You may be surprised to know that the Ontario government allows automobile insurance companies to reduce the amount of damages paid to accident victims, through the application of a “deductible.” This deductible reduces the compensation for pain and suffering for victims who have suffered serious and permanent impairments in motor vehicle accidents.
The amount of the pain and suffering deductible is substantial. For accidents that occurred before August 1, 2015, the deductible is $30,000.00. This means that if you have serious and permanent injuries due to someone else’s negligence, and a jury awards you $35,000.00 for pain and suffering, the insurance company only has to pay you $5,000.00. If the judge or jury thinks a fair amount of compensation is $25,000.00, you receive zero.
Oddly, if you have sustained a serious and permanent impairment resulting in pain and suffering valued at over $100,000, the deductible does not apply. This means that if your pain and suffering damages are $100,001, you receive $100,001. If the jury or judge believes the fair value of your pain and suffering is $100,000, you will receive only $70,000.
The pain and suffering deductible may not seem fair, but this is the law passed by the Ontario government. In fact, the law has recently changed again. For accidents that occur on August 1, 2015 or later, the deductible is going up to $36,540. And then it is going to go up again. Every January 1, 2016 the deductible will be “adjusted”. The $100,000 figure after which the deductible is not applied is also going up, to $121,799.00, and will also be “adjusted” every year.
The stated rationales for the deductible (and the adjustments to the deductible) are to account for inflation and to decrease premiums for consumers. However, by comparison, there have been no similar adjustments to the no-fault accident benefits that insurance companies have to pay. For example, the maximum payment for income replacement benefits has been frozen at $400 per week, for over a decade.
With regard to the rationale of lowering insurance policy premiums, two questions arise. First, why should lower insurance premiums be paid for on the backs of seriously and permanently impaired accident victims? Second, when is the last time you got a letter from your insurance company informing you that your automobile insurance premiums were going down?
If you are concerned and think that these laws are unfair, please write to your local Member of Provincial Parliament (MPP).