What is a statutory deductible?
Pursuant to section 267.5 of the Insurance Act, when a plaintiff receives a jury award for general damages that falls below a certain monetary threshold, the judge must subtract a statutory deductible from this award.
On January 1, 2020, the monetary threshold increased from $129,395.49 to $131,854.01, and the statutory deductible from $38,818.97 to $39,556.53. A statutory deductible of $19,778.27 is also in place on claims made by family members.
Why does the statutory deductible exist?
The legislative intention behind the deductible aims to reduce motor-vehicle litigation by disqualifying cases by those with modest injuries and modest damages.
However, while the statutory deductible continues to rise with every passing year due to annual indexing, the jury awards for general damages stagnate. Importantly, juries are not told about this deductible nor that if they were to award less than $131,854.01, that the award would be automatically reduced. Furthermore, an award of general damages is not based on any special formula, or standard calculator, or medical guideline – nor is the jury always given precedents to this nature. Instead, the jury is asked to attempt to place a fair or reasonable value on something that most often cannot be valued. Yet, there is no evidence that jury verdicts have become more generous to keep pace with inflation.1
As Justice MacLeod noted in the 2018 case of A.B. v Waite: “[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.”2
What does this mean for plaintiffs?
It is important for plaintiffs to understand that their claims for pain and suffering under the Insurance Act will be subject to a deductible that only continues rise with time. As a result, some claims may no longer be financially viable to pursue as the deductible reduces their potential award for general damages to zero.
1 A.B. v. Waite, [2018] O.J. No. 1845
2 ibid.
