When a car accident occurs in Ontario, an injured person may pursue two separate avenues of recovery:

• A tort action may be commenced against the at fault driver, seeking recovery of damages; and





• An application for accident benefits may be submitted to the injured person’s insurer, seeking payment of various accident benefits.

As a result of the undertakings signed by most U.S. insurers, for Ontario accidents, the U.S. insurer’s policy’s third party liability limits are automatically increased to CDN$200,000 and the U.S. insurer will potentially have liability over and above the $200,000 limits for the plaintiff’s legal costs and disbursements. Furthermore, U.S. insureds are entitled to accident benefits at the levels set out by the Ontario Statutory Accident Benefits Schedule (SABS). Accidents Occurring on or after October 1, 2003 There were significant changes in the Ontario legislation pertaining to motor vehicle accidents in 2003. This paper deals with the law as it applies to motor vehicle accidents occurring on or after October 1, 2003.

Non-pecuniary general damages:

Based on the provisions of the Ontario Insurance Act, claims for non-pecuniary general damages are subject to a verbal threshold and monetary deductible. The threshold for recovery of non-pecuniary damages is defined in section 267.1 of the Insurance Act as:

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important physical, mental or psychological function.

The serious and permanent threshold is further defined by regulation, which also sets out the evidence that must be adduced to prove entitlement. “Serious” requires: “substantial interference with ability to continue with regular or usual employment despite reasonable accommodation…; or substantial interference with most of the usual activities of daily living considering the person’s age”. “Permanent” is of a nature that is expected to continue without substantial improvement when sustained by persons in similar circumstances.

In Canada, there is a cap on non-pecuniary general damages, which is currently at approximately $330,000. In Ontario, pre-judgment interest is calculated on general damages at 5% per annum.

FLA Claims

In addition to claims by injured persons, dependant relatives of persons injured or killed in accidents are entitled to claim for pecuniary losses and damages resulting from a loss of care, guidance and companionship of the injured or deceased persons. Family Law Act claims are reduced for contributory negligence attributable to the injured or deceased person.

Section 61 of the Family Law Act sets out the rights of dependants to sue in tort. It states in part:

If a person is injured or killed by the fault or neglect of another under circumstances where the person is entitled to recover damages, or would have been entitled if not killed, the spouse, as defined in Part III (Support Obligations), children, grandchildren, parents, grandparents, brothers and sisters of the person are entitled to recover their pecuniary loss resulting from the injury or death from the person from whom the person injured or killed is entitled to recover or would have been entitled if not killed, and to maintain an action for the purpose in a court of competent jurisdiction.

(a) actual expenses;

(b) actual funeral expenses;

(c) travel expenses in visiting the person during his or her treatment or recovery;

(d) loss of income or the value of the nursing, housekeeping or other services provided for the person; and

(e) compensation for the loss of guidance, care and companionship that the claimant might reasonably have expected to receive from the person if the injury or death had not occurred.

In certain dependency circumstances, FLA claimants may also be entitled to claim loss of financial support that would have been received from the injured or deceased person.

Non-Pecuniary Damages - Statutory Deductible:

The statutory deductible applies only to non-pecuniary losses and is to be applied to the award of damages before any split in liability.

A main plaintiff’s award is to be reduced by statutory deductible of $30,000 (not indexed). Each Family Law Act plaintiff’s award is to be reduced by a statutory deductible of $15,000 (not indexed).

The statutory deductible is waived for damage assessments greater than $100,000 for the main plaintiff and greater than $50,000 for FLA claimants.

Pecuniary Losses

Neither the threshold nor the deductible applies to pecuniary loss claims.

There can be no claim for income losses suffered in first seven days after the accident. Claims for pre-trial income loss are restricted to 80% of net income. Claims for post-trial income loss are assessed at 100% of gross.

