“What would we do if we won a million dollars, Daddy?” Hmmm. My daughter Kara’s question was an interesting one. That evening, we just finished watching “Lottery,” a new reality show on TV. In a way, it was kind of sad to see how most people respond to large sums of money. I explained that we’d be able to pay off our mortgage, buy a few new cars, put some extra money away for their university education and take a few trips. We’d also be able to do those renovations we have been talking about, and perhaps put in an in-ground pool. Then I got thinking…it really wouldn’t be long before that life-changing money would be gone if we did all that.
Sadly, it’s amazing how people’s lifestyles change after winning large sums of money… and more sadly a year later when they are broke and have created even more debt than before. According to statistics on the show, over one third or more of lottery winners are broke within a year, and this increases as time goes on.
One of the major challenges we see with some WSIB alternative programs is that many being offered to O/O fleets are short term in nature and offer a lump sum pay out for a catastrophic type injury. The idea is that if the O/O receives a large sum of money, usually $300,000 to $500,000 (like winning the lottery) that they should invest the proceeds in order to have enough ongoing monthly income to pay their bills until they reach retirement age.
For whatever reason, these types of policies don’t have requirements that the O/O needs to put this money away for the future. Even though they may receive this lump sum, there is nothing stopping them from blowing it all in a short period of time (see lottery statistic above). If the injury was work related (i.e. truck accident ) when they run out of money, chances are they’d be heading back to their trucking companies auto policy with their hand out looking for more… because they can.
Most fleets in Ontario have allowed their O/O’s to opt out of WSIB, and purchase a private alternative in its place. Unfortunately, not all fleets have done everything they can to ensure the right coverage has been purchased, but more importantly maintained.
When an O/O opts out of WSIB, it does give them the right to sue. Requiring an O/O to carry a private alternative with not eliminate a lawsuit, but the more comprehensive the program and how a carrier ensures coverage is maintained certainly reduces their risk and exposure.
Canada is really becoming more like the States when it pertains to lawsuits. With more lawyers getting involved with personal injuries, it’s really imperative for a fleet to revisit how they are doing things.
Criteria for a Comprehensive WSIB Solution
- Short term benefits:Look for something with a long “Own Occupation” definition, preferably at least five years. Some programs provide benefits that are payable for five years, but may only have a one or two-year “Own Occupation” definition. On the surface, these programs may seem to be okay, but after the one or two-year period is up, the O/O may be forced back to work if they can do any other occupation, and benefits could cease. If the O/O is still truly injured, they may have the option of coming back to the fleet looking for more.
- Long term benefits to age 65 or 70:This is often a benefit that has been overlooked. Because of some of the issues above, more fleets are now requiring their O/O’s to invest in a program that includes not only short term benefits (with a Permanent and Total Disability Benefit), but also a long term disability benefit that is payable to age 70. This approach is a much better way of reducing risk and exposure, plus, it’s the right thing to do for the O/O and their family.
- At least 60 days for strains/sprains (with no lifetime maximum): A strain or sprain is the number one injury for this type of coverage, and more than half of our claims go beyond 30 days on average. Be careful of programs that only offer 15-30 days for strains/sprains.
- $300,000 Accidental Death and Dismemberment: We don’t like to think about this, but if an O/O is killed, the family will need to replace the O/O’s income for years to come (so the more the better).
- $300,000 Permanent and Total Disability (in addition to the Age 70 benefit described above): This will help cover some of the extra expenses incurred if the injury is catastrophic.
- Accident Medical Benefits: physio, medical appliances, prescriptions drugs, etc. (the more the better).
- The program should also include benefits for rehabilitation, education benefit and spousal retraining.
- $5,000,000 Emergency Travel Medical-If your O/O’s are crossing the border, it is imperative that they purchase a comprehensive Emergency Travel Medical Pay close attention to the limitation and exclusions and stay away from programs that have a pre-existing condition clause. These plan give the insurance company the right to deny claims if the O/O’s health has changed prior to their trip (generally over the last 90 or 180 days).
- Ensure the policy you chose is a “first payor”policy, not directing claims to other insurance first.
The other “debate” seems to come down to: what is better coverage, individual or a group policy? Because of past challenges which have occurred in our industry, we now always recommend that the O/O only invest in individual coverage. Although there are group type programs available that may save a few dollars, a group policy is owned by the carrier and may be one of those items that tip the scale if an O/O’s independent status is questioned. An individual policy is generally noncancellable by the insurer and is portable, meaning the O/O doesn’t lose their coverage if they leave a certain carrier.
Method of Payment: Is it better to let the O/O purchase coverage on their own or provide deductions through their operating statements? Both ways are acceptable if it’s monitored properly, but having a comprehensive program through operating statement deduction not only reduces the carrier’s risk and liability, it will also save tremendously on administration, if done the right way. If O/O’s are purchasing coverage on their own, be sure to have them provide you with a copy of their policy as well as a current certificate of insurance each month (or quarterly at the least). Recommendation: Providing a comprehensive “individual program” through operating statement deduction is really the true way to ensure coverage has not only been purchased, but more importantly, maintained.
Who Can Opt Out?
O/O’s that own their own vehicle and pay the majority of expenses have the ability to opt out.
An 1149A (WSIB Independent Status Document) must be completed and signed by all O/O’s and the Fleet, then it needs to be forwarded on to WSIB for consideration. Be sure to provide a copy of the vehicle ownership, articles of incorporation (if applicable) and a copy of the business registration (if applicable) to avoid delays.
Once approved, the O/O’s will receive a letter back from WSIB confirming that they have received independent status at your company or that they need to provide additional information. Please ask your O/O’s to provide you a copy of this letter for their file.
O/O’s then have 3 choices
- Personal Coverage with WSIB
- Private Coverage
- Nothing at all
Although number 3 is definitely an option, it’s not one that we support for the following reasons:
- When O/O’s opt out of WSIB, it gives them the right to sue both the Fleet and their Customer.
- Injury claims for any Motor Vehicle Accident (MVA) related injuries will be directed to the Statutory Accident Benefits of the Fleets Auto Policy.
Who Cannot Opt Out?
Employee Drivers and Contract Drivers are automatically covered under WSIB, regardless of the type of contract that the Fleet has with them. Although there are Fleets that have perhaps made “special arrangements” with a Contract Driver’s agreement, unless the driver contracts their services with 4-5 other companies throughout the year, they will be considered an employee and WSIB must be paid premiums.
Winning the lottery is something only a few will experience in a lifetime. That means if we want our companies to be successful, we are going to have work at it and make wise business decisions, including choosing the right broker. If you have O/O’s and allowed them to opt out of WSIB, be sure to choose a broker that specializes in WSIB Alternative Programs and will be there for you at the time of a claim. Just because someone has a license to sell insurance and has access to a “product” doesn’t make them an expert. Ask for references and check them. You wouldn’t hire an O/O without checking out their references thoroughly, would you?
When was the last time your reviewed your current situation? Times have changed and experience suggests, a good criteria from 10 years ago may not work well today.