Prejudgment Interest Changes
Bill 15 proposes to change a 30-year-old rule that has been so important to those who have suffered injuries in Ontario. “Prejudgment interest” on pain and suffering damages is intended to compensate an innocent victim when the negligent person’s insurance company delays paying those damages. Basically, it ensures timely payment for damages by insurance companies to innocent victims. No one can argue with the fact that timely resolutions are in the best interest of both sides of any dispute, and the Court system.
Prior to January 1, 2015, insurance companies are required to pay 5% interest on whatever sum injured people are owed for pain and suffering. For example, if an injured person has a serious injury and his or her injury is ultimately assessed at $50,000, but the insurance company delays paying the claim for 3 years, the insurer would have to pay $7,500 in interest. That’s not a lot, but at least it is something to compensate for the delay, and it serves as an important incentive for insurers not to purposely delay settlement of claims!
The change in the interest rate became effective on January 1, 2015 which has now reduced to the rates as published in the Courts of Justice Act. This applies to all claims under the Statutory Accident Benefits Schedule, as well.
This is another insult visited upon injured victims in the Province of Ontario as levied by the current Provincial Government.