The Liberal Government of Ontario created the first legally mandated no-fault auto insurance system in 1989. The legislation was in effect from mid-1990. The legislation became effective in mid-1990.
This article will give a quick overview of the Ontario’s initial fault system, the no-fault Ontario system, as well as a summary and comparison of the different changes that have been made to it. While the current system may be intended to cover certain personal injury needs caused by car accidents, it is complex.
The Tort System
The British commonlaw is the foundation of Ontario’s tort-based system. A tort is a civil wrong. Neglect is the most common tort in car accident cases. The law used to provide full compensation for injuries caused by the negligence or willfulness of another person. However, if the injured person was partially or fully negligent, they were barred from any recovery.
This situation has been changing over the years. The law and our courts have made it possible for a person partially responsible to be able to sue another negligent person for damages up to the extent of their negligence. A person who is 50% at fault for causing a car accident would be responsible for 50% of damages.
The Initial Ontario No-Fault System
There were flaws in the tort system. The tort system required that the victim of a car accident who sustained personal injuries had to prove the negligence of the other driver before they could sue the other driver for damages. Personal injuries can cause serious financial problems for the victim and their family. This is until the lengthy litigation process is over.
Car insurance companies also wanted protection against what they called the rising litigation costs. This protection was required to maintain lower car insurance rates in Ontario while allowing car insurers the opportunity to make a profit.
Because of the flaws of the tort system, the Liberal government in Ontario passed legislation in 1990 that codified a nofault car insurance plan. To be eligible for insurance benefits, anyone who has suffered personal injuries as a result of a car accident in Ontario did not need to prove fault. The government established a Schedule of Accident Benefits (often referred as AB benefits). This schedule provided personal benefits to anyone who suffered injuries in a vehicle accident. The accident’s cause was not relevant to the entitlement. For these benefits, the injured person had to apply to their own insurance company. Accident Benefits did not cover pain and suffering, nor 100% of income loss. There were no maximum limits on rehabilitation or medical costs.
It is clear that no insurance company would be able pay 100% of the losses for everyone who has suffered personal injuries from a car accident in Ontario. It would be impossible to afford insurance. The legislation, which was combined with no-fault benefits, established a verbal “threshold”, which is a threshold for the severity of an injury. Before a person who has suffered personal injuries may sue, it must be established. The “deductible” for bodily harm was similar to the one for your car. An injured person would have to pay some pain and suffering. In addition, the accident benefits to income loss were lower than 100%, as well as maximum medical and rehabilitation amounts.
The first threshold stipulated that only people who have suffered serious and permanent bodily injury or permanent scarring were eligible to sue. People who sustained only temporary injuries, are psychological in nature or are not seriously injured were also exempted from the right to sue. A person who has reached this threshold can sue to recover pain and suffering, 100% for past and future lost wages, handyman service, etc. An accounting was required by the accident benefits insurance to avoid double recovery.
Subsequent no-fault schemes
1994 was the year that the NDP party changed the no fault legislation. The Accident Benefits were made more inclusive. In some cases, the rights to sue were more restricted than in others. All rights to lost wages, for example, were no longer available under the no-fault benefits for accident victims. It is no longer possible to sue for past or future wages. However, a law suit to recover pain and suffering doesn’t have to be limited to physical injuries. This legislation made it easier to sue if you had reached a certain monetary threshold. Although the deductible was increased, you can sue if your pain or suffering exceeds that amount, regardless of whether your injuries are permanent or purely psychological.
The Conservatives governed 1997. They tried to create their own no-fault legislation, which was not surprising. It was possible to sue for lost income. The requirement that the injuries be permanent was also established. The right to sue was still available if you sustained psychological injuries, but only if they were permanent. A higher deductible was required.
The current No-Fault Scheme
Further modifications have been made to the no-fault system since 1997. Ontario still has a list of accident benefits. This schedule outlines the benefits that every person who has suffered personal injuries from a car accident in Ontario can claim, regardless of fault. The amount of medical and rehabilitation costs that a person can receive depends on the severity of the injuries. The limits for catastrophic injuries are increased to $100,000.00 to $1,000,000.00
Although the Accident Benefits part of the current law seems complex, it is complicated when you consider the interplay between the tort system as well as the accident benefits system. To be able to sue, you must have permanent impairment or disfigurement. There is also a $25,000.00 deductible for pain and suffering. The deductible is not straightforward. There is no deductible if a person is suffering from pain and suffering that is more than $100,000.00.
A second option is that a person can be awarded 80% of the net loss up to the date they are tried and 100% of any future gross loss. You must repay your own insurance company any income benefits you get under the Accident Benefits.
You can sue for any expenses or out-of-pocket expenses that are not covered by accident benefits. You can also sue if your personal injury is considered to be catastrophic. In order to avoid double recovery, it is necessary to repay any accident benefits that you have received.
Conclusion
The Ontario no fault scheme is very complex and in constant evolution. It is difficult to understand why someone must endure $25,000.00 of pain and suffering from another. This is clearly a political issue because all three major political parties decided, at one point or another, while they were in power, that they would establish their own no-fault system. This isn’t a simple process that evolved out of altruistic motives. Ontario insurance companies have seen record profits and suffered from poverty for a long time. Lawyers have advocated for the rights of injured persons, while also protecting their own interests. While governments have promised in campaign speeches that they would amend or modify legislation to protect injured persons, the fact is that when in office they have not done so. Dalton McGuinty is one example. Dalton McGuinty was a candidate who promised to significantly lower the deductible but failed to fulfill that promise when he became president.
It is difficult to determine whether no-fault is worse or better than traditional fault systems. It is important to remember that any car insurance policy should not be based solely on the interests of people who are injured in car accidents.
According to the government, they want to reduce the cost to insurers for the litigation that would follow in a pure tort environment. This is supposedly to lower car insurance rates while “allowing” the insurers to make profits. How is it possible that a person who has suffered $100,000.00 in pain and suffering can receive all that money, while a person who suffers only one cent of the pain and suffering can get $74,999.99? It is not uncommon for $25,000.00 to be used in legal fees for cases in which the damages are likely to reach $100,000.00 for pain or suffering. It would be more generous to pay that money to the victim of personal injury who is suffering from the pain and suffering.
A system that allows people to get prompt medical treatment is certain to speed up and make it easier for those who have been injured in an auto accident. Experts agree that the quicker someone suffering from soft tissue injuries receives treatment, the greater their chances of recovering and the less likely they will experience chronic pain.
The best system is one that offers the injured access to medical and other services quickly and efficiently.
