Navigating the Challenges of General Damages in Ontario: The Impact of Increasing Statutory Deductibles on Motor Vehicle Accident Compensation
Individuals who have been injured as a result of a motor vehicle accident may have an entitlement to seek general damages, which are also commonly known as non-pecuniary damages or damages for pain and suffering. However, it is important to note that the process of receiving compensation for general damages in Ontario can pose some challenges, specifically due to the annual increase in the statutory deductible, making it increasingly difficult for individuals to be adequately compensated especially for injuries that do not meet the “disappearing deductible” threshold.
What are general damages?
General damages are non-economic losses an individual may suffer from an injury. While other damages, such as the material impacts of a physical injury (e.g. loss of employment income), are more easily quantifiable in monetary terms, general damages can be challenging to quantify as they are intangible. They compensate for things like pain and suffering, loss of quality of life, and emotional or psychological distress.
How can individuals seek restitution for general damages?
In Ontario, in order for an individual to recover general damages in a motor vehicle accident, there are two criteria that they must meet. First, they must satisfy the threshold test [1], proving that, on a balance of probabilities, their injuries are both permanent and serious. Next, the individual must prove that the general damages being claimed exceed the statutory deductible to recover any amount under the category of general damages. This statutory deductible applies to general damages and to “loss of guidance, care and companionship” under the Family Law Act (although the deductible is lower for that head of damage) [2].
To be exempt from the deductible, a plaintiff’s injuries must surpass a monetary threshold (also known as the “disappearing deductible threshold”).
Every year, the statutory deductible increases, making it more difficult to be adequately compensated for general damages. In 2023, the statutory deductible was $44,367.24, and the monetary threshold was $147,889.59. In 2024 [3], the deductible has increased to $46,053.20, and the monetary threshold has now increased to $153,509.39 [4].
What does this mean?
Consider a scenario where an individual gets hit by another vehicle while driving. This person then sustains various injuries which impact their life in a multitude of ways, both physically and emotionally. This individual’s overall quality of life is impacted, and they have been seriously and permanently injured. They decide to sue the other driver, and the case eventually proceeds to a trial. At trial, a jury decides to award general damages of $50,000. The statutory deductible will then need to be subtracted, leaving the insurance company liable to pay only $3,947 for damages related to pain and suffering to the affected individual. This discrepancy highlights a significant issue in the compensation process.
Many personal injury trials are done by jury. Juries, uninformed about statutory deductibles and thresholds, may unintentionally award amounts that don’t reflect the actual compensation received by the injured party. Lacking a specific formula or chart, juries may believe a substantial award is fair, unaware that post-deduction, the compensation diminishes significantly, leaving the injured party with a fraction of the intended amount. Consider the scenario above; a $50,000 award might be fair compensation depending on a person’s individual circumstances, but, once the deductible is considered, the plaintiff is no longer receiving a fair amount of compensation for their general damages.
The deductible is there to disincentivize plaintiffs and counsel for bringing lawsuits for de minimis injuries, and that’s a good thing both for insurers and for plaintiff counsel working on contingency. Unfortunately, however, the deductible can also discourage litigation where a plaintiff has, for example, chronic pain and anxiety, but no economic losses.
This post was co-authored by Tijana Potkonjak and Articling Student Toni Pascale.
[1] https://www.ontario.ca/laws/statute/90i08#BK282
[2] Family Law Act , RSO 1990, c F-3, s 61(2).
[4] For comparison, the deductible for non-pecuniary losses under the Family Law Act, are currently $23,026.61 with the monetary threshold set at $76,754.06.