By Brent L. Handel Q.C.
Alberta Disability Benefits
Under the “Alberta Standard Automobile Policy SPF No 1”, Section B, there are certain benefits available to you in an accident regardless of fault. These benefits are payable by your own auto insurance company and do not affect your future auto premiums. One of the benefits is a total disability benefit which is a weekly benefit payable to the injured party when they are “wholly and continuously disabled” from working within 60 days of the date of the accident. The amount payable is the lesser of $400 per week or 80 percent of the average gross weekly earnings.
In December 2015 the Alberta NDP Government issued bulletin #04-2015 to the general public but essentially directed at Alberta automobile insurers for engaging in what the Superintendent of Insurance considers—“for failing to provide proper disability benefits” in accordance with the above policy. One problem is that the auto industry in 2004 lobbied the provincial government so that if you have disability benefits from work or even a private disability policy that you pay for out of your own pocket, these benefits must be accessed first, even though the disability is from a motor-vehicle collision. One would think if the disability is from a motor-vehicle collision than the motor-vehicle policy would pay first. This highlights the strength of the automobile insurance lobby in Alberta that they can pass legislation that even disadvantages other insurance companies such as disability insurers.
Auto Insurance Companies Fail To Provide Proper Disability Benefits
In any event, the calculation and coordination of benefits between private disability insurance and the automobile insurance is confusing to the public, but the bottom line is the only time there is a co-ordination of benefits is when the combined total of the benefits under the automobile insurance policy ($400 per week) and another disability contract, exceed the average gross weekly earnings of the injury victim pre-accident. Insurance companies have not been following this protocol and so the Superintendent of Insurance felt it necessary to issue this bulletin advising auto insurance companies that failing to provide proper disability benefits as prescribed by the standard automobile policy, is an “unfair act or practice.” The Superintendent of Insurance goes on to state that an unfair act or practice is prohibited by section 509 (1) (c) of The Insurance Act.
Further the Superintendent of Insurance reminds Alberta automobile insurers that contravening section 509 of The Insurance Act is an offense under section 780 (d) of The Insurance Act, for which an administrative penalty may be assessed pursuant to section 789 of The Insurance Act. An administrative penalty of up to $25,000 may be assessed for each occurrence in which an offense is committed.
The Superintendent “strongly encourages insurers to insure that all of their applicable staff are aware of this bulletin.”
It is indeed unfortunate that private, for-profit auto insurance companies are not properly paying out disability benefits and as a result could be fined $25,000.
All of this leads one to question whether in Alberta we should have private, for-private auto insurance companies whose legal obligation is to their shareholders, trying to make profits rather than helping the victims of motor-vehicle collision. Perhaps instead we should adopt the system in British Columbia and have one government-run auto insurance company providing benefits to victims of motor-vehicle collision. In British Columbia this is called the Insurance Corporation of British Columbia (ICBC).
One may object to this as many Albertans are “free enterprise” individuals, but I would remind them that having an automobile auto insurance policy is not a “free market” as purchasing an Alberta automobile policy is mandatory under the law of the Province of Alberta. In other words an individual does not have an option to purchase this particular insurance product; therefore, if it is required by law that all Albertans purchase a certain product, it is questionable whether it should then be sold by private, for-profit companies.
Handel Law Firm is Alberta’s serious personal injury and fatal accident law firm serving the cities and areas of Red Deer, Fort McMurray and Grande Prairie.