How broken is Ontario’s Auto Insurance System
Murray Ralston partner, Jay Ralston, has been a long-standing member on the Board of Directors of the Ontario Trial Lawyers Association. Murray Ralston Lawyers has been advocating for the rights of injured accident victims for over 25 years. What are the broken pieces of the Ontario motor vehicle accident regime? Just how broken is Ontario's auto insurance system? Read this article by the Ontario Trial Lawyers Association for more information.
First in a series – Just how broken is Ontario’s Auto Insurance System?
Issue: Restrictions to the right to sue - The Secret Deductible and the Threshold. You’ve heard of a $300 collision deductible… how about a secret $39,000 deductible? Ontario’s dysfunctional insurance system restricts access to the courts for most injured accident victims. To bring forward a successful court action against an at-fault driver, it’s not enough to show that you were injured. To bring forward a successful claim for pain and suffering against the driver who caused your injury, you also have to prove that your injury is serious AND permanent. Once you have met that high hurdle, your claim is still subject to a deductible of nearly $39,000!
Yes, you read that correctly.
When a judge or jury finds that you have sustained significant enough injuries to merit an award for pain and suffering damages, any amount payable is reduced by a deductible of $38,818.97, which is returned to the insurance company of the driver responsible for causing your injuries. Although the deductible does not apply to damages in excess of $129,395.49, the percentage of car crash victims who are awarded damages that exceeds this amount, is very low. The majority of people injured in car crashes in Ontario have almost $38,000 in compensation taken away from them – just to allow automobile insurance companies to make more money! The law does not let juries know about this $39,000 deductible.
Effectively, it’s a secret! Most jurors will not be aware that an injured accident victim’s $50,000 damages award would be reduced to approximately $11,000 because of the deductible. There is more bad news for people injured in car crashes in Ontario: the $39,000 deductible is indexed to inflation, and rises every year, which further erodes the already reduced compensation received by innocent accident victims. But wait, in addition to a “Secret Deductible,” there is also a threshold! The deductible and the threshold are a package deal to limit access to the courts to the benefit of insurers. The threshold is a test used by the court to determine whether an accident victim should be allowed to recover for pain and suffering. The threshold test looks at the injuries or impairment suffered by the injured accident victims in three ways. First, a judge must be satisfied that the impairment is permanent. This will involve a review of medical records, treatment, and what the witnesses say about the prognosis. Second, a judge must be satisfied that the impairment is serious. This is a bit more difficult to define, but it involves a judge considering what the level of impairment or injury is.
The judge will consider the effect the injury has had on the life of the injured person including their hobbies, work, and family. Lastly, the impairment must be to an important physical, mental, or psychological function. This is a broad part of the test – what injury or impairment wouldn’t affect someone in one of these ways? The deductible has been indexed to inflation, but the underlying no-fault accident benefits have not – in fact they have been cut dramatically over the years. The logic behind having restrictions to the right to sue was that there was to have been an historic “trade-off”: giving up the ability to sue in exchange for ready access no-fault benefits. However, the no-fault benefits have been slashed drastically and, in particular by the previous government over the last 15 years, with the only benefit to insurers’ profit margins. The end result is further marginalization of accident victims, with even greater reliance on our public health care and social welfare system. The threshold and deductible both have the same objective of keeping cases out of the system by denying the right to sue – the right to justice! By having both, cases that exceed the value of the deductible, and thus are not "smaller" cases, can still be unfairly eliminated by the threshold. Ontario is the only North American Jurisdiction to have both a deductible and threshold.