Unlike the United States, where Court awards for personal injury have gone through the roof, Canadian Courts have been extremely careful not to over-compensate the victim. In 1978, the Supreme Court of Canada decided three personal injury cases which together have provided a guideline for the lower Courts to follow. The cases are commonly referred to collectively as “The Trilogy”.
Prior to 1978, Canadian Courts tended to award global amounts to accident victims with little regard to the actual financial losses which the victim suffered. We now do our best to measure the actual sums lost by the victim and compensate him only for those losses. For example, if a victim has been unable to work since an accident, his income loss will be calculated to the date of trial. If he is unlikely to be able to work well in the future, his loss of future income will also be calculated. The extra expenses which the victim has incurred and will incur after trial, will be determined and the amounts will be totalled. They will then be added to an award for pain and suffering and Judgment will be given for the total amount.
Recognizing the trend towards large Judgments in the United States, the Supreme Court has taken steps to ensure that the lower Courts do not become overly generous with awards for pain and suffering. In the Trilogy, the Supreme Court of Canada set a maximum award for pain and suffering in the most serious cases (example: paraplegic and quadriplegic) of $100,000.00. This ceiling has increased with inflation and now stands at approximately $250,000.00. Awards for less serious injuries also increase with inflation, but as the awards are scaled-down from the ceiling amount of $250,000.00, it is not possible for pain and suffering claims to increase beyond the rate of inflation. Accident victims in Alberta are now compensated modestly for their pain and suffering and as accurately as possible for their financial losses caused by an accident.
Nevertheless, insurance companies continue to argue that claims have risen drastically. The cost of repairing damaged automobiles has increased markedly in the past as has the cost of buying replacement automobiles. Surely premiums must increase at the same rate as the cost of the items being insured. Perhaps more people are being injured in automobile accidents. If this is the case, then we are simply faced with a larger group of individuals requiring fair treatment and reasonable compensation: all the more reason for ensuring that accident victims are properly compensated rather than reducing compensation.
While not everyone agrees that there is a need for a change in the insurance system, it is likely that the government will be reviewing the system on an ongoing basis with an eye to making drastic alterations. The changes in Ontario, Manitoba and Saskatchewan clearly illustrate a trend in that direction.
For example, in Ontario, accident victims (in all but the most serious cases), no longer claim from the person who caused them harm. Rather, everyone who is injured in an automobile accident, whether they caused the accident or were an innocent victim, must look to his or her own insurer for compensation. The only people able to sue the “at-fault” motorist for full economic compensation as well as compensation for pain and suffering are those with extremely serious injuries. All others are required to claim from their own insurer. They are not entitled to any compensation for pain and suffering. They are only entitled to limited rehabilitation and medical expense payments, as well as limited compensation for lost income. Thus, most accident victims in Ontario face restrictions in recovery for (1) lost income; (2) rehabilitation and medical expenses; and (3) pain and suffering. Little wonder that insurers were able to extend these benefits to pay motorists who caused the accidents and still reap a huge profit. In fact, during the first year following the implementation of the no-fault scheme in Ontario, the insurance industry in that province had an astounding increase in profits of $750,000,000.00, with no appreciable decrease in premiums!