Ontario Car Accident Settlement: Assessing Value

If you were seriously injured in an Ontario car accident, you are entitled to “no-fault” accident benefits from your own auto insurer regardless of who was at fault for the accident. These benefits can include income replacement, treatment and rehabilitation, attendant care, and housekeeping assistance.

While accident benefits have been designed to provide for your needs throughout your recovery, it might become beneficial to settle your claim for a lump sum amount at some point.

Typically, accident benefits claims do not settle before the one-year anniversary of the accident. After that point, there are a variety of situations that can promote a settlement opportunity. For example:

• - You return to work and/or your symptoms have plateaued
• - Your insurer determines that ongoing income replacement or rehabilitation is no longer reasonable and necessary, leading to legal disputes through the Licence Appeal Tribunal
• - You use up most of your standard medical and rehabilitation funding and must fight for a determination of catastrophic impairment to receive ongoing and enhanced benefits
• - You are also the plaintiff in a lawsuit against the at-fault driver and need immediate financial support to survive until the litigation is resolved

It is important to understand your present and future needs, and the value of the benefits that you are giving up in exchange for a lump sum payment. This understanding will depend on several factors including your life circumstances, future employability, prognosis, and which statutory accident benefits regime applies to your accident. Benefits available under older versions of the Statutory Accident Benefits Schedule (Bill 68, Bill 164 and Bill 59) are quite different than the benefits available for accidents occurring after September 2010. We recommend that you consult with a reputable personal injury lawyer with experience settling serious accident benefits claims – ideally, to manage your claim from the outset, but certainly before negotiating a settlement because it is very difficult, and in some cases impossible, to overturn a settlement.

Often, we are asked, “How much will my claim settle for?” Many of our clients have heard of other settlements or read online resources that advertise high-value settlements. The truth is, there is no reliable way to estimate your claim’s settlement value until the specific facts relating to it are known, including the severity of your original injuries, complications or additional impairments that arise, and the degree of your functional recovery (or ongoing impairment). These facts will help forecast your future needs and determine your insurer’s willingness to provide funds to close the file. One factor considered by the insurance companies is the “burn rate,” which is the total cost of benefits per month or year that you have used prior to settlement. The higher the burn rate, the higher the likelihood that you will use these benefits in the future and therefore, the higher the potential amount of the settlement.

Categories of Ontario’s No-fault Accident Benefits

A general sense of potential value can be suggested based on the structure of Ontario’s no-fault system, which currently features three distinct categories of accident benefits:

• - “Minor” injuries (including whiplash without neurological symptoms and certain soft-tissue injuries)
• - Non-catastrophic injuries (standard coverage)
• - Catastrophic impairment (including serious brain injuries, para- and quadriplegia, blindness, multiple whole-body impairments, certain mental and behavioural disorders)

Claimants categorized under the Minor Injury Guideline (MIG) are subject to a $3,500 cap on medical and rehabilitative funding, and no funding is available for attendant care. Standard coverage is available up to $65,000 in combined funding for med/rehab and attendant care. Unless optional benefits were purchased, neither of these claimants can receive any amounts for housekeeping assistance. Catastrophically impaired claimants can access up to $1,000,000 combined for med/rehab and attendant care and are entitled to housekeeping and home maintenance assistance. All three categories provide income replacement benefits for up to 2 years, or until the insurer determines that the claimant can resume the essential duties of their job. Income replacement benefits can be paid beyond 2 years provided that the claimant remains unable to work at any occupation. However, bear in mind that adjusters presume MIG claimants will be fit to work within 12-16 weeks after the collision.

Given these three tiers of available funding, your potential settlement value will be impacted directly by which category your claim has been assigned, as well as the proportion of available limits you have accessed during your recovery to date. Unless you have been deemed catastrophically impaired, and particularly for MIG claimants, we recommend that you consider challenging your insurer’s categorization prior to settling if you still require ongoing care.

Agreement and Settlement Disclosure Notice Requirements

Once you are confident that a proposed settlement is in your best interest, you will be given a copy of the Agreement and a Settlement Disclosure Notice. To be binding, these documents must conform to Ontario Regulation 664/90, which aims to protect you by making insurers meet certain standards of fairness. The Notice must contain:

• - A description of all benefits that might be available to you;
• - A description of the consequences of settlement, including the restricting your right to challenge its terms;
• - A statement that you can rescind the settlement within two business days by delivering a written notice to the insurer;
• - A statement that the tax implications of settlement might be different from the tax implications of the benefits that you might otherwise receive;
• - A statement of the insurer’s estimate of the commuted value of the benefit and an explanation of how it was determined; and
• - A statement advising you to consider seeking independent legal, financial, and/or medical advice before entering the settlement.

Failure by the insurer to provide adequate Notice can be grounds to set aside the settlement if it is to your advantage.

We strongly recommend that you seek legal and medical advice before settling. You should tell your doctors and specialists that you are considering settling your Accident Benefits (AB) claim and seek their opinions concerning your prognosis and future needs. You should also ask whether further testing should be undertaken (MRIs or functional testing, for example), to avoid settling and then discovering that you have additional or more serious ongoing impairments.

Settling your accident benefits claim is an important and complex decision. You need a clear picture of your prognosis and future needs and must balance the potential short-term gains against competing priorities and potential disadvantages. Please do not hesitate to contact us with if you have questions relating to your accident benefits claim, settlement or a potential lawsuit.

At Campisi LLP, we are pleased to offer a free, no-obligation consultation to explore your options and set you mind at ease.

Campisi LLP – Champions with Heart