Automobile insurance exists to provide financial protection against losses from vehicle accidents, theft, or damage. It is a concept that is simple enough to understand. However, in practice auto insurance is a social and legal construct that can be quite complex and confusing.
For example, in Ontario various financial “thresholds” and “deductibles” are set in place that determine whether or how much an individual can claim for personal injury compensation following a motor vehicle accident (MVA). And each year, Ontario’s Financial Services Regulatory Authority (FSRA) increases those statutory deductible amounts and thresholds.
Damages for pain, suffering, loss of enjoyment of life.
This year, the FSRA has set the statutory deductible for awards for pain and suffering (also known as non-pecuniary losses) at $47,913.01, with a threshold of $159,708.71. What does that mean to you if you make a claim after being injured in an accident? Simply, any award of damages for pain and suffering below the $159,708.71 threshold will be reduced by the $47,913.01 deductible. Another way of looking at it is this: If, for example, your damages fall below the threshold amount and you are awarded $100,000 for pain and suffering, you would actually receive $52,086.99. On the other hand, if the awarded damages are, for example, $160,000, and therefore above the threshold amount, you will receive $160,000 as the deductible would not apply.
The deductible – which is regulated under Ontario’s Insurance Act – also applies to claims made by family members under the Family Law Act (FLA) for their loss of guidance, care and companionship. The monetary threshold for claims by family members for loss of guidance, care and companionship is currently $79,853.70, while the deductible has been set at $23,956.52.
threshold and deductibles referred to above will not apply to the damages awarded to the surviving family members who are entitled to make claims under the Family Law Act for their losses.
As personal injury lawyers representing those whose lives have been impacted – sometimes irrevocably – by an MVA, we find the deductible/threshold concept onerous. Moreover, juries are not advised about the threshold when deciding on an appropriate award for a plaintiff’s pain and suffering. Nor are juries advised of the $47,913.01 deductible that must be applied to any non-fatality award below the threshold.
Claimants must first prove injury.
It should also be noted that in order to recover general damages for pain and suffering following a motor vehicle accident, the Insurance Act mandates that claimants must first prove that they have suffered a permanent, serious physical or mental impairment that affects an important function of the body, or have suffered permanent, serious disfigurement. Such proof will invariably require expert evidence. Therefore, a plaintiff essentially faces a double threshold that is unfair. And, if one’s non-pecuniary damages fall below the $47,913.01 deductible, the award for that aspect of damages will likely be zero.
Statutory deductibles and thresholds have been around since the 1990s and were heralded as a way to control costs and cut down on frivolous lawsuits. The provincial government at the time was under pressure from the insurance industry to provide reasonably-priced automobile policies while controlling the product in terms of cost.
The government’s intention was to discourage people from suing for minor injuries. Instead, claims would only be paid out in cases of significant and lasting harm, therefore reducing insurers’ financial exposure. It was also thought that the system would sway claimants to negotiate settlements rather than resorting to the trial courts for compensation. All-in-all, this was an insurance-driven solution to rising premiums.
Settlements can fall short.
In reality, however, we are seeing people with legitimate claims receiving less compensation than they need, or no compensation at all. One can suffer a permanent injury with life-long chronic pain yet see little if any compensation for their pain and suffering, and only limited compensation for treatment and other care needs. An elderly person could suffer a broken bone yet not surpass the monetary threshold or deductible, without further recourse.
It is no wonder, therefore, that persons injured in motor vehicle accidents may even have difficulty finding legal representation as lawyers are well aware of these rules that limit claims, and know that their hands are tied.
It is possible to get around the threshold by purchasing non-deductible coverage, essentially paying a significant added premium to have some of these Insurance Act levies reduced. But for most people this is cost prohibitive and therefore not a solution at all.
The biggest problem with statutory deductibles and thresholds is that legitimate claimants may slip through the cracks while they continue to suffer long-term. It is a concept that needs to be reconsidered or, ideally, eliminated.
We are an experienced MVA law firm.
If you drive in Ontario, you are legally obligated to have automobile insurance. But despite how necessary it is, many people don’t fully understand how insurance works or what their policy covers. It is incumbent for every policy holder to be aware of what goes into their insurance while keeping up with how changes in the industry impact coverage.
We recently outlined the province’s plan to move to an "à la carte" automobile insurance model beginning July 1, 2026. This means all accident benefit coverage, except for medical, rehabilitation and attendant care benefits, will be optional.
Insurance is complicated and if you have been seriously injured in a collision it is important to ensure you are getting the benefits you paid for and are entitled to.
We can help.
The team at Gluckstein Lawyers is committed to always putting our clients first, providing knowledgeable advice you can trust. Contact our personal injury lawyers today for a no-obligation free consultation to see if you require legal representation for a personal injury claim.