Clarity on prejudgment interest but not deductible
Author(s): Darcy R. Merkur
February 3, 2017
The debate over whether ongoing Ontario personal injury automobile claims are impacted by recent legislative amendments received some clarity recently, at least when it comes to the issue of prejudgment interest. However, the dispute over the application of annually increasing statutory deductibles to ongoing personal injury automobile claims remains.
Ontario motor vehicle accident victims involved in accidents that predate January 1st, 2015 will no longer have to entertain the argument that they are caught by the prejudgment interest rate reduction set out in section 258.3(8.1) of the Insurance Act.
Since its legislative introduction on January 1st, 2015, insurance defence lawyers have regularly taken the position that defendants in ongoing automobile claims (associated with accidents prior to 2015) can benefit from the prejudgment interest rate reduction, arguing the legislation has retroactive effect. The legislative amendment served to replace the favourable prejudgment interest rate applicable on general damage claims from the mandated 5% per year rate set out in Rule 53.10 of the Rules of Civil Procedure with the lower Courts of Justice Act (CJA) rate set out in section 130 (a rate that has been between 1.3% and 1% for the last few years).
The higher prejudgment interest rate on general damage claims was a welcome feature for accident victims not only for the obvious reason that it was much higher than the CJA rate but because it gave a financial incentive to insurers to pay out claims efficiently rather than face the 5% per year interest rate.
Read full article as it originally appeared in the February 3, 2017, issue of The Lawyers Weekly: Clarity on prejudgment interest but not deductible