Who pays for car accident injuries?

When someone gets injured in a car accident, the at-fault driver who caused the collision is usually responsible for providing compensation to the injured victim. Fortunately, drivers carry insurance to protect them if they cause an accident and need to pay compensation to an injured person.

According to the Compulsory Automobile Insurance Act, all motor vehicles in the province of Ontario must be insured, and the insurance has to include coverage for the driver’s “liability arising out of bodily injury or death… caused by a motor vehicle.” This liability insurance is what usually provides compensation to injury victims, up to the liability limits of the insured driver’s insurance policy.

Drivers can have different levels of liability protection: the minimum coverage drivers must carry in Ontario is $200,000, but most drivers have policies that will protect them from liabilities up to $1 million (and additional coverage beyond even that can – and should – be purchased).

It’s important to ensure you have enough liability protection on your policy. If the injured person’s damages exceed your policy limits, you will be personally responsible for paying compensation to the person you’ve injured. In cases of serious injury, you might end up on the hook very large amounts.

Besides paying out any compensation you owe the injured person, your liability insurance also pays for the lawyer who will defend you if you get sued, and it covers all the costs associated with taking the dispute to court if necessary.

So, if you get sued for causing an accident, as long as you were insured and the amount you end up owing to the injured person is within your policy limits, the lawsuit itself should have no financial impact on you. (If your premiums are going to be affected because you were at-fault for an accident, that will usually happen regardless of the lawsuit.)

Of course, sometimes accidents are caused by people driving illegally without insurance, or perhaps an at-fault driver might flee the scene of an accident and can’t be identified. In these cases, an injured person might be covered by their own insurance coverage, which provides basic liability coverage for unidentified and at-fault drivers, up to a maximum of $200,000.

Drivers can also optionally carry coverage known as underinsured protection. This coverage means that if the at-fault driver has lower liability limits than the injured driver (or if the at-fault driver is uninsured or unidentified), then the injured driver can recover the difference up to their policy limits from their own insurance. Since it’s often difficult to recover compensation from unprotected or insufficiently-protected individuals, it can be very helpful to carry this underinsurance protection – it is usually a lot easier to get money out of an insurance company than an individual with limited means! And since the underinsured protection will pay out up to your own liability policy limits, this is another good reason to ensure you’ve bumped the limits on your own policy up to a sufficient amount.

It will be no surprise that insurance companies often end up fighting between each other about who is going to have to pay the injured person. These disputes are known as ‘priority disputes’ and they can have serious consequences for injured persons if the amounts of coverage available are different. For example: one car may have coverage of $2 million, and the other may only have $200,000. If a badly injured person doesn’t have underinsurance protection, they obviously hope the $2 million policy is the one that will respond to their claim, and have a vested interest in pushing for that interpretation.

If an accident occurs and no one involved has any insurance, injured persons still have one final place to turn. The Motor Vehicle Accident Claims Fund protects Ontarians injured in sufficiently serious car accidents up to the basic levels.

Figuring out who pays after a car accident is not always straightforward. An experienced OTLA car accident lawyer can help identify the correct payor, and ensure injury victims receive full and fair compensation.

Brendan Sullivan
Written by

Brendan is a lawyer working in Hamilton Ontario at Harvey Katz law office. He has had the privilege of working closely with Harvey Katz and assists seriously injured people with claims arising from motor vehicle accidents, slip and falls, dog bites, life insurance denials and long-term disability. Brendan completed his articles in 2016 with a large insurance defence firm where he assisted with a seven week jury trial in Toronto. Brendan is a member of the Hamilton Law Association and the Ontario Trial Lawyers Association.