Refresh/Reset – Multiple $2,000.00 Deductibles Allowed in Loss Transfer Claims

January 26, 2016 | Helen D.K. Friedman

A recent Superior Court decision (Economical v. Northbridge, 2016 ONSC 458) has provided the industry with a refresh/reset in applying the $2,000.00 statutory deductible in loss transfer claims.

The deductible in issue is set out in section 275(3) of the Insurance Act which states:

“(3) No indemnity is available under subsection (2) in respect of the first $2,000.00 of statutory accident benefits paid in respect of a person described in that subsection.

For twenty years, the prevailing jurisprudence (Progressive Casualty v. Jevco, [1994] O.J. No. 3152) dictated that the $2,000.00 deductible applied once and only once and applied to each “incident”, regardless of the number of individual accident benefits claims in respect of each incident.  For every car full of accident benefits claimants (who may be claiming from multiple insurers), the loss transfer payor was only entitled to one deductible.

Applying both a textual and contextual practical analysis, Mr. Justice Faieta agreed with the reasoning of Arbitrator Samis who heard the matter at first instance.  While Arbitrator Samis ultimately upheld the single deductible approach, he did so only as he felt bound by the decision of Mr. Justice Somers in Progressive Casualty.  Mr. Justice Faieta overturned the Arbitration decision but applied Arbitrator Samis’ reasoning in a call to refresh/reset the application of the $2,000.00 statutory deductible, namely:

  • Pragmatic cost avoidance – deductibles are meant to deter loss transfer claims in minor cases.
  • Simplicity over complexity – a single deductible would require distribution among various claims for reimbursement.
  • Each claimant’s fault needs to be separately assessed.
  • Each claimant’s coverage circumstances are different depending on his or her particular policy.
  • The prevailing jurisprudence did not appreciate or acknowledge that “loss transfer is claimant centric”.
  • The language of section 275(3) of the Insurance Act does not limit the deductible to the named insured.
  • The words “in respect of” should be read with the widest, not the narrowest, possible scope.
  • Just because one judge ascribed an interpretation to a statutory provision, this does not mean that their judicial interpretation reflects the legislative intention.
  • Allowing for a deductible to be applied to each person’s claim would produce a just and reasonable result.

This decision will be of benefit to a number of insurers, not just those who insure heavy commercial vehicles; consider the application to off-road vehicles, motorcycles and snowmobiles with multiple occupants.  The refreshed approach is simple, efficient and expedient, which dovetails with the purpose of the loss transfer scheme.

With many claims being held in the MIG, the end result may simply be less of an appetite to pursue loss transfer claims in the face of a $2,000.00 deductible per claimant.

Read the full case.


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