Toronto Injury Lawyer Blog
The policy limits under the majority of standard car insurance policies in Ontario is $1,000,000.
Those policy limits don’t stack. That means that if there are more than 1 vehicle involved in a car accident, it doesn’t mean that the Plaintiff has access to $1,000,000 under one policy, plus $1,000,000 under another policy. It means that the policy limits of the claim are limited to $1,000,000; which, if you think about it long and hard, isn’t all that much money in 2025. Will $1,000,000 buy you a home in Toronto proper? Perhaps it will buy you a home outside of Toronto, but after paying all of the closing costs, insurance, taxes, and furnishing the home, you might not be left with a whole lot. In any event, $1,000,000 today, is not the same as $1,000,000 decades ago.
Insurance companies are reluctant to write lump sum cheques for $1,000,000. There are a lot of policy reasons for that. Namely, insurers don’t want their willingness to write the cheque, to come back and create a legal problem.
What do I mean by that?
Let’s assume that a car accident case settles for $1,000,000; and the insurer cuts a lump sum cheque. The Plaintiff then takes his/her share of the settlement funds, and blows through them in a matter of months, weeks, or even days. How can one do that? There are plenty of ways, I can assure you.
Months later, the Plaintiff retains a different personal injury lawyer to bring a claim against the insurance company, along with his/her old personal injury lawyer alleging that the settlement was either not enough (improvident); that it was not placed into a structure (improvident); or that the settlement never should have taken place to begin with.
There might be merit to the Plaintiff’s claim. There might be no merit at all. Nonetheless, after the claim has been made, the insurer and the old personal injury lawyer have to defend it; which is a pain in the you know what; particularly after the parties believe that the claim had settled. After all, the Plaintiff did receive a $1,000,000 which s/he agreed to.
Insurance companies, nor personal injury lawyers, want to see these sort of things happen; nor do they want to spend their time defending these sort of cases. Do you really think that your personal injury lawyer wants to see their former client blow through $1,000,000 in a matter of months on inconsequential or wasteful purchases?
When there is a large amount of money being negotiated between then parties, such as a $1,000,0000 sum, insurers may request that the Plaintiff undergo a Capacity Assessment with a designated capacity assessor. Here is a list of Designated Capacity Assessors in Ontario from the Government of Ontario.
The insurance company will generally pay for the cost of a capacity assessment. The capacity assessor will generally come to the Plaintiff’s home, and ask them a variety of questions in order to determine whether or not they have the capacity to appreciate the proposed settlement; and whether or not they have the capacity to manage their own finances given that they will be responsible for managing their own settlement funds should there not be a Guardian of Property or Power of Attorney in place. If the Plaintiff does not have capacity to appreciate the settlement, then the settlement will need to be approved by a Judge, and a Guardian will need to be appointed. If the Plaintiff has capacity to appreciate/understand the settlement, but is showing a lack of capacity to manage their own finances, then a Guardian of Property will need to be appointed by the Court through a Guardianship Application in the Estate Court. This is a completely separate proceeding from the personal injury case, which can be hard for many to understand. It’s basically a separate claim (a Guardianship Application) brought to a Judge of the Estates Court. The Guardianship Application can be over property, or over caring for the Person; or for both. The Guardianship Application can also be done at the same time as the approval for the settlement in the Superior Court as well (a 2 in 1 Motion) which can streamline both the approval of the settlement, along with appointing the Guardian at the same time should the Court permit it.
The next thing which needs to be considered is structuring then $1,000,000 settlement. Some insurers will require this as a term of the settlement. Others won’t. Structuring the settlement means that all, or a portion of then settlement funds are put into an annuity to the benefit of the Plaintiff which pays out periodically. The frequency of payments along with the amounts is flexible and depends what works best for the Plaintiff. By structuring the settlement funds, it ensures that the Plaintiff does not spend his/her money too quickly on wasteful items. The money will last longer and is invested by an insurance company in order to gain interest to the benefit of the Plaintiff. The intent of the structure is to make the money last, and grow for the benefit of the Plaintiff. All of this sounds wonderful in theory. A $1,000,000 structure invested over 30 years can easily double or reap even greater returns. But, here is the downside. What happens if the Plaintiff dies before the structure is fulfilled? Say the Plaintiff dies 3 years after the settlement and the funds were placed into the structure? In that scenario, the Plaintiff does not get to enjoy, or use, the full amount of his/her settlement which doesn’t seem right. Let’s say that the Plaintiff wants to make a big ticket purchase for a home, vehicle, cottage, invest into a business, or pay for their children’s education abroad at a fancy university. Once the money is placed into a structure, that structure cannot be undone. Once it’s there, it’s locked in. In the United States, structures can be undone, or sold off/assigned (generally at lower values) for a lump sum. That sort of thing does not exist in Ontario. That means if your settlement has to be structured, it’s very important to select the right structure that will work for you. But, this is a tall task because your needs/goals today, may not be the same needs/goals which you have years from now. Circumstances change, and these changes are not accounted for in structures.
