The Threshold Test & Statutory Deductible in Motor Vehicle Accident Claims Posted onNovember 25, 2021March 26, 2025/ Devry Smith Frank LLP Defining General Damages In every motor vehicle accident, an individual may claim general damages. General damages are commonly referred to as non-pecuniary losses, non-economic damages, or quite simply damages for pain and suffering. These are damages that are not economic in nature, yet still affect a person’s lifestyle and quality of life. They cannot be calculated or quantified like lost income or medical bills; rather, they compensate for things like pain and suffering, loss of quality of life, and emotional or psychological distress. The Threshold In Ontario, in order for an individual to recover general damages (i.e., damages for pain and suffering, also known as non-pecuniary losses) in a motor vehicle accident claim, the individual must first satisfy the Threshold Test by proving on a balance of probabilities that their injuries are both permanent and serious: As denoted in section 267.5(5) of the Insurance Act– the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss from bodily injury or death arising directly or indirectly from the use or operation of the automobile, UNLESS as a result of the use or operation of the automobile the injured person has died or has sustained: (a) permanent serious disfigurement; or (b) permanent serious impairment of an important physical, mental or psychological function. 1996, c. 21, s. 29; 2011, c. 9, Sched. 21, s. 3 (3).2 The Deductible In addition to satisfying the threshold test, an individual must also prove that their general damages exceed the statutory deductible in order to recover any amounts under this head of damages. The current statutory deductible for 2021 is $39,754.31 and increases each year.3 What this means is – if an individual is involved in a motor vehicle accident and their claim for pain and suffering is valued at an amount equal to or less than the current statutory deductible, they will receive nothing under this head of damages.[1] It is important to note that this statutory deductible applies only to general damages – so if an individual has losses relating to housekeeping or income loss, for example, this deductible does not apply for those damages. The rationale for this deductible is to discourage smaller or frivolous tort claims, and operates to save insurance companies from paying out on smaller claims. Example Case: Motor Vehicle Accident Claim An elderly and retired individual was on their way to the local grocery store and, while driving to their destination, was rear-ended by another motorist. As a result of the accident, the elderly individual sustained various injuries and now has difficulty doing housekeeping tasks at home and can no longer enjoy the things they used to do, such as taking long walks, exercising, or travelling with family. The elderly individual sues the other motorist, and the two sides are unable to settle at mediation, so the case proceeds to trial. At trial, after hearing the evidence and considering the facts of the case, the jury deliberates and agrees that the claim satisfies the threshold test, concluding that the injuries sustained are both permanent and serious. As a result, damages are awarded. The jury arrives at a general damages figure they consider fair compensation for the elderly individual’s injuries. In addition to an award of $10,000 for housekeeping damages, the elderly person is awarded $60,000 for general damages relating to pain and suffering. From this amount, the statutory deductible of nearly $40,000 is subtracted, leaving the insurance company liable to pay out a little over $20,000 to the elderly individual for general damages. In total, the elderly individual receives: $10,000 for housekeeping damages $20,000+ for general damages after the statutory deductible is applied If you have more questions related to motor vehicle accident claims, please visit our website or contact Cindy Leung at Devry Smith Frank LLP and Derfel Injury Law to discuss any questions regarding your rights and options. This blog was co-authored by Student-At-Law Amar Gill. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please contact a lawyer. Each case is unique and different and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” Sources [1] https://www.ontario.ca/laws/statute/90i08 [2] Ibid. [2] https://www.fsrao.ca/industry/auto-insurance/regulatory-framework/guidance/2021-automobile-insurance-indexation-amounts-guidance-updated-december-18-2020 [1] As of 2021, the deductible of $39,754.31 is waived if an individual’s claim is above the monetary threshold of $132,513.28. This monetary threshold is also subject to increase each year.
