How Ontario Car Accident Compensation Is Actually Calculated

You may have two separate claims

After a car accident in Ontario, two distinct systems can apply at the same time, and they work on different rules.

• Accident benefits (no-fault) come from an insurer under the SABS (the Statutory Accident Benefits Schedule) and are not tied to who caused the crash, although the Schedule lists some circumstances in which certain benefits are not payable. They cover categories such as medical and rehabilitation expenses, attendant care and income replacement, depending on the coverage in place. See the accident benefits guide.
• The tort claim is a lawsuit against the person at fault. It deals with losses such as pain and suffering and income loss, and the damages for income loss and health care are reduced by accident benefits received or available (Insurance Act, s. 267.8).

This page is about the tort claim.

First hurdle: the threshold

Under s. 267.5 of the Insurance Act, the people protected by the statute (the owner, the occupants of the automobile and anyone present at the incident) are not liable for non-pecuniary damages, which is the legal term for pain and suffering, unless the injured person died or sustained one of two things: a permanent serious disfigurement, or a lasting serious impairment of a physical, mental or psychological function that is important to the person. Section 267.5(3) applies to the same two conditions for health care expenses.

Ontario Regulation 461/96 spells out what that phrase means in s. 4.2. In broad terms:

• Serious: the impairment substantially interferes with the person's ability to continue regular employment or career training, or with most usual activities of daily living, considering age.
• Important function: the function must matter to the person's essential work tasks, their own care or well-being, or their usual daily activities.
• Permanent: the impairment has been continuous since the incident and, on the medical evidence, is expected not to substantially improve, assuming reasonable participation in recommended treatment.

Section 4.3 of the same regulation sets out the evidence needed. A physician with suitable training must explain the nature, permanence and importance of the impaired function, and other evidence must corroborate the change in function.

A judge decides whether the threshold is met, either on a pre-trial motion under s. 267.5(12) or at trial under s. 267.5(15).

What the same section does to income loss and care costs

The statute also trims other parts of the claim. For income loss, s. 267.5(1) removes liability for the first seven days after the incident. For later income loss before trial, it removes liability for the portion above 70 per cent of the gross income lost, calculated under the regulations. The same limit applies to loss of earning capacity during that period. Health care expenses fall under the threshold in s. 267.5(3).

Second hurdle: the deductible

How it works, per the statute and Reg. 461/96:

• For most pain-and-suffering awards, the court reduces the award by the greater of $15,000 and an amount prescribed in the regulation (s. 5.1 of Reg. 461/96 began at $36,540 before 2016 and is indexed every January since).
• For claims by family members for the loss of guidance, care and companionship (Family Law Act, s. 61(2)(e)), the deductible is the greater of $7,500 and a prescribed amount (it began at $18,270 and is indexed in the same way).
• The deductible does not apply once the award, before the reduction, exceeds a threshold amount in s. 267.5(8.3). It began at $121,799 for 2015 and is indexed annually. For the family claims, the equivalent figure in s. 267.5(8.4) began at $60,899.
• Under s. 267.5(8.1.1), the deductible does not apply to non-pecuniary damages where the injured person dies because of an incident occurring after August 31, 2010.
• If the injured person was partly at fault, s. 267.5(7) para. 4 applies the reduction before damages are apportioned under s. 3 of the Negligence Act.

An illustration only. The numbers below are invented to show the mechanics and are not the current statutory figures. Suppose, for teaching purposes only, a deductible of $50,000 and a no-deductible threshold of $160,000:

Two features stand out. There is a cliff: an award at or below the cutoff is reduced by the full deductible, while one that exceeds it is not. And the deductible applies only to non-pecuniary damages, so income loss, care costs and out-of-pocket expenses are not reduced by it.

The heads of damages

A claim is usually built from several components rather than one number:

1. Pain and suffering (non-pecuniary damages). Compensation for the non-financial effects of the injury. The size of an award depends on the injury and its effect on the person's life, and the threshold and deductible above apply.

2. Past income loss. Income lost before trial, within the limits of s. 267.5(1) described above.

3. Future income loss and loss of earning capacity. For a working-age person with a lasting injury this can be a large component. It can involve the person's career path and capacity, not just current earnings.

4. Future care costs. Treatment, medication, devices, home changes and attendant care, subject to the health care expense rule in s. 267.5(3). In serious cases, the cost of future care may be assessed by occupational therapists and economists.

5. Out-of-pocket expenses. Amounts actually paid because of the injury.

6. Family Law Act claims. Under s. 61(1) of the Family Law Act, a spouse, children, grandchildren, parents, grandparents, brothers and sisters may recover their pecuniary loss, and under s. 61(2) the damages may include a sum for the loss of guidance, care and companionship.

What tends to move the number

• Permanence. The permanence requirement is part of the threshold, so an injury that resolves is treated very differently from one that does not.
• Medical evidence. The threshold regulation calls for physician evidence and corroboration, so the quality of the records matters.
• Age and earnings. These feed into income loss and earning capacity.
• Consistency. Gaps in treatment and inconsistent accounts can be raised by the other side.
• Fault. Under s. 3 of the Negligence Act, if the injured person's own fault contributed, the court divides damages by each party's share of fault.
• Available insurance. Whether the at-fault party has enough coverage, and whether other defendants or other coverage exist, depends on the facts and the policy wording.

Points that can reduce the value of a claim

1. Settling before the picture is clear. A claim is hard to value while recovery is uncertain, and the effect of a signed release depends on its wording and should be reviewed by a lawyer.
2. Counting only past costs. Future care needs are a separate component and may be larger than what has been spent so far.
3. Gaps in treatment. The other side may argue that missed care means the injury resolved.
4. Statements to the other insurer. What a person says may be raised later in the claim, and a lawyer can explain the implications.

When it is worth talking to a lawyer

• An insurer has made a settlement offer and the amount is in dispute
• Injuries have lasted months and still affect work or daily life
• A statement of claim or an insurer document has arrived
• Fault is disputed, or the at-fault party may be uninsured or underinsured
• Doctors are describing the condition as permanent

What to gather

• Medical records and treating-physician reports
• Pay stubs, tax returns and employer letters about missed work
• Receipts for treatment, devices and travel
• Accident benefits file, including any insurer letters
• Police report and photographs