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Income Replacement Benefits after a car accident in Ontario

If you have been hurt or injured in a car accident in Ontario, you may be entitled to an income replacement benefit of up to $400/week (or more if you paid an additional insurance premium to increase your IRB level).

$400/week isn’t very much money. But before you complain, all Ontario drivers are eligible to purchase optional benefits to increase the IRB level. Unfortunately, very few Ontario motorists opt to purchase this coverage because it tacks more money on to their existing premium. Let’s be honest, the majority of people are simply looking for the cheapest rates around, without giving much thought to what they are, or aren’t covered for and regardless of the ultimate benefit which is paid out.

If I told you that you could increase your liability coverage from $1,000,000 to $2,000,000 per year by paying an extra $20/year, would you take it? Sounds like a pretty good deal right? Paying just $20/year for an extra $1,000,000 in coverage. This is one of the best bangs for the buck on the car insurance market, but few people opt for this additional coverage benefit. The cheapest coverage is the default coverage of choice for the majority of Ontario drivers.

When you think of the term income replacement benefits, it would lead you to believe that the benefit will replace your entire income for the period you’re too injured to work following a car accident. NOT TRUE.

The term income replacement benefit is somewhat misleading, as it doesn’t entirely replace your income, and it’s not as automatic as the term “benefit” would lead you to believe.

For starters, the income replacement benefit does NOT replace your income for the first 7 days following your car accident. That means the first 7 days following your car accident are lost completely (unless you can recover them on the tort end, which is another story).

We tell our personal injury clients to apply for Employment Insurance (Sickness/Disability) right away following serious injuries from a car accident. Often times, the EI Disability will be paid out from the Government faster and fuller than your income replacement benefit.

EI Disability pays out 55% of your average insurable weekly earnings, to a maximum of $562/week. The standard Income Replacement Benefit maximum is just $400/week. This is hard to wrap your head around considering that car insurance companies are in the business of insuring people after they’ve been hurt or injured in a car accident. Their entire business model is geared around car accidents. Yet, when it’s time to pay out, car insurers are able to pay out a weekly maximum of $162 less in income replacement benefits than the government is required to pay out.

In fairness, EI Disability has a shelf life. It’s capped out of a maximum of 15 weeks, then it’s gone. Income Replacement Benefits have a much different shelf life.

The duration of the income replacement benefit should be looked at in two distinct time frames. The first being the initial two year period or 104 weeks as defined by the legislation governing income replacement benefits (SABS). The second time period is what happens after the first two years or the post 104 week time period. You will often hear personal injury lawyers talk about the term “post 104“. This is what they’re referring to so now you know.linkedin-2-300x300

Over the first 104 weeks (two years), entitlement to the IRB is defined by s. 5 of the SABS as:

a substantial inability to perform the essential tasks of one’s own employment

After two years have elapsed (post 104 week period), entitlement to the IRB is defined as:

a complete inability to engage in any employment, for which her or she is reasonably suited by education, training or experience.

The injured accident victim will also need to show that they where either:

(a) employed on the date of the accident; or

(b) not employed but either worked 26 or the 52 weeks before the accident

Proving these two parts is a two part step. The first step is getting your past or current employer to complete an OCF-2 Employer’s Confirmation of Income Form. Unlike the Income Replacement Benefit, the OCF-2 Employer’s Confirmation of Income Form is true to its name. It’s a form whereby your employer not only confirms your past standing as an employee of gainfully employed person, but the employer also confirms how much you were earning; hence the name “confirmation of income”. This is one of the few accident benefits forms which actually makes sense and achieves what it seeks out to achieve without some dark ulterior motive or misleading name.

The second step is getting your doctor, nurse, specialist, psychologist or other health care professional to complete an OCF-3 Disability Certificate. 

The disability certificate is supposed to articulate in an easy to understand way what your disability is from the car accident, and provide a prognosis on how long your disability will last. A lot of this is guess work. Nobody can predict the future which is one of the problems with the Disability Certificate.

Using this educated guess work from treating professionals, the insurance company in theory should be in a position to make a determination whether or not the injured accident victims qualifies for income replacement benefits.

Regrettably, this is often not the case. The insurer will almost always request a plethora of other information including but not limited to your tax returns predating the car accident for as long as they can go, your complete employment file(s), your doctors clinical notes and records predating the car accident for as long as they can go, the hospital records, your collateral benefits file, the accident report, and the list goes on as far as your imagination will let it.

If you are self employed, or a contractor, or work in a cash job (taxi driver, barber/hairstylist, waiter, food service, trades person), the insurance company will hire a forensic accountant to sift through your finances. They will request all of the financial records you can dream of including but not limited to  deposit slips, bank statements, check books, invoices, more detailed tax returns etc. The insurance company will not pay out the income replacement benefit until their demands are satisfied.

So when will your income replacement benefit get paid? That all depends. How clean are your books? How quickly will your doctor and employer complete the necessary forms to get the ball rolling. How quickly will your doctor, the hospital and Revenue Canada produce what the insurance company needs to see. And just because you’ve produced all of these documents to the insurer is still no guarantee that they will pay the income replacement benefit. So, when I say it all depends, I mean it. There are a lot of moving parts in order to get the ball rolling so that your income replacement benefit can begin to flow.


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