A SECRET DEDUCTIBLE

Why does the insurance company of a negligent driver get to keep money owing to an accident victim?

Car Accidents in Ontario: The Secret Deductible on your Body

When most people think of deductibles and car collisions, they think 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. $390,000 (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 $132,513.28 (and most are), that award will be reduced by a deductible of $39,754.31. 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 $40,245.69. 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 $39,754.31 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 who’s 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 $39,754.31, 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.

Name of CaseAward and Deductible
AB v Waite, 2018 CanLII 2151 (ONSC)
  • Award:
    • $42,250 general damages
    • $76,121 for past income loss
  • Net after deductible:
    • $4,266.67 general damages
    • Deductible: $37,983.33
Persampieri v Hobbs, 2018 CanLII 368 (ONSC)
  • Award:
    • $40,000 general damages
    • $25,000 housekeeping
    • $2,000 attendant care
    • $500 medical and rehab expenses
  • Net after deductibles:
    • $2,614 for general damages
    • $15,800 housekeeping
    • $2,000 attendant care
    • $0 medical and rehab expenses
  • Total net award: $20,414.83 from $67,500
El-Khodr v Lackie, 2017 ONCA 716
  • Award:
    • $50,000 general damages
    • $10,000 future housekeeping
  • Net after deductibles:
    • $13,460 general damages
    • $5,850 future housekeeping
Corbett v Odorico, 2016 CanLII 1964 (ONSC)
  • Award:
    • $33,000 general damages
    • $22,000 past housekeeping
    • $32,000 past caregiving
    • $21,000 future housekeeping
    • $12,000 future caregiving
  • Net after deductibles:
    • $0 general damages
    • $13,196.63 past housekeeping
    • $8,875 past caregiving
    • $21,000 future housekeeping
    • $12,000 future caregiving
    • Figures not include interest
Cobb v Long Estate, 2017 CanLII 717 (ONCA)
  • Award:
    • $50,000 general damages
    • $10,000 future housekeeping
  • Net after deductibles:
    • $13,460 general damages
    • $5,850 future housekeeping
  • Total net award: $22,136
Tennant v Fariba, 2013 CanLII 1676 (ONSC)
  • Award:
    • $65,000 general damages
  • Net after deductible:
    • $35,000 general damages
    • Deductible: $30,000
Ashburn et al v Storrey, 2019 CanLII 5486 (ONSC)
  • Award:
    • $62,000 general damages
    • $0 past and future income loss
    • $2,500 out-of-pocket expenses
    • $23,400 future health care
  • Net after deductibles:
    • $23,681 general damages
    • $0 past and future income loss
    • $2,500 out-of-pocket expenses
    • $21,900 future health care
    • Deductible: $38,818
Rodrigues v Purtill, 2018 CanLII 3102 (ONSC)
  • Award:
    • $65,000 general damages
  • Net after deductible:
    • $27,016 general damages
    • Deductible: $37,983
    • This was awarded to two of four plaintiffs
St. Marthe v O’Connor, 2019 CanLII 1585 (ONSC)
  • Award:
    • $70,000 general damages
  • Net after deductible:
    • $32,016 general damages
    • Deductible: $37,983
    • Other heads of damages awarded
Dimopoulos v Mustafa, 2016 CanLII 4119 (ONSC)
  • Award:
    • $37,000 general damages
  • Net after deductible:
    • $7,000 general damages
    • Deductible: $30,000
Dermann v Baker, 2019 CanLII 584 (ONCA)
  • Award:
    • $50,000 general damages
  • Net after deductible:
    • $12,016 general damages
    • Deductible: $37,983
Gilbert v South et al, 2014 CanLII 2413 (ONSC)
  • Award:
    • $70,000 general damages
  • Net after deductible:
    • $40,000 general damages
Johnston v Walker, 2017 CanLII 3494 (ONSC)
  • Award:
    • $60,000 general damages
  • Net after deductible:
    • $22,614 general damages
    • Deductible: $37,316
Gyorffy v Drury, 2015 CanLII 31 (ONCA)
  • Award:
    • $39,000 general damages
  • Net after deductible:
    • $9,000
    • Deductible: $30,000

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