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Changes to Insurance Act (Prince Edward Island)

Highlighting the significant changes

September 24, 2014

Prince Edward Island enacted some changes to its Insurance Act which will affect motor vehicle accidents that occur on or after October 1, 2014 or motor vehicle insurance policies that are issued or renewed on or after October 1, 2014. The following are brief highlights about some of the more significant changes:

New Definition, Test and Cap for “Minor Personal Injury”: A “minor personal injury” is now narrowly defined to mean “any of the following injuries, including any clinically associated sequelae, that do[es] not result in serious impairment: (i) sprain, (ii) strain, or (iii) whiplash-associated disorder injury. . .” There are also corresponding new definitions for “sprain”, “strain” and “whiplash-associated disorder injury”.

This is a departure from the previous definition: “. . . an injury that does not result in (i) permanent serious disfigurement, or (ii) permanent serious impairment of an important bodily function caused by continuing injury that is physical in nature;. . .”.

There is a new test for identifying minor personal injuries where the focus is first on identifying the injury as a sprain, strain and whiplash-associated disorder injury. If the injury is a sprain, strain or whiplash-associated disorder injury, the next step is whether it fits in the definition of “serious impairment”.

Where there is more than one injury arising out of the accident, each injury must be separately assessed to determine if it is a minor personal injury. Further, the amount available to an injured party with a minor personal injury will increase from $2,500 to $7,500 and will be subject to inflation starting in 2016.

New Definition and Test for “Serious Impairment”: The new definition for “serious impairment” takes an “all or nothing” approach. In order to fall in this definition, it must be an impairment of a physical or cognitive function where the impairment:

  1. Results in a substantial inability to perform any or all of the following:
    • The essential tasks of the injured party’s regular employment, occupation or profession, despite reasonable efforts to accommodate and the injured party’s reasonable efforts to use the accommodations to continue such employment, occupation or profession;
    • The essential tasks of the injured party’s training or education in a program or course that the person was enrolled in or had been accepted for enrolment in at the time of the accident, despite reasonable efforts to accommodate the impairment and the injured party’s reasonable efforts to use the accommodation to continue his or her training or education;
    • the normal activities of the injured party’s daily living;
  2. Has been ongoing since the accident, and
  3. Is expected not to improve substantially.

This is a more onerous definition as the previous definition was simply “an impairment that causes substantial interference with a person’s ability to perform his or her usual daily activities or his or her regular employment.”

As mentioned earlier, the injury is examined to see if it is a sprain, strain or whiplash-associated disorder. If it is one of these three injuries, then injured party’s pre-existing medical history and the criteria set out the definition of “serious impairment” are taken into account to determine if the injury is a “serious impairment”.

Treatment Compliance: This interesting addition to the Act as it allows a sprain, strain, or whiplash-associated disorder injury to be considered a minor personal injury if the injured party has no reasonable explanation as to why he or she has not sought and complied with all reasonable treatment recommendations of a medical practitioner for such injury and the injury results in a serious impairment unless the injured party can prove that the injury would have resulted in a serious impairment even if the treatment was sought.

Schedule B benefits increased: There are several benefits increased with the new changes, including an increase in the maximum for basic health or insured services, funeral expenses, death benefits, income loss and housekeeping.

Undoubtedly, the changes in Schedule B benefits will increase the cost to the insurers but will be of a major benefit to the insureds. While applauded and overdue, it remains to be seen if these new benefits will result in increased insurance premiums. As with the introduction of any new legislation, the new definitions and tests of “minor personal injury” and “serious impairment” and the treatment compliance requirement will raise new challenges in the Court and it will be interesting to see whether these new additions aid plaintiffs or create new challenges. It is encouraging though, to note that the new minor personal injury cap should encourage individuals with such injuries to settle earlier and keep their costs of litigation down.

To review these changes, please click here.

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Changes to Insurance Act (Prince Edward Island)