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March 11, 2016

New law means less money for car accident victims

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If you’ve been hurt in a car accident in Ontario, a new law likely means less money in your pocket. Like other types of insurance, car accident victims payouts are subject to a deductible. The bad news: that deductible has increased. And on top of that, the interest rates payable for your pain and suffering damages is hitting rock bottom.

As of August 1, 2015 the statutory deductible on pain and suffering has increased from $30,000 to $36,540. The minimum amount required to ignore the deductible has also increased from $100,000 to $121,799. Like other deductibles, this means that if you are awarded damages less than $121,799, you will have $36,540 deducted from your payout.

Night time car accident with potential accident victims.

Will Fisher via CC BY-SA 2.0

For example, on an award of $50,000, you would have received $20,000 last year, but will now only receive $13,460. And there’s no stopping here, the deductible is set to increase every year from now on.

To add insult to injury, the prejudgment interest rate on damages for pain and suffering for car accidents drops from 5% to the current rate, which as of January 1, 2015 was 1.3%. This interest rate applies from when you notify the other driver you plan to sue until the date of settlement. This drop in 3.7% would mean $740 lost over two years.

An important note is that these changes only affect victims of car accidents. Deductibles and interest rate changes don’t affect people injured in slip and fall accidents.

It seems unfair that the rules would change in the middle of the game and a couple people have gone to court to argue that the changes should not be applied to people whose accidents happened before the changes. So far there are 2 cases and they’ve come to completely different conclusions. Until the Court of Appeal tells us who’s right, victims of car accidents are left trying to resolve their claims with all this uncertainty about which rules to apply.

The law is constantly changing and if you are injured in an accident you need lawyers who are up to speed on your rights. We can help. Give us a call at (416) 533-7133.

Filed Under: Car Accidents

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