WHAT IS A DEDUCTIBLE?
What is a Deductible?
Most people involved in a motor vehicle accident understand that a deductible may apply to a claim for property damage. For example $500 may be deducted from the amount that you are entitled to receive from an insurer for damage to your vehicle.
What people are often shocked to learn is that there is a far higher deductible which could apply to claims for personal injuries. An important part of any personal injury claim is obtaining compensation for ‘non-pecuniary losses’ ‘i.e. pain and suffering, loss of enjoyment of life, and loss of amenities).
The idea of deducting money from an award for non-pecuniary losses was introduced by Ontario government in 1994. Initially the deductible was $10,000. In 1996 the deductible was increased to $15,000, and in 2003 the deductible was doubled to $30,000! The increase in the deductible did not end then. In 2015 the Ontario government passed legislation which deemed that the $30,000 deductible introduced in 2003 be indexed to inflation up to the present day. What this means is that the deductible in 2018 for non-pecuniary losses is $37,983.33. If you, therefore, are awarded $100,000 for non-pecuniary losses your claim is reduced by $37,983.33 and you receive only $62,016.67.
Does the $37,983.33 Deductible Apply in all Cases?
No. In 2003 the Ontario government legislated that no deductible applied if a claimant’s non-pecuniary loss award was more than $100,000. In 2015, however, the government passed a law deeming that the $100,000 monetary threshold be indexed to inflation from 2003. This means that in 2018 any award for non-pecuniary losses less than $126,610.07 will be subject to a deductible of $37,983.33. This can create an unusual situation which is apparent in the examples below.
Jury awards the claimant $125,000 for non-pecuniary losses. This is less than $126,610.07 so the $37,983.33 deductible applies. The claimant’s award is reduced to $87,016.67.
Jury awards the claimant $127,000. This is more than $126,610.07 so no deductible applies. The claimant’s award remains $127,000.
How does the Deductible Effect my Claim?
As personal injury lawyers our job is to obtain compelling evidence to demonstrate the full extent of our clients’ non-pecuniary losses. We obtain reports from our clients’ healthcare professionals, and we hire experts (e.g., occupational therapists, orthopaedic surgeons, physiatrists, psychologists, and psychiatrists) to ensure that all of our clients’ losses can be presented at a settlement conference or a trial. We are concerned not only with our clients’ current losses, but, as importantly, what they may suffer from in the future (e.g., post-traumatic arthritic changes).
We also interview family members, co-workers, and friends in order to paint a complete picture of our clients’ functioning, and quality of life both before and after a motor vehicle accident.
Our goal is to ensure that our clients receive full compensation for their losses, including their non-pecuniary losses.