The most common question I get asked about Saskatchewan’s auto insurance is; “Should I have Tort or No Fault?”. Everyone has No Fault by default by way of provincial law but it costs nothing to switch over to Tort, so the cost is the same. Choosing between the two then depends on what your insurance needs are first, and what your insurance wants are second. The answer to the question of whether “to tort or not to tort” can be pretty simple but requires a bit of an explanation of the difference between the two choices.
Firstly, "No fault insurance" is a pretty good system for bad drivers who don’t have any other coverage or insurance. That’s because, even if you cause the accident through your own negligence, and there is no one to sue for your losses, your entitlement to No fault benefits are pretty generous. For example, If you are a wage earner and you don’t get paid if you don’t show up for work, No Fault pays you 90% of the net of your missed wages (after taxes, CPP, a one week waiting period and a cap of about $85,000/yr depending on the year of the accident). On top of that, No Fault pays for your rehabilitation costs up to six million dollars ($6,000,000), again depending on the year, a living assistance benefit for help around the home, and a permanent impairment benefit. If you need a source of cash flow to survive in the event of a disability from a car accident, No Fault is good protection.
But what if the accident is someone else’s fault?
Guess what? You can sue the at-fault driver for your economic losses in excess of what has already been paid to you under No Fault. Another positive. So I bet you’re wondering what an economic loss is; Simply put, economic losses are the gap between what you received and recovered from SGI and what your losses are.
The most obvious economic loss is an income loss because of SGI’s income cap. In other words, SGI's compensation may be less than what you would have earned if you were not injured. For example: Imagine that a potash mine worker -- who earns $120,000 a year -- is injured in a car accident, and as a result is disabled and can't work. SGI will offer him or her an Income Replacement Benefit (IRB). The problem is: the IRB cap is $92,000/yr, so the worker will have an economic income loss of $28,000 a year. Over a lifetime, this $28,000 yearly difference is a huge loss! Other scenarios of income economic loss include the loss of daily non taxable subsidence pay “sub pay”, loss of dental coverage, loss of pension contributions matched by an employer and the list goes on. Oh, and SGI No fault will terminate the workers' IRB on their 65th birthday.
Economic loss can also include these life “costs” not covered by SGI:
- labor costs that you would not have incurred but for the accident, (have you ever painted your own bedroom and now you can’t?)
- cost of additional maintenance and upkeep of the new residence as may be required as a result of the use of equipment including wheelchairs, lifts etc,
- costs of care above living assistance benefits,
- travel costs and additional vehicle costs,
- rehabilitation costs not covered by SGI and additional costs of recreational and exercise equipment.
To sum up your No Fault option, if you were to be disabled from a motor vehicle accident and left without cash flow because work wont pay you if you don't show up and you dont have private dissability insurance, No Fault is a need. If you are a bad driver and will be sure to be the cause of your own disability, then Tort is pointless, and No fault is a need. Even if you have No Fault and the accident is someone else’s fault, you can still sue them for your Economic Losses.
So what does Tort get you and what does it take from you? I will discuss that in Part 2.
