Understanding Automobile Insurance in Ontario – Part IV

In the last two posts we looked at two of the four categories of mandatory insurance coverage in Ontario: liability and accident benefits. In this blog we will focus on the third category: Direct Compensation – Compensation for Damage to Property.

Section 263.(2) of the Insurance Act gives an insured the right to recover, from the insurer, for damages sustained to the insured’s vehicle, vehicle’s contents, and loss of use, in the event of an accident with another vehicle. Note that in order for the insured to recover in this fashion, the other vehicle cannot be owned by the same insured who is claiming and neither can the damage be caused by another vehicle that is driven by the insured. Moreover, the insured cannot claim against the insurer for damages to contents of an automobile that are being carried for compensation (transporting goods for compensation).

Where loss or damage to your vehicle occurs, you are required to give written notice thereof to the insurer, providing the insurer “with the fullest information obtainable at the time”. If required by the insurer, you have to also deliver to your insurance company, a statutory declaration, outlining the particulars of the accident, such as the place, time, and the amount of damages. If required by the insurer, you must also attend what is called an “examination under oath”, and answer questions asked by the insurer’s representative about your claim.

The insurer is required to repair damages to the vehicle within a reasonable period of time after receiving notice from the insured. The insurer has the option of paying money to the insured for repairs, instead of repairing it. Note that your insurance company is not liable for more than the actual cash value of your vehicle, “with proper deduction for depreciation”.

NOTE: Unlike the 2-year limitation period applying to personal injury claims, you only have one year from the date of loss, to bring any claims against insurer for loss or damage to the car or its contents.

If you are not happy with the settlement offer proposed by your insurer, for loss or damage to your automobile and/or loss of use thereof, the Insurance Act gives you the right to sue the insurer. An action against the insurer for loss or damage to the car or its contents cannot be brought after expiry of 1 year from the loss or damage. though the court may exercise its inherent discretion to extend the limitation period, it is unwise to wait longer than 1 year to start an action in these circumstances.

Insurers are allowed by the law to limit, in motor vehicle insurance contracts, the amount payable for damage to an automobile, its contents, or both, by a certain amount, called the “deductible”.  Amount of deductible varies from contract to contract.