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The Shocking Truth About Car Insurance Deductibles

Insurance deductibles have been around for a long time but few are aware of the insurance deductible that may apply to their personal injury claims. Knowledge is power so I want to tell you about how it works.

Familiar Insurance Deductibles

No one likes them but most people are familiar with insurance deductibles.  You have a flood at your house and you have to pay the $1,000 deductible towards the claim. You have to pay the $500 deductible after a fender bender.

While no one likes them, they are (arguably) modest and I suspect many people see them as part of dealing with an insurance company.

Most people are shocked however when I have to tell them about the insurance deductibles that apply to personal injury claims involving car accidents. Hint: They are way bigger!

Deductibles In Car Insurance Claims

Strap yourself in while I tell you how so called “Statutory Deductibles” work in personal injury claims involving car accidents.

I’ll give you an example to explain. Joe is driving home from work one day. Little does he know that someone had been on a bender all day and decided to drive his car home. It is dark and Joe is stopped at a stop light. Joe’s light turns green. Then all of the sudden, seemingly out of no where, the drunk driver blows the red light and smashes into Joe’s car. Joe suffers broken ribs, vertebrae and a broken leg in the crash. He endures months of medical treatment and rehabilitation.

His family life also suffers. His wife Sara feels like she is now more of a nurse than a spouse. His two young children, Holly and Ryan don’t really understand.  All they know is that Daddy does not play with them like he used to. The reality is that Joe has no energy beyond his rehab.

Fast forward a number of years. Joe’s condition has improved but he is left with permanent reminders of the night the drunk driver hit him. His relationship with with his family is strained and will never be the same.

Joe’s case goes to trial and the jury awards Joe $80,000 in compensation for pain and suffering and loss of enjoyment of life. The jury awards Sara, Holly and Ryan $20,000 each for their claims under the Family Law Act for loss of Joe’s care, guidance and companionship.

The Secret Deductibles Few People Know About

Now, here is how the Court will apply the deductibles.  Under Ontario law, the statutory deductible will reduce Joe’s claim from $80,000 to $42,614.83! Yes you read that right. There is a statutory deductible that applies to Joe’s claims for pain and suffering in the amount of $37,385.17.

The statutory deductible will reduce the claims of Sara, Holly and Ryan from $20,000 to $1,307.41! There is a statutory deductible that applies to their claims of $18,692.59.

Now, it’s frankly even worse than that because of a couple of other rules.  The first rule is that, the mere existence of deductibles is kept secret from Joe’s jury. Neither the Judge or Joe’s lawyer can tell the jury that Joe’s claims will be reduced by $37,383.17 or that his families’ claims will be reduced by $18,692.59 each. The jury never knows and therefore can never consider it. Seems like there is a theme developing here.

The second rule is that the deductibles are indexed. In other words, they increase year after year. So the numbers I gave you above will be larger next year and the year after that.

Injured people are shocked when I have to explain this and usually have many questions.  Many of them ask – Why is there a statutory deductible?  A fair question.  The answer is that our government decided to pass this law to save money for car insurance companies.  Likewise, it is used to deter people from suing – thus saving car insurance companies more money.

Full disclosure, the deductibles do not apply to claims for pain and suffering assessed to be greater than $124,616.59 or the claims of family members assessed to be greater than $62,307.59. I suspect this is little consolation for the hundreds of thousands who are affected by this ever year.

From Trauma to Trial Book Cover

The car insurance system in Ontario is rigged in favour of car insurers and against injured people. But, I want to do my best to let everyone know about it. I’d be obliged if you would share this blog so that more people know about how our system works. Knowledge is power!

Would you like to learn more about personal injury law in Ontario? Visit our website and request your free copy of Bill Teggart’s best selling book “From Trauma to Trial: A Step-by-Step Guide to Ontario Personal Injury Law”. Alternatively, you can purchase a copy on

All proceeds from the sale of the book are donated to charity.

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