not be aware of significant changes to non-catastrophic accident benefits coverage since 2016.

“In Ontario, your medical and rehabilitation benefits were capped at $50,000, and you had attendant care coverage of $36,000. Now, those two categories are combined and capped at $65,000,” Herscu says. “If you have medical and rehab costs and require someone to come to your house and take care of you — $65,000 is not going to go far.”

There are also options to purchase extra income replacement benefits (IRB), which he says could be crucial in the event an accident renders you unable to work.

“In a standard policy, the IRB is capped at 70 per cent of your gross income up to $400 per week. Most people aren't aware, but you can buy optional coverage to increase that weekly benefit to $600, $800 or $1,000 per week.”

Herscu says the new year is a perfect time to review your auto insurance policy.

“As you're doing your budgeting and financial planning for the year, this should be an easy thing to check off your list,” he says. “Not that I encourage people to be overinsured, but these are small changes that could give you huge relief.”

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