Insurance deductible for pain and suffering nears eye-popping $40,000

Last updated: 07-26-2020

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Insurance deductible for pain and suffering nears eye-popping $40,000

How happy would you be if an insurance company automatically scooped nearly $40,000 from an award issued after you sustained a serious injury in a car accident?

For motorists in Ontario, that is the law.

And like most drivers in the province, you probably didn’t know that this cash grab exists.

Under the Ontario Insurance Act, an inflationary increase pushed the deductible for non-pecuniary damages — or awards for pain and suffering –up to $39,556.53 on Jan. 1 and applies to any award at or below $131,854.01. Above that threshold there is no deductible.

That means if you win an award for pain and suffering, but it is at or below $39,556.53, you won’t collect a dime.

“I turn away the vast majority of cases, even if they have a fracture, even if they got severe chronic pain, because the deductible is so high you are not going to get them any money for pain and suffering,” said Toronto-area personal injury lawyer Nainesh Kotak, of Kotak Personal Injury Law. “It’s completely unfair to those who are innocent victims.”

Kotak said there are several reasons why this deductible is not well known, including legal rules which prohibit a jury from being told about this amount.

“So if a jury thinks that pain and suffering is worth $35,000, they don’t know that the person will get zero and they cannot be told,” he added. “So it is secret, in my view, from juries who will decide awards. It is secret from the general public who pay premiums. And it is secret, I think, from most politicians who don’t know about this.”

To make a claim for pain and suffering, drivers must establish they suffered a permanent and serious injury that will affect the quality of the rest of your lives.

The deductible was first put in place in 1993 to weed out minor injury claims. In exchange, a no-fault collision law allowed insurance companies to offer more generous benefits for treatment of injuries and income replacement.

The first deductible was set at $10,000 for any award up to $100,000 and would be waived above that amount. It then increased by 50% to $15,000 in 1996.

In October 2003, the deductible doubled to $30,000 and stayed there until a new formula came into effect in August 2015 under Kathleen Wynne’s Liberal government to further help lower costs to insurance companies.

At that time, the deductible spiked 22% to $36,540.

And since 2015, the deductible is required to increase at the rate of inflation.

Kotak takes issue with how benefits remained static since the late 1990s and noted injury awards have not grown with inflation.


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