The Ontario government has proposed major revisions to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “SABS”).  These changes will come into force on July 1, 2026, and will drastically reduce the mandatory benefits currently available under the standard auto insurance policy.

The following benefits are currently mandatory under the present SABS regime: 

• Income replacement
• Non-earner
• Caregiver
• Lost educational expenses
• Visitor expenses
• Housekeeping and home maintenance
• Damaged clothing  including prescription glasses and hearing aids
• Death and funeral benefits

With the proposed changes these benefits will become optional at an additional cost to the consumer.  This will force Ontarians to consider which optional benefits are suitable for their situation.  In doing so, this will inevitably shift more responsibility, and a greater risk of liability for insurance brokers when it comes to advising their clients. 

An insurance broker owes a duty of care to their client as a “fiduciary”.  This requires the broker to provide information and advice to their client on the best type of coverage to meet their needs.  This also means the broker is expected to be proactive and ask questions about their client’s circumstances to assess foreseeable risks and insure against them.  As such, the broker’s file will be very important in determining what discussions were had with the client regarding optional benefits and whether the broker fell below the standard of care.

To fulfil their obligations as a fiduciary the broker needs to take proactive steps in obtaining information from their clients.  They need to ask their client direct questions about their own personal circumstances and that of their family members and ensure that these conversations are well documented.  The following are examples of the type of questions the broker should ask: 

• Are the clients working? Retired? A student?
• Do they have STD/LTD benefits available through work or private policy?
• Did the broker make recommendations with respect to coverage?
• Did the broker give examples of scenarios that might occur in the event they, or a family member is injured in an accident?
• Did they discuss the cost of purchasing optional benefits?

In the case Zefferino v. Meloche Monnex Insurance Company (2012 ONSC 154 CanLII), the Court found that there was a consumer protection purpose requiring insurers to proactively offer optional benefits to their clients.  The Court concluded that the statutory obligation under s. 27 of the SABS (now s.28) requires the insurer to offer coverage to the plaintiff in a “meaningful way”.  In this case, the broker was found negligent because they did not make any enquiries into the Plaintiff’s personal financial circumstances and did not provide any hypothetical loss scenarios where the optional coverage may have been applicable. 

Once the Plaintiff can prove the broker breached the standard of care, they will then need to prove causation and satisfy the “but for” test.  This involves satisfying the trier of fact the Plaintiff would have purchased the optional benefits “but for” the broker’s negligence.  In making this determination the court will look at what coverage they have historically purchased.  In Zefferino the court considered that the Plaintiff was offered optional benefits in the past and had declined and had never expressed an interest in anything more than the minimum coverage.  Therefore, in this case the Plaintiff failed to prove causation.    

The courts have consistently held that to successfully prove causation there will need to be a “deep dive” into the Plaintiff’s personal situation.  This will involve a comprehensive review of previous spending habits and a historical review of their insurance purchases.  Therefore, the broker’s file will be a necessary piece of evidence regarding any notes/documents concerning past discussions of coverage. 

With the upcoming reduction in mandatory benefits under the SABs the broker will have to be vigilant in having meaningful discussions with their clients regarding optional benefits.  They will also have to take the necessary steps to ensure all discussions are well documented in the file to prove they satisfied their statutory duty.  As the failure to do so could have drastic consequences for their clients and could expose themselves to a negligence claim.      

We encourage our readers to seriously consider the optional benefits available under their auto insurance policy. Sometimes the additional premium is modest, and you may regret not taking the opportunity if later involved in an auto accident that prevents you from working if you have no work benefits. Feel free to contact our lawyers with any questions you have. We are here to help.