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Client Update: PEI Auto Insurance Reforms: Change is Coming

No really. We mean it this time.

During the Spring 2014 sitting of the legislature, the PEI government passed legislation that will result in significant changes to the standard automobile policy, effective October 1, 2014. Most notably, the amended legislation will:

  • Increase no-fault accident benefits (i.e. Section B benefits).
  • Increase the “cap” on minor personal injuries.
  • Make significant changes to the definition of “minor personal injury”.

The government has also laid the groundwork for a shift to direct compensation for property damage, although direct compensation is not expected to come into effect until sometime in 2015.

  1. Increase in No-Fault Accident Benefits

No-fault accident benefits available under the PEI standard auto policy are set to increase significantly, mirroring those in New Brunswick. The following benefits will apply to motor vehicle liability policies issued or renewed on or after October 1, 2014:

  1. Changes to the “Cap” for Minor Personal Injury

The “cap” on non-pecuniary general damages for motor vehicle accidents occurring on or after October 1, 2014 is set to increase to $7,500 – up from the current amount of $2,500. The existing cap of $2,500 will continue to apply to accidents occurring prior to October 1, 2014.

The cap will also be indexed cumulatively in January of each year, beginning in 2016. The maximum recoverable amount will be the amount in place on the date of the accident.

  1. Changes to the Definition of “Minor Personal Injury”

The amended legislation will not only increase the amount of the “cap” for accidents occurring on or after October 1, 2014, but will also restrict the definition of “minor personal injury” to sprains, strains and whiplash-associated disorders that do not result in a serious impairment. This is a significantly more narrow definition than currently exists in PEI.

The amended legislation also provides guidance on matters relevant to the determination of “minor personal injury”, the assessment of multiple injuries, and the impact of a claimant’s failure to follow reasonable treatment advice.

  1. Direct Compensation for Property Damage

Although not yet in force, direct compensation for property damage is expected to be in effect sometime in 2015. Fault determination rules have not yet been prescribed.

What This Means For You

Greater benefits will be available for accidents occurring on or after October 1, 2014. These changes may result in new strategic considerations in the defence of auto-related personal injury claims in PEI.

The foregoing is intended for general information only and is not intended as legal advice. If you have any questions, visit our firm website at www.stewartmckelvey.com to contact or learn more about our Prince Edward Island lawyers practicing in the area of Insurance.

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