For many decades, the law in Ontario ensured that an innocent victim be restored to the position they were, as far as money could do, prior to the negligence of another. Unfortunately, car accident victims have suffered through the erosion of our communities enshrined principle of recovery, in favour of insurer profits.

The drastic increase in insurer profit has not been passed on to consumers by way of reduced premiums, and, in fact, premiums have been increasing. Rates continue to increase despite collisions and related insurance claims being down in 2020 when compared to the previous year. This trend continues in 2021.

WHAT CAN BE DONE? REBALANCING THE SYSTEM

1. Repeal of the secret deductible

The deductible is secret because a jury is not allowed to hear that the award they give for pain and suffering will be reduced by more than $40,000.00.

a. This year, the secret deductible on pain and suffering damages now exceeds $40,000.00.  It stands at $41,503.50. Any claim for pain and suffering damages of less than $138,343.86 is subject to this deductible.

b.  More than 80% of the innocent accident victims in the Ontario who pursue tort

claims are punished by this deductible. Notably, no car accident victim is entitled to payment for

pain and suffering damages unless their injuries are deemed serious and permanent

(threshold test). Accordingly, with this verbal threshold test in place, any legislative goal of keeping

smaller claims out of the court system will be met without the need of the secret deductible.

c.  The secret deductible is unnecessary, redundant and unfair, and causes significant hardship for those injured in car accidents due to the negligence of another driver, while that negligent driver’s insurance company derives an unfair economic benefit.

The insurer for the at-fault driver gets to take that deductible, at the expense of an innocent accident victim. The secrete deductible motivates insurance companies to take unreasonable settlement positions and force more claims to the court system.

2. Past loss of income reformed to 100% of losses as opposed to 70% prior to trial.

Victims of negligence or wrongful conduct have always been entitled to claim 100% of their loss of income in tort actions. However, victims of car accidents are treated differently – they are only entitled to claim 70% of their loss of income to the date of trial. Arbitrarily limiting past loss of income for car accident victims is unfair and provides auto insurers with an economic incentive to delay the settlement or trial of an action. It is not a surprise that an insurer may delay an action to keep 30% of the injured victim’s past income loss. This is particularly problematic in light of the backlog in getting cases to trial caused by the COVID- 19 pandemic.

3. Return to the pre-judgement interest rate to 5%.

Rule 53.10 of the Rules of Civil Procedure requires that a negligent defendant pay 5% pre-judgment interest on an injured victim’s pain and suffering damages from the date of the accident forward. The law recognizes that pain and suffering damages are owed to the victim as soon as the negligent act of the defendant occurs and the injury is sustained. The Insurance Act contains a number of disclosure clauses, aimed at ensuring the insurance company has proper timely disclosure so as to assess the claim for damages. The Insurance Act compels the injured victim to provide the insurer this information/documentation or run the risk of having the clock starting the pre-judgment interest accumulation delayed.

In 2016, the government carved out an exception to pre-judgment interest payable to innocent victims injured in motor vehicle accidents. The result is a reduction from the standard 5% to an amount that presently stands at 0.5% for victims of motor vehicle accidents. 

Insurers are discouraged to settle meritorious claims in a timely fashion given that their return on investments is likely significantly higher than any pre-judgment interest they will ultimately have to pay.

Insurers need to be motivated to resolve claims at the earliest reasonable opportunity. The court system is in a state of crises, plagued by insufficient resources, with far too many cases than can be reasonably handled. Having parties resolve their claims without using judicial resources, through a return to the 5% pre-judgement interest rate on pain and suffering damages for car accident victims, is in the best interest of our community.

AUTO INSURANCE IS AT CROSSROADS

Ontario is at a crossroads. Consumers in Ontario expect that, if they are injured because of the negligence of someone else, they will be able to return to the same position economically as if they were not injured. In the current system, where insurers are enjoying record profits, nothing could be further from the truth.  No other province in Canada with a tort system has imposed the substantial restrictions on the rights of innocent accident victims that we have in Ontario as insurer profit on the backs of our community.