Understanding the Statutory Deductible: Your Personal Injury Lawyer Can Help

Statutory deductibles are those deductions made according to certain legislation mandated by federal and provincial governments. Some examples include income tax, employment insurance premiums, Canada Pension Plan contributions etc. These amounts have to be submitted to the proper authorities.

In the case of insurance settlements, when the plaintiff is injured in a motor-vehicle accident, the compensation amount received by him/her for non-pecuniary damages such as pain and suffering are subject to certain statutory deductibles. Such deductibles significantly affect the final bottom-line of the award in personal injury claims.

These statutory deductibles are intended to ensure that only very serious cases come to trial, since there is immense pressure on the legal system. Along with the statutory deductible, a threshold limit was placed on “permanent and serious” injuries that had to be fulfilled in order to qualify for compensation.

Statutory Deductibles In Ontario

From 2003, Ontario has legislated a $30,000 statutory deductible in all claims made by injured victims against at-fault motor-vehicle drivers and operators. This rule was applicable across the board unless the general damage award exceeds a vanishing deductible amount of $100,000. Statutory deductible of $15,000 was placed on claims made by family-members unless the Family Law Act exceeds a vanishing amount of $50,000.

Recent Changes Made

As of August 2015, certain changes were made to the statutory deductible, under Section 267.5 of the Insurance Act, bringing it in line with inflation since 2003. Concurrently, the Ontario government also announced major reductions in accident benefits from June 1, 2016.

The new legislation mandates that the statutory deductible will be increased to $36, 540 until December 31, 2015. This represents a 22% hike. Following this, the amount will be increased every year on January 1, according to inflation. The vanishing deductible limit was similarly hiked by 22% to $121,799, while the family-members' vanishing deductible was also raised by 22% to $18,270. Both these figures are to be adjusted for inflation.

However, as experienced car accident lawyers and personal injury lawyers opine, there are several lacunae. There is no clarity on whether these figures apply retrospectively for accidents occurring on or after August 1, 2015.

The Questions Remain

There were several cases that brought this issue into sharp focus. Cobb vs Long Estate and Vickers vs Palacious resulted in different conclusions. In the Cobb case, the plaintiff (Cobb) was injured in a motor-vehicle accident and brought a suit against the estate of the at-fault party. The court decided that changes to the statutory deductible are not retroactive.

In the Vickers case, the plaintiff (Vickers) was a bicyclist injured in an accident when the defendant's car's passenger-side mirror struck her on the back as she was being overtaken. In this instance, the court decided that the new deductible was retroactive and it was applied to the non-pecuniary damages award given to Ms Vickers.

Since then, in another case, Corbett vs Odorico the court also deemed the deductible to have retroactive effect.

These cases have resulted in a certain amount of confusion and ambiguity regarding the new rates of statutory deductibles.

An experienced and knowledgeable personal injurylawyer with expertise in this area of insurance regulations will be able to provide the right advice and assistance.