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The $41,503.50 Secret Credit Insurance Companies Don’t Want You to Know About

This edition of the Toronto Injury Lawyer Blog is coming out a bit early because I have the time to write now before I have to start homeschooling my children given the recent announced lockdown measures in Ontario. It’s rather difficult being a lawyer and educator for your young children at the same time. There’s a reason why kids go to school and aren’t taught at home by their parents who have full time careers.

I don’t need to tell you that Ontario is all messed up right now. Just tune into the news and it’s all doom, gloom, lockdowns and restrictions. It’s enough to make one cringe.

I’m just a personal injury lawyer, so it’s not my lane to comment on the health and safety of Ontario’s population. But what I can tell you is that I’m an optimist and I strongly believe that we will get through this. There is light at the end of the tunnel. This is the storm before the calm. If were were able to get through the Black Plague and Spanish Flu with nothing more than rubbing alcohol, spoonfuls of castor oil, other whacky home remedies and bandanas for face coverings; I think we will be able to get through COVID and all of its variations. What scientific belief is all of this optimism founded upon you ask? NONE! Just the fighting spirit of humankind and a positive belief that we all want the same thing which is for our health, happiness and our basic human freedoms.

A topic that is within my education, training and expertise is the area of personal injury law. This is the field of law I’ve been practicing in for basically my entire legal career.

Ontario has a really complicated system of car insurance. Each car accident case has two cases. The first case is a no fault accident benefit case with your own car insurer. Regardless of fault, the first claim is with your OWN CAR INSURER for accident benefits. These accident benefits cover such things as med/rehab benefits for physio, massage, chiropractic care, psychological counselling and anything else under the sun not covered by OHIP for your wellness and rehabilitation which is deemed to be both reasonable and necessary. Accident benefits also cover an income replacement benefit which under a standard policy of insurance is up to $400/week; and non-earner benefits for those unemployed or retired people of up to $185/week for up to two years; along with an attendant care benefit of up to $3,000/month for non catatrophic claims; which is then increased to up to $6,000/month for catastrophic claims.

The second part of the car accident case is called a tort case. Tort cases are against the at fault driver. We need to establish that the driver was negligence or at fault for the car accident in order to establish a tort claim. These cases are for pain and suffering, income loss, housekeeping, home maintenance and any other head which is not covered by the accident benefit claim (within reason). Other head of damages may include claims for loss of guidance, care  and companionship under the Family Law Act; a loss of competitive advantage in the workplace; a loss of marriageability; aggravated or punitive damages; out of pocket expenses; re-training costs etc.

But there is a nasty secret for these tort claims for pain and suffering which the insurance industry doesn’t want everyday people to know about.

Insurers get a secret credit for each tort claim! On top of that, the secret credit increases each calendar year based on inflation.

When 2022 rolled around, the secret credit increased from $39,754.31 up to $41,503.50. This means that for each claim under $138,343.86 the insurer gets a credit of $41,503.50! So, if a Judge/Jury award you $100,000 in damages for your case; that award is reduced by $41,503.50; leaving you with a net award on a $100,000 of just $58,496.50.

If a Judge/Jury award you $50,000 for your car accident case; that award is reduced by $41,503.50; leaving you with just $8,496.50.linkedin-2-300x300

Here’s the kicker. Your personal injury lawyer CANNOT discuss the $41,503.50 secret credit to the Judge, or to the Jury. Now the Judge will likely know about the secret credit which is a major reason why insurance companies dislike Judge alone trials and insist on jury trials. Jurors will likely NOT know about the secret credit because they are industry outsiders. Accordingly, when a Jury awards a Plaintiff $75,000 they may think it’s a lot of money. But after the secret credit is applied, that $75,000 is reduced to just $33,496.50 which isn’t as much money. The will of the Jury is NOT honoured by failing to disclose the secret credit to the jury and by applying the secret credit. But this is how the law works on Ontario.

The application and annual indexation of the secret credit to factor inflation is a huge windfall to the already plump insurance industry which records massive profits year after year. With fewer motorists driving on the roads due to lockdowns and restrictions; those profits are bound to continue to increase. The fact that the secret credit has increased from$39,754.31 to $41,503.50 presents a savings amounting to $1,752.19 per case under the deductible activation number of $138,343.86.

At Goldfinger Injury Lawyers we refer to this figure the secret credit; but that’s what it is. But there is a legal term to the secret credit. In the personal injury industry, it’s referred to as the deductible; or the statutory deductible because it was set by way of government statute.

Regardless of fault, the statutory deductible will apply to any case valued at below the deductible activation number of $138,343.86. That means that the Defendant can be drunk, texting, and driving blind folded; and if the Plaintiff’s injuries are valued at under $138,343.86; the Defendant is entitled to a secret credit of $41,503.50. Which begs the question: Why are Defendants afforded these rich protections at law while Plaintiff are not? Why are Plaintiffs being victimized twice? Why does our legal system value putting more money in the hands of negligent at fault defendants in the face of seriously injured accident victims who were simply in the wrong place at the wrong time? Answer: Follow the money. Insurers have molded Ontario’s car accident laws for as long as I can remember. The laws have been tailored to suit their needs and not yours.

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