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23/May/2018
What is the Deductible and How Does it Affect Damage Awards?

When a victim is injured in a car accident, they are entitled to damages for pain and suffering, otherwise known as general damages. General damages are intended to compensate victims for losses that are not pecuniary, such as income loss or medical treatment costs. Pursuant to section 267.5 of the Insurance Act, general damage awards are subject to a statutory deductible, which is currently $37,983.33 and, since the legislation was amended in 2015, is indexed with inflation every year. Unfortunately, general damages awards are not rising with the deductible, resulting in increasingly lower general damages awards for plaintiffs.

The trend towards lower general damages was recently demonstrated in A.B. v White. The plaintiff sustained soft-tissue injuries and returned to work while dealing with chronic pain. Her physicians described her pain as “severe and debilitating”. Nonetheless, the jury awarded the plaintiff $42,250 for general damages. After the deductible was applied, the plaintiff received only $4,266.67.

In applying the deductible, Justice MacLeod noted that it was a “disastrous outcome” for the plaintiff and that the legislation worked against plaintiffs with moderate and smaller claims. Justice MacLeod stated:

[The deductible] illustrates the legislative intention that all but the most significant tort claims should be eliminated and injured motorists be largely confined to claiming no fault benefits under their own insurance policies.

It also illustrates how annual indexing of the monetary threshold for unreduced general damages and annual indexing of the deductible may in short order make unreduced general damages largely unattainable. A review of jury awards in this jurisdiction over the past decade would reveal that general damages in excess of $130,000.00 are very much the exception. There is no evidence that jury verdicts have become more generous to keep pace with inflation.

Plaintiffs should be aware that due to the Insurance Act, their claims for pain and suffering will be subject to a deductible which grows every year.

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