Car Accidents in Ontario: The Secret Deductible on Your Body

When most people think of deductibles and car collisions, they think of property damage. What damage was done to my car, how much will it cost to repair and what is my deductible? Deductibles also apply in other insurance contexts, including on your homeowners policy and your business property damage policy. On those policies, you usually have the choice of how to structure your deductible. If you pay a higher premium, for example, your deductible will go down. If you choose the lower premium, your deductible will go up.

Most people, however, are shocked to learn that there is also a deductible on your body when it comes to being injured in a car accident. If you are injured in Ontario through the negligence of another driver, you have the right to sue that person for a number of heads of damages, including pain and suffering, past and future loss of income, past and future care costs, and past and future housekeeping and home maintenance costs. The award for general damages for pain and suffering is supposed to measure the impact that your injuries have had on your day-to-day life. It is not a mathematical calculation, but rather an assessment based on precedent ranges of awards for certain types of injuries. The damages amount can vary anywhere from $0 to approx. $430,000 (which is the current approximate cap on general damages awards in Canada), depending on the significance of your injuries. For example, for someone who suffers a serious traumatic brain injury, amputation, or paraplegia, your general damages award could be $250,000 or more. However, in the vast majority of cases, including chronic pain cases, mild traumatic brain injuries, or other injuries to your extremities (shoulders, ankles, etc.), the damage awards are often below $150,000.

What most people do not realize is that in a car accident case, pursuant to section 267.5(8.3) of the Insurance Act of Ontario, if your general damages award is under $147,889.59 (and most are), that award will be reduced by a deductible of $44,367.24. So, if a jury awards you $80,000, for example, that amount is reduced by the deductible such that you would receive only the net sum of $35,632.76. And guess who keeps the deductible amount? The insurance company of the at-fault driver. In other words, the deductible is not designed to deter the at-fault driver from bad driving, in any way, although their premiums will go up. Rather, it punishes the innocent victim and rewards the at-fault driver’s insurance company.

Unfortunately, the unfairness for the accident victim in this circumstance does not stop there. That same jury who awards you the sum of $80,000 in the previous example, is not told at any time during the trial that there is a deductible applicable to their general damages award. So, the jury members might actually think that they are being very fair with you by awarding you $80,000 for general damages while, unbeknownst to them, their award will be cut in half.

Finally, there is one last “kicker” to the injured accident victim. I mentioned above that, normally, when you pay a higher premium, your deductible will decrease. Unfortunately, for the general damage award deductible, that is not the case. Rather, the deductible goes up annually by an indexation percentage, tied approximately to the rate of inflation. The previously mentioned current deductible of $44,367.24 was actually $39,556.53 in 2020, which gives you an idea of how significantly it increases on an annual basis. When you consider that your auto insurance premiums will generally increase on an annual basis as well, you realize that the “higher premium for lower deductible” concept does not apply to accident victims.

No one contests an insurance company’s right to defend a claim made by an injured driver. Indeed, this happens in every case. For example, they have every right under the law to full disclosure of an accident victim's medical and financial history so that they can assess the legitimacy of the claim and either settle it or have it adjudicated in court. There is no unfairness in the civil justice system for insurance companies. In contrast, they are aided significantly by a deductible that punishes victims and whose existence is kept from a jury.

“General Damages” or “Non-Pecuniary Damages” are legal terms for the amounts awarded for an injured person’s Pain and Suffering. This amount may also be referred to as damages for Pain and Suffering. The Ontario Insurance Act mandates that a deductible is to be applied to this category of damages, but, only for car accident victims and their family members. The deductible which is subtracted from awards of Pain and Suffering for car accident victims is currently $44,367.24, and increasing. This deductible on a person’s injuries or body is regulated to increase every year by an indexation percentage tied approximately to the rate of inflation.

The Secret Deductible is a discount to Insurance Companies and an amount they do not have to pay. The jury is not told about this Secret Deductible that will be applied to the award that they make for a person’s pain and suffering in car accident cases. Juries may believe that they are awarding significant amounts to accident victims and that intention is disregarded when the deductible is applied in secret. The chart below illustrates how deductibles can drastically reduce the amount an injured person receives after a car collision trial.