It only takes a moment for someone’s life, and the life of their loved ones, to be dramatically changed for the worse through no fault of their own. In Ontario, victims of vehicle accidents – typically people driving their car to work or out with their family – should have the benefit of laws that help them, not cause additional heartache (or surprise).

Unfortunately, this is not always how the law works. In particular, the “deductible law” in Ontario, which protects insurance companies, not victims. The law is so well hidden during a trial, that it’s actually nicknamed by some as the “secret” or “hidden” deductible law. 

If you are a victim of a bad driver

Let’s say you’re injured in a car accident. It’s not your fault, but your case goes to trial. The defendant (the party arguing against you) is the insurance company. The jury is given the responsibility to determine the amount of damages to award you for your pain and suffering. Keep in mind: a jury is a group of citizens randomly selected for a trial in a court of law. They are not people who know the intricacies of how the legal system works. In fact, anyone who is acquainted with the law (lawyers, law students, police officers) are not eligible to be on a jury. 

Suppose the jury decides on a $50,000 award. It seems fair, and in fact, jurors may feel pretty good about their decision. What they don’t know is that the award is going to be immediately reduced by a $38,818.97 deductible—and that deductible is going back to credit the at-fault driver’s insurance company even if the defendant was convicted of drinking and driving. So, your $50,000 jury award for pain and suffering actually nets you, as a plaintiff, $11,181.03. (The only exception to this is if the pain and suffering amount is greater than $129,395.49.)

Is the deductible kept secret? You bet!

Do jurors know about the deductible? No. In fact, plaintiffs are not allowed to tell the jury about it. If they do, it’s likely that a mistrial will be declared. There’s also no variation in the amount. The deductible for 2019 has been set by the Financial Services Commission of Ontario (FSCO) at $38,818.97, and it is tied to inflation, so it increases each year. 

There are other aspects of the deductible law worth noting. 

  • As noted above, the amount of the deductible increases every year even though no-fault benefits have remained the same for decades (e.g. the income replacement benefit maximum has never been adjusted since they were set at $400/week).
  • The deductible is applied even if it’s not your fault. So if a bad driver causes you pain and suffering valued at $38,818.97, you would receive nothing once the deductible was applied.
  • If the plaintiff is in 2 accidents, 2 separate deductibles apply, even though the jury is instructed to assess damages on a global basis. This means that each new accident reduces the victim’s award. So in the above case, an award of $50,000 would net nothing because the deductible would be applied twice.
  • There is a separate deductible for children, who as family members, suffer because of their parent’s injuries from the accident.

Why was the deductible law put in place?

The stated purpose of the deductible law was to reduce the high auto insurance premiums paid by Ontario residents. However, premiums have not decreased over the years, while at the same time, the deductible has more than doubled.  In fact, insurance companies can still increase premiums for the defendant/at-fault driver. Insurance companies also argue that the deductible is a fair way to spread the risk. But fairness doesn’t seem to apply to a law that is kept a secret from juries, who are entrusted to make the ultimate decision on facts.

It should be about the victim

The intent of the deductible may have been to help Ontario residents bring their insurance costs more in line with the rest of the country. The primary impact, however, has been to prevent injured victims from receiving the compensation they need during a very difficult time. It does so by effectively mutating the decision making powers of the jury, without them even knowing about it. 

When you consider that there are awards for pain and suffering for other types of injuries, such as medical malpractice or slip and fall, which are not subject to a deductible, it makes one wonder, why the innocent victim of a car accident is less worthy of compensation?