Health care claims are permitted if the plaintiff’s injuries meet the serious and permanent threshold. This can be a significant source of exposure in serious injury cases, where the actual health care costs will exceed available funding through collateral benefits (including SABS or private health care plans). Claims for housekeeping and home maintenance/handyman expenses are common. Various other claims for special damages are permitted, subject to remoteness.

OHIP Subrogated Claims

In situations where the automobile liability policy is not written in Ontario, there may be further exposure to subrogated claims brought on behalf of Ontario Health Insurance Plan (OHIP) for health care expenses incurred in connection with the treatment of the injured person. Releases signed by plaintiffs do not bind OHIP in regards to potential subrogation.

Collateral Benefits

Collateral benefits are statutorily required to be deducted from non-economic losses in the context of a tort award, but are not to be deducted from general damage awards.

For income losses, based on the Insurance Act provisions, the plaintiff’s damages are reduced by: all SABS received or available for income loss or loss of earning capacity up to date of trial; all payments received or available under a legislated income continuation plan or an income continuation benefit plan up to the date of trial (e.g. CPP Disability); and all payments received under a sick leave plan up to the date of trial.

Similar statutory provisions require that health care expenses and other economic loss claim awards be reduced by collateral benefits received or available up to the date of trial. A benefit is deemed not available if the plaintiff has made an application for the benefit in good faith and has been denied.

However, after a trial, plaintiffs are entitled to recover future pecuniary losses from the tortfeasor without regard to future collateral benefits. Future benefits will be subject to a statutorily codified Cox v. Carter Order, which requires the plaintiff to hold all future benefits received in trust for the tortfeasor. Alternatively, a court may order that the plaintiff assign future rights to collateral benefits over to the tortfeasor and to co-operate with the tortfeasor in the future collection of benefits.

Direct Compensation Property Damage

S. 263 of the Ontario Insurance Act in essence provides that, in the event of a collision between two insured vehicles, each vehicle’s insurer pays its own insured the property damage that would ordinarily be the obligation of the other party’s insurer.

As an example, if a U.S. vehicle were to collide with a vehicle, X, insured by another insurer, and X was 75% at fault for the accident, the U.S. insurer would pay its insured 75% of the insured’s property damage claim under the Direct Compensation Property Damage coverage. If the U.S. insurer’s insured carried collision coverage, the U.S insurer would pay the remaining 25% under the collision coverage. Fault is determined by the Fault Chart in R.R.O. 1990, Reg. 668.

The U.S insurer would have NO liability to pay any part of X’s property damage and The U.S. insurer and X’s insurer would have no rights of subrogation for property damage.

The U.S. insurer would still be liable, however, for property damage claims from non-auto claimants, such as the department of highways (for damages to the roadway or lamp posts, for instance).

An insured person may claim SABS from his/her own personal insurer, employer’s insurer, insurer of vehicle in which he/she is an occupant at the time of the accident, or insurer of other vehicles involved in the accident. Numerous different types of SABS benefits are available as part of the standard Ontario automobile policy depending on nature and severity of the claimants injuries. There is no ability for an insurer to subrogate to recover SABS payments made to its insureds.

Weekly Benefits

Income Replacement Benefits: compensate for lost income if the claimant suffers a substantial inability to perform the essential tasks of his/her pre-accident job or, after two years post-accident, suffers a complete inability to engage in any employment for which he/she is reasonably suited by education, training or experience.

The benefit is calculated at 80% of net income before the accident up to a maximum weekly benefit of $400.

Non-Earner Benefits: compensate if the claimant is completely unable to carry on a normal life, and does not qualify for an Income Replacement Benefit or Caregiver Benefit. The benefit is $185 per week beginning 26 weeks after complete inability arose.

Caregiver Benefits: compensate the claimant for expenses incurred if he/she cannot continue as the main caregiver for a person (such as child under age 16) who needs care. The benefit pays expenses up to $250 per week for the first person in need of care, plus $50 for each additional person.

