Did you know that Ontario car insurance companies are entitled to a secret credit approaching $40,000 for your pain and suffering in car accident cases? Probably not.
It’s one of the best kept secrets in the insurance industry which insurance companies don’t want you to know about.
In the past few days, the secret credit aka the deductible has been getting a bit of attention in the news. Here is an article from the Toronto Sun explaining the unfairness of the deductible.
In fairness, the current deductible does not actually stand at $40,000. Technically speaking, it sits at $39,556.53, but lawyers call it $40,000 because remembering the exact dollars and cents is a bit difficult to do. This $39,556.53 goes up each year on January 1st. So, while today the deductible sits at $39,556.53, by January 1st of next year, it will go up again, likely over $40,000 which is higher than the average net salary of many income earners in Ontario.
Goldfinger Injury Lawyers has been referring to the deductible as a secret credit for a long time (since June 2018) to be precise. We are glad to see that those in the mainstream media are picking up on the term. We continued to refer to the deductible as a secret credit in August 2018, November 2018, August 2019, September 2019 and December 2019
How does the secret credit work? If you have been injured in a motor vehicle accident (car, truck, van, motorcycle etc.), the first $39,556.53 of your award below $131,854.01 vanishes in to thin air! That means if a Judge/Jury award you $50,000 for your pain and suffering, the Plaintiff is left with just $10,443.47. If the Judge/Jury award the Plaintiff $40,000, after the secret credit is applied, the Plaintiff is left with just $443.47!!!!
The intent of the Jury to award the Plaintiff the amount which they thought which they were awarding is overwritten/superseded by the application of the secret credit which is NOT shared with the Jury at trial. You read that correctly. Even though the secret credit of $39,556.53 is deducted from the Jury’s award, this deduction is NOT shared by the lawyers to the Jury, or by the Judge to the Jury at trial! This is insanity because information relevant to the Jury’s ultimate decision is deliberately withheld by the lawyers and by the Judge. The will of the Jury to award the Plaintiff the sum of money which they wanted to award to an injured Plaintiff is completely disregarded through the application of the secret credit in favour of the insurance company.
What happens to the money which the insurance company is credited? Is it used as a write off by the insurer? Is it deemed a loss in their books for accounting purposes to play against their profits? Nobody really knows. All we know for certain so that innocent accident victims are getting the short end of the stick in car accident cases.
In addition to the secret credit, accident victims also need to establish that their injuries are both “serious” and “permanent“. This is called the threshold. Regardless of fault, and regardless of the mechanism of how the motor vehicle accident happened; of the injuries are not “serious” or not “permanent”; then the injured Plaintiff gets ZERO!
That means that the at fault Defendant could have been drunk, high on drugs, texting and ran a red light. If the injured Plaintiff fails to establish that his/her injuries are not “serious” or not “permanent“; then the injured Plaintiff recovers ZERO.
When applied together, the threshold and the secret credit make recovering damages against a completely at fault driver very difficult.
Even more concerning is that the at fault Defendant seemingly has more protections and rights that does the innocent accident victim. It has always troubled me that the law seeks to do more to protect an at fault Defendant, than it does to compensate or to make an injured Plaintiff whole again. Why does the law bend over backwards to protect a Defendant insurer than it does to protect an innocent accident victim? Does our government care more about the rights of multi national, multi million dollar insurance companies than it does over the rights of its own citizens? Based on the wording of the Insurance Act, along with recent amendments I can tell you that governments have been telling you one thing yet doing another.
Every year the benefits of accident victims decline and their bargaining power against insurers decline as well with the deterioration of their rights. People are paying more in premiums, yet getting less coverage and less power in the Courts because the laws are skewed in favour of deep pocketed insurance companies and against innocent accident victims. Even before you’ve played your hand, and even before you’re in the game, the cards when it comes to car accidents in Ontario are already stacked against you.
Interesting to note that the notion of a threshold and a secret credit only applies to motor vehicle accident cases. It does not apply to slip and fall, dog bite, assault, product liability or other insurance cases. This is because the car insurance lobby is a powerful one. They have successfully lobbied successive governments to write the laws in their favour. The logic was that if the laws were changed, car insurers would be able to save money and that those savings would then be passed along to the consumer in the form of lower premiums. The reality is that despite changes to the legislation to save insurers money, odds are that your premiums have NOT decreased one bit. Don’t believe me? Take a look at your insurance rates from five years ago to today’s date. Have they decreased or increased. If you haven’t moved, or haven’t dramatically changed your vehicle, odds are that your rates have increased. Yet you are paying more in premiums for far less in coverage. Those savings which were supposed to be passed along to the consumer have not trickled down which has only contributed to increased insurance company profits.
We are glad to see that more people are catching up with the secret credit for car accident cases in Ontario, but more people need to catch on.