You were hit by a driver who ran a red light. Liability is not in doubt. You have been in physiotherapy for eight months, you still cannot sit through a full workday, and you have been told, correctly, that you can sue. Then a lawyer explains that two features of Ontario law may mean the lawsuit is not worth bringing. This post explains what those two features are and why they exist.
Ontario trades no-fault benefits for limits on lawsuits
Ontario’s auto insurance system is built on a bargain. Every injured person receives accident benefits from their own insurer without having to prove fault. In exchange, the right to sue the at-fault driver is restricted. Two of those restrictions, found in the Insurance Act, do most of the work: the threshold and the deductible.
Both apply to what lawyers call general damages, the compensation for pain, suffering and loss of enjoyment of life. Neither applies to claims for lost income. That distinction matters and we come back to it below.
The threshold
To recover general damages from an at-fault driver in Ontario, an injured person must show that they have sustained one of the following as a result of the collision:
- death;
- permanent serious disfigurement; or
- permanent serious impairment of an important physical, mental or psychological function.
Each word in the third category has been litigated. “Permanent” does not mean unchanging, but it does mean the impairment is expected to continue indefinitely. “Serious” is measured against the person’s own life: whether the impairment substantially interferes with their ability to work, to care for themselves, or to carry on the activities that mattered to them before. “Important” means the function is one that is essential to that person’s usual daily life or occupation.
The threshold is decided by the trial judge, not the jury, usually after all the evidence has been heard. A claimant can win a jury verdict and then have the general damages struck out because the judge finds the threshold was not met. This is why medical evidence in a tort claim has to speak directly to permanence and seriousness, not just diagnosis.
The deductible
Even where the threshold is met, the Insurance Act applies a deductible to the general damages award. The amount is adjusted every January for inflation and is published by the Financial Services Regulatory Authority of Ontario. It has been in the tens of thousands of dollars for years and continues to climb.
The deductible works like this: whatever amount a jury awards for pain and suffering, the deductible is subtracted before the claimant sees a cent. If the award is smaller than the deductible, the claimant recovers nothing under that head. The deductible disappears only where the award exceeds a separate, much higher figure, also indexed annually. A smaller deductible applies to the claims of family members under the Family Law Act, with its own vanishing point.
Juries are not told the deductible exists. They assess damages as though the full amount will be paid, and the reduction is applied afterward by the court.
Why some claims do not proceed
Put the two together and the practical effect becomes clear. A genuine injury that has caused real pain but is expected to resolve, or that has left an impairment a court would not call serious, may fail the threshold entirely. An injury that clears the threshold but attracts a modest general damages award can be swallowed by the deductible.
In either case the injured person still had the accident, still suffered, and still faced months of recovery. The law simply does not provide a route to compensation for pain and suffering in those circumstances. This is the honest answer to why an experienced lawyer sometimes advises that a claim, though real, should not be pursued in tort.
What the threshold and deductible do not touch
This is where careful analysis pays off. Neither the threshold nor the deductible applies to:
- past and future income loss;
- the cost of future care above what accident benefits cover;
- housekeeping and home maintenance loss; or
- out-of-pocket expenses.
A claim that looks marginal on general damages can still be substantial if the injury has affected the person’s ability to earn. A tradesperson who can no longer lift, or a nurse who cannot work twelve-hour shifts, may have an income loss claim that stands entirely on its own. The threshold question and the deductible question should never be the end of the analysis.
How this fits with your accident benefits
Because tort recovery is restricted, the accident benefits available from your own insurer carry more weight than most people expect. We explain how the two claims run in parallel in our post on accident benefits and tort claims, and our motor vehicle accidents page sets out how we approach both.
Get an honest assessment early
Whether a claim clears the threshold is rarely obvious in the first few months, and the answer often depends on how the medical evidence is developed. If you have been injured in a collision, book a consultation with Kabir & Alam Lawyers. We will tell you plainly where your claim stands, including when the better course is to focus on the parts of it the deductible cannot reach.