Cochrane Personal Injury Lawyer


What You Need to Know About Car Accident Settlements in Canada

When you are injured in an accident wherein the other driver was at fault, you are entitled to compensation that covers the expenses that arise directly from that accident. You are also entitled to compensation for your pain and suffering. 

Car accident settlements still generate a lot of confusion among our clients. This guide will give you a better understanding of how they work and what you can expect. 

How long does it take to get a car accident settlement?

Most car accident settlements are awarded within 18 months of the accident. Before your settlement can be awarded, you must reach maximum medical improvement. You may not be fully whole, hale, and healed upon reaching MMI, but your recovery has progressed as far as it’s going to go.

At that point, we can calculate the sum total of your medical expenses and lost wages. We can also evaluate whether or not you’re ever likely to be able to return to work. If you aren’t, we’d want to include a loss of earning capacity amount in your settlement. We can get a doctor’s recommendation on what kind of long-term care you are likely to need. 

We need all of this information before we start attempting to negotiate with insurance companies. 

As you’ve healed, we’ve been conducting a thorough discovery process. We’ve taken official statements from witnesses. We’ve reconstructed the accident and have tracked down the police reports. We have a good idea of what percentages of fault could be assigned to each side.

Thus, we’re fully prepared when it’s time to go into a settlement conference, or into a mediated alternative dispute resolution process with a professional mediator or a judge. 

90% to 95% of the time, we agree on a settlement with the insurance company. The rest of the time we can’t come to an agreement and the case goes on to trial. If the case goes to trial you only get an award if the jury agrees you deserve one, and the jury sets the amount. 

If the case goes to trial you can expect the process to take another 6 to 12 months. It takes time to get a court date, and to litigate a case.

What Should I Expect From A Car Accident Settlement?

The severity of the damage is the first item to consider when determining what a typical settlement for an auto accident injury would be. Many circumstances can influence your settlement, and it’s frequently difficult to predict how much you’ll get.

What is a Typical Auto Accident Settlement?

There are three types of no-fault accident compensation, each with a different maximum sum for medical and rehabilitative care:

  1. Minor Injury Guidelines (up to $3,500)
  2. Non-catastrophic Injuries (up to $65,000 in total)
  3. Catastrophic Impairment (up to $1,000,000 in damages)

As you can see, the classification of your injuries has a significant influence on the accident benefits you receive.

Are car accident settlements taxed?

No. The Canadian Revenue Agency (CRA) does not count personal injury compensation as income for the purposes of taxation. The only exception is parts of your settlement meant to replace income.

You can also end up paying taxes on investment income earned on your settlement. Any profit or gain you make on those investments is taxable. For example, if you make $1000 on a $10,000 investment then you can expect to be taxed. 50% of the capital gains income ($500) gets added to your income.

Even structured settlement claims where you receive a regular monthly or bimonthly payment are considered to be tax-free income, though you should consult with an accountant to make sure all the money is being handled correctly to protect its tax-exempt status. 

Collection agents are asking for money, what should I do?

Sometimes medical bills go to collections long before the personal injury case is done. Collection agencies start calling and your stress levels go through the roof.

Fortunately, there’s a simple solution. Just refer those people to your lawyer. They can place a lien on your settlement. Once they’re reassured that a case is in progress and they’re likely to get paid they typically stop calling.

What’s the average settlement for a car accident?

While settlements can vary greatly the average settlement is approximately $120,000. They can be lower when injuries are minor or higher when injuries are catastrophic

We’ve certainly seen car accidents worth over a million dollars.

A more useful figure is, of course, what your car accident settlement is likely to be worth. When we go over your case we’ll calculate this figure and you’ll know exactly what a fair settlement should look like, within a negotiable range. 

How are car accident settlements calculated?

You are awarded two types of damages.

The first is your special or pecuniary damages: the calculable amount of all of your costs that have resulted from the accident. These are your medical bills, costs to repair or replace your vehicle, lost income, loss of future income or earning capacity, future medical costs, expenses for special equipment you may need as a result of your injury, and housekeeping expenses if your injury now requires you to have housekeeping help. These damages are quantifiable and vary with every case. 

The other type of damage is your pain and suffering damages. These are damages awarded for your pain, disfigurement, scarring, or loss of ability to enjoy the activities that you used to enjoy as a result of the accident. There is no set guideline for calculating pain and suffering but in Alberta, they are capped at $379,050.28 even for major injuries. 

For minor, soft-tissue injuries pain and suffering damages are capped at $5,365.

The sum total of both of these amounts will constitute your car accident settlement. Obviously pain and suffering is somewhat negotiable and your lawyer will be working hard to get these damages set as high as possible. 

How do you get your car accident settlement? 

The monies go first to your lawyer. They pay everyone who has a claim on that money, such as the hospital or your physical therapist. They also take out legal fees, including their contingency percentages and costs, such as the costs they paid to hire expert witnesses.

They then wire the rest to your bank account. Rest assured that you are likely to walk away with 3 times as much money than you would have had if you’d gone it alone, even after lawyer’s fees and legal costs are accounted for. 

What happens if I reject a settlement offer?

Negotiations continue. Both parties may agree on a settlement at any point prior to a jury returning a verdict. If you reject reasonable settlement offers too many times the matter will likely go to trial, where your case may face an uncertain outcome. 

Get Help With Your Car Accident Settlement Today

Call us for a risk-free case assessment. Our responsive, caring lawyers have over two decades of experience helping other Albertans get the best and highest settlements for their car accident claims

Contact us to schedule your initial consultation today. 

Call (403) 237-9777 to get started. 

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