Frequently Asked Questions

What is a minor injury? When is the cap applied?

A minor injury is an injury that will resolve in days, weeks or months, such as a strain or sprain. The government would establish a full medical definition. What’s important to note is that a minor injury is determined on an individual basis. A sprain to an active 30-year-old is different from a sprain to a senior.

In the context of an auto insurance settlement, a “minor injury” is specifically defined in legislation and must meet specific criteria. An insurance company or adjuster does not arbitrarily decide whether your injury is minor or not. The rules also make it very clear that if your injuries do not meet the minor injury criteria, the cap does not apply.

A cap would be applied if:

  • You suffered a minor injury, such as a sore neck or a wrist sprain from the airbag deploying, in a fender-bender; and
  • You met the medical criteria for minor injury set out in the legislation.

What happens if I’m hurt in a collision and there’s a cap on pain and suffering awards for minor injuries?

Whether there is a cap or not, seek immediate medical attention. Then when you’re able, call your insurance company and file a claim. Your insurer will ask you questions and will arrange for you to receive immediate medical or para-medical treatment (for example, physiotherapy and/or massage).

Your car insurance policy covers your vehicle repairs, your medical bills for treatment and equipment, and medically-prescribed time off work. The cap applies only to pain and suffering awards, which provide additional compensation, on top of these other policy benefits.

What about seniors? A sprain for my 80-year-old mother would hardly be minor.

A minor injury is evaluated on an individual basis. If there are factors that would make a strain or sprain result in serious impairment, then the cap would not apply.

Can I sue or seek legal assistance with a cap system?

Yes. A cap on pain and suffering damages for minor injuries would not prevent you from seeking legal assistance or suing. That is your right.

Will a cap fix the NL auto insurance system?

Not completely, but it’s a great first step toward bigger reforms.

The insurance industry made a number of recommendations as part of the Board of Commissioners of Public Utilities (PUB) review process in 2018 to enhance and improve the auto insurance system in NL. The industry’s recommendations include providing quicker access to health care after a collision, access to more medical benefits after a collision and structural changes to the system that would encourage more competitors to enter the market. These changes would benefit drivers across the province.

Does Insurance Bureau of Canada (IBC) – and its insurance industry members – want the NL government to reform auto insurance?

Yes, because it’s clear to IBC and the industry that the current system is not working for Newfoundlanders and Labradorians. Auto insurance rates are too high. You’re paying more than New Brunswickers, Nova Scotians and Prince Edward Islanders. These high costs are hurting everyone and prevent people from being able to afford insurance – leading to more uninsured drivers on the roads, which is dangerous for everyone. A minor injury cap in several other provinces has brought rates down for everyone and increased access to insurance for drivers, either through lower rates or more options.

As the industry association for home, business and auto insurance companies, IBC wants market sustainability. When the market is sustainable, everyone benefits – insurers and consumers.

You’re saying insurers are losing money in NL, but I read that they made $92 million in 2017. How are they losing money?

The 2017 report of the NL Superintendent of Insurance stated that the industry, all insurers combined, collected $92 million in premiums that were not paid out in claims. This is accurate. However, that’s not profit. That $92 million was spent on provincial taxes, payroll for the thousands of employees across the province, community initiatives, scholarships and sponsorships, office rent, operational expenses and more. Actually, when all expenses are considered, insurance companies operating in Newfoundland and Labrador lost an average of $26.1 million per year in underwriting losses over the last 5 years (2013 – 2017).

If insurers are losing money, why are they still doing business in the province?

Because they’re your neighbours. Johnson Insurance, for example, was started in Newfoundland 130 years ago. It’s home for them – their roots run deep in the communities across the province.

The industry as a whole is strong across the country, so companies can take financial losses in specific provinces for a short time and survive. But it’s not sustainable. That’s why many companies have closed shop in NL over the last few years. There are too few left today – the industry and government know that. That’s why we’re working to find a solution that works for everyone.

Is this lack of competitors what’s preventing me from getting a reasonable auto insurance rate?

It’s a big factor. IBC and its members want healthy competition in the market and believe that’s the best thing for consumers. More companies mean more choice and more competitive rates. However, if the insurers who are in the province now continue to lose money, the likelihood of other insurers entering the market is zero.

Are taxi drivers in NL responsible for our high premiums?

No. Insurers rate taxi drivers differently. Their driving history, good or bad, has no impact on your auto insurance rates.

If a cap is approved, what does that mean for my premiums?

A cap on minor injuries will stabilize your premiums. It won’t reduce them right away. It will take some time, but we know caps work. There is a cap in NB, NS and Prince Edward Island, and drivers there have seen a drop in their rates. Today they pay approximately $300 less for auto insurance per year than Newfoundlanders and Labradorians, they have more insurance options, and they have access to more benefits if they’re injured in a collision.

Aren’t collision rates stable in NL? Why does the industry keep saying costs are too high?

Yes, collision rates are stable, but at the very high end. For every 100 vehicles in NL, 13.37 are expected to be in a collision this year. By comparison, in Nova Scotia, it’s 11.74. Average claim payouts are also much higher here, which means premiums for policies in NL have to be higher to cover the costs.

How is a $5,000 cap fair compensation?

A cap would limit one type of payout (for a minor injury) and open up a whole new collection of benefits – faster treatment, wider access to medical providers, quicker payments – so after a collision you can get back to your normal life faster. The capped payment would be on top of all the benefits provided in your insurance policy, such as fixing your vehicle, compensating you for lost wages, paying medical bills and renting a replacement vehicle.

Payment of “pain and suffering” damages would be capped, not the payments for treatment of the pain or healing of the injury. The idea is that if the injury is small – a strained neck, sprained wrist, mild whiplash – it will heal quickly.
Fairness is about levelling the playing field so all Newfoundlanders and Labradorians have access to affordable auto insurance.

Why are some lawyers so opposed to the cap?

There are some parties talking about how a cap will prevent customers from getting fair compensation and limit their rights. This simply isn’t true. A cap system does not prevent anyone from accessing legal counsel or services, and it does not stop a victim from suing the at-fault driver.

Right now, many minor injury cases are tying up the legal system, with collision victims having minor injuries seeking tens of thousands of dollars in pain and suffering compensation. Many law firms take these cases on contingency, meaning they only get paid if they win. That payment can be up to 30% of the settlement awarded, which is a lot of money in some cases. If a cap comes into effect, some individuals in the legal profession are worried that it will reduce their potential compensation from these types of cases, so they’re actively fighting it.

I called my lawyer and now my insurance company won’t talk to me. Is this because of the cap?

No. Once you bring a lawyer into the conversation, it’s standard process for an insurer to speak only with your lawyer. Information on this process should be contained in the documents you signed when retaining legal counsel.