Health Care Benefits

Medical Benefit: pays for reasonable and necessary medical expenses incurred as a result of claimant’s injuries, which are not covered by any other medical plan, such as the Ontario Health Plan, or any medical plans at the workplace.

Rehabilitation Benefit: pays for reasonable and necessary rehabilitation expenses incurred as a result of claimant’s injuries. These are expenses that are not covered by any other plan.

Attendant Care Benefit: compensates for the expense of an aide or attendant or services provided by a long-term care facility at prescribed rates.

The maximum amount available for medical and rehabilitation expenses combined is $100,000, with a 10-year time limit, and $72,000 for attendant care benefits with a two-year time limit. However, if the plaintiff’s impairment is catastrophic, the maximum amount is $1,000,000 for medical and rehabilitation expenses, and $1,000,000 for attendant care expenses, with no time limits.

Other Expenses: there is also coverage available for expenses of family members in visiting you during treatment or recovery; housekeeping and home maintenance, payable for two years post-accident at a maximum of $100 per week, unless catastrophic; repair or replacement of items lost or damaged in the accident such as clothing, prescription eyewear, dentures, hearing aids, prostheses and medical or dental devices; lost educational expenses; and the reasonable cost of examinations obtained for the purposes of the Statutory Accident Benefits Schedule.

Death and Funeral Benefits: are available to pay family members of a person killed in an automobile accident ($25,000 is paid to a surviving spouse, $10,000 to each surviving dependant, and a total of $10,000 to a person on whom the deceased was a dependant) and up to $6,000 to cover funeral expenses.

Optional Benefits: are available for purchase from Ontario insurers, which increase the amount of basic benefits. The optional benefits are: Increased Income Replacement; Increased Caregiver and Dependant Care; Increased Medical, Rehabilitation and Attendant Care; Increased Death and Funeral, and Optional Indexation Benefit.

Also, if the claimant meets the definition of “catastrophic impairment”, he/she is entitled to significantly increased accident benefits (monetary and temporal limits). “Catastrophic impairment” includes: paraplegia or quadriplegia, amputation or other impairment causing total and permanent loss of use of both arms or total and permanent loss of both an arm and leg or both legs, total loss of vision, certain brain injuries, and certain other combinations of impairments that result in 55% or more impairment of the whole person. This determination must be made by medical experts.

Accident Benefits Procedures

The SABS provides for a rather intricate procedural system for claiming and responding to claims for accident benefits, including numerous forms (OCFs) created by the Financial Services Commission of Ontario (FSCO). The system involves rather strict timelines for responses to various forms submitted to insurers and involves the determination of entitlement based on the severity of the initial injury (Pre-Approved Treatment Framework), followed by ongoing assessments. If treatment modalities or benefits are sought which are not approved, entitlement may be determined by way of examinations, insurer’s assessments, and rebuttal reports.

Various SABS sections require compliance by the insured with requests for information and documentation. Non-compliance (without a reasonable explanation) can result in forfeiture of benefits. Insurers are permitted to terminate IRBs, Non-Earner Benefits and Caregiver Benefits if the insured fails to participate in treatment or seek reasonable employment. In addition to medical examinations, insurers may conduct an Examination under Oath (with limitations).

Accident Benefits Litigation

If a dispute arises regarding payment of accident benefits, the claimant may apply for mediation at FSCO. After a failed mediation, a claimant may elect to seek a determination of entitlement to accident benefits by:

• commencing an arbitration proceeding at FSCO; or,
• commencing a court action.

1. The insurer of an automobile in respect of which the claimant is a named insured or a spouse or dependant of a named insured.

2. The insurer of an automobile in respect of which the claimant is an occupant.

3. The insurer of an automobile involved in the incident from which entitlement to benefits arose.

• to the insurer of a motorcycle from the insurer of any other class of automobile; and

• to the insurer of any other class of automobile from the insurer of a heavy commercial vehicle.