Deductibles Can Wipe Out a Victim's Settlement: What Jurors Need to Know

November 21, 2019
Nancy Sarmento Barkhordari
JD Barrister & Solicitor
Paras Patel
B.A. Hons., L.L.B., L.L.M.

Jurors do their best to ensure a fair outcome for both plaintiff and defendant. This often means recommending a financial settlement to help personal injury victims in their recovery.  However, most jurors are unaware that the entire settlement amount can be wiped out by a deductible, leaving the accident victim with absolutely nothing.

Take for example, the case of a woman injured on a Metrolinx GO bus in 2009.  She hurt her leg when the bus moved forward before she had a chance to take her seat.  For her trouble, the jury awarded $35,000, believing the money would cover the cost and inconvenience of missing ten days of work while suffering leg pain.

After subtracting the deductible, the victim received nothing.[1]  Presumably, this was not what the jury intended.

What is this Deductible?

A deductible is an amount of money an insurance policy holder must cover for the cost of an accident before the insurer pays the rest of the cost.  Most auto insurance policy holders are familiar with the concept of deductibles.  For example, if your car needs $5,000 in repairs and there is a $500 deductible on the policy, you will receive $4,500 from the insurance company.

The Ontario government has set statutory deductibles that apply to everyone with a personal injury claim.  This is the amount of money accident victims must cover before the insurance company has to pay.  Most people, including jurors, are not aware of these restrictions.

This is what the bus injury victim faced when her $35,000 award virtually disappeared.

Ontario’s Statutory Accident Benefit Deductible

In the 1990s, the Ontario government introduced no-fault auto insurance along with a $10,000 statutory deductible.[2] The idea was to avoid minor accident claims, lowering the overall number and cost of claims for insurers.[3]  This would theoretically increase funds available for seriously-injured victims while keeping insurance rates affordable for all drivers.

In 2015, at the request of insurance companies, the government increased this deductible to $30,000. Every year, this amount grows with inflation, sitting at $38,818.97 as of 2019.  The deductible applies to pain and suffering awards under $129,395.49 as of 2019, an amount that also rises annually.

For example, a jury may award an injury victim $50,000 for their pain and suffering, thinking this amount fairly compensates the innocent party.  In reality, after the deductible, the plaintiff will receive less than $12,000.  If the jury were to award $38,000, the injury victim would receive nothing at all for their suffering.

Although the statutory deductible is not subtracted from awards over $129,395.49, larger settlements are usually reserved for significant impairment and injury – more the exception than the rule in Ontario courts.[4]

Family Law Act Deductibles

The accident victim’s family may make a tort claim for income loss or guidance loss under the Family Law Act.  These FLA plaintiffs, who are usually the spouse and children of the injured person, also face a deductible from their award.

If the jury awards the family less than $64,697.21, a deductible of $19,409.49 is subtracted. Depending on the amount awarded, the family could be left with nothing.

While these deductibles keep money in insurance company coffers, innocent accident victims and their families pay the price.

What Other Information do Jurors need to know?

The deductible is not the only information jurors are unaware of as they try to decide a fair settlement.  They may believe, incorrectly, that a defendant is personally responsible for paying the entire award.

In Ontario, mandatory car insurance typically has one million dollars in liability coverage.  This means the at-fault driver is not responsible for paying any amount under one million dollars, the insurance company is.  The insurer also hires and pays for the defendant’s lawyer and legal experts as well as deciding if they will settle the case out of court or proceed to trial.

When jurors believe the defendant is paying an award from their own money, they may sympathize with the financial difficulties this could cause the at-fault driver, resulting in a lower award for the injured party.  If jurors realize the insurance company is paying damages, they may more fairly compensate the victim.

Knowing who the real defendant is in a personal injury trial helps keep things in perspective.

However, any mention in the trial of the insurance company’s involvement, policy limits, or the deductible can cause a mistrial, which means the trial ends without a resolution.

What is the Solution?

An Ontario Trial Lawyers Association blog post called the statutory deductible “the law that may be most frequently used to punish innocent accident victims in Ontario to the benefit of bad drivers and their insurers.”[5]

The logical solution to these cases of victim undercompensation is to educate the jury during trial.  If jurors are aware of deductibles and the insurance company’s involvement, they are more likely to award accident victims the correct amount they need to recover from personal injury.  This is not allowed.

Some lawyers call for the Ontario government to remove the deductible or for insurers to pay the deductible into a fund for accident victims.[6]  At least one judge seems to agree this deductible is unfair. After a jury awarded $3,000 to a car accident victim, Ontario Superior Court Justice Frederick Myers stated:

“Jury trials in civil cases seem to exist in Ontario solely to keep damages awards low in the interest of insurance companies, rather than to facilitate injured parties being judged by their peers.” — Justice Frederick Myers in Mandel v Fakhim[7]

In the meantime, spreading the word helps educate future jurors on how deductibles hurt accident victims.  Share this article with people you know who could be involved in a personal injury case some day.  That way, when someone begins jury duty, they have full information to ensure the plaintiff receives the funds they need to help them recover.

Better yet, contact your local Member of Provincial Parliament to voice your concerns.

Read More:

Considering a Personal Injury Case? Start With an Injury Diagnosis 

7 Considerations During An Injury Lawsuit 

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