Let’s break things down in really easy to understand terms.
If you have been involved in a car accident, you are entitled to accident benefits from your own car insurance company.
If you didn’t have car insurance at the time of the accident because you were a passenger, cyclist or pedestrian; then don’t worry. The law has thought of that. Under the priority rules of the Insurance Act, the other motorist’s car insurance needs to cover your accident benefits.
If the other driver didn’t have any car insurance; and you didn’t have any car insurance; and nobody can find a car insurer to claim from in relation to the subject car accident: don’t worry! The law has thought of that as well. Under the priority rules of the Insurance Act, the Motor Vehicle Accident Claims Fund (MVACF) steps in to the shoes of where the auto insurer should be and pays out of the claim. Basically, the government steps in to the shoes of the hole left by the lack of private insurance for the case.
Once we have established insurance, it’s time for the injured accident victim to make a claim for benefits.
The injured accident victim makes a choice in terms of what benefits s/he wants to receive.
This choice is called an “election”. The “election” is made by completing an OCF-10 Election of Income Replacement Benefit, Non Earner, or Caregiver Benefit Form.
The election is very important, because it can only be made ONCE. Once you have elected one form of benefit, you change your mind and re-elect another.
For self employed who do not show much income on their taxes; or who work in largely cash businesses, this election can be a tricky decision to make.
Calculating the value of the income replacement benefit, is based on reported income. For self employed persons, it’s one thing to earn unreported cash income. But unreported income cannot be relied upon for the quantification and calculation of an income replacement benefit. If you don’t report it; you don’t get to rely on those numbers.
What often happens is that self employed people under report their income to avoid paying taxes. That’s not to say it’s a good thing to do. It’s just reality.
The same scenario can present itself for a small business owner who keeps poor records. An insurance company will pay hire a third party forensic accountant to examine the books and records of a self employed person; or small business owner. The purpose of this is to assess how much money the business/person was earning in real terms. Keep in mind there is a difference between gross and net earnings. Once those figures have been tabulated, the forensic accountant then can put a figure on the value of the income replacement benefit. It’s not uncommon for a Plaintiff side forensic accountant to have a different opinion or number than a Defendant side forensic accountant.
If the self employed accident victim’s business was showed to be losing money on paper (yet highly profitable in practice), then the income replacement benefit will be ZERO.
On the other hand, if the self employed accident victim’s business was showed to be highly profitable, then the accident victim’s income replacement benefit may achieve the maximum allowable benefit, which is just $400/week or $800/week if an optional IRB rider was purchased. It should be noted that the majority of Ontario motorists do NOT purchase this optional rider to afford this additional coverage.
So what happens when you aren’t working, or your business isn’t generating any profit (on paper).
This is when you can elect the Non-Earner Benefit.
The Non Earner Benefit will only pay $185/week, for up to two years. That’s it. But, it’s better than receiving nothing or having the joy of a forensic accountant hired by an insurance company plow through your books.
In order to receive the Non Earner Benefit, the injured accident victim must meet the disability test. That test is a “complete inability to carry on a normal life “.
The Non Earner Benefit has harsh rules which favour the insurer not to pay, or to hold off on payments to minors under the age of 18:
The insurer is not required to pay a non-earner benefit:
(a) for the first four weeks after the onset of the complete inability to carry on a normal life;
(b) before the insured person is 18 years of age; (this means that an insurance company can hold on to the minor’s money, and earn interest on that money, until that minor reaches the age of 18. The minor does not receive any credit on the interest, nor is the value of the Non Earner benefit adjusted to reflect inflation. Basically, by holding on to the funds, the insurer makes more money on the interest, and the accident victim loses money on opportunity loss and the cost of inflation.)
(c) for more than 104 weeks after the accident; or
(d) if the insured person is eligible to receive and has elected under section 35 to receive either an income replacement benefit or a caregiver benefit under this Part.
The final issue which we would like to bring to your concern is the issue of timing. The majority of accident victims don’t know that the non earner benefit (or any other accident benefits for that matter) are available to them following a car accident in Ontario. Sometimes, our law firm hears about cases long after the accident itself took place. That’s not to say that the case is ruined. It just makes it harder to get the case started up; and makes securing those valuable accident benefits even more difficult than it already is.
This is why timing for accident victims is very important. This means it’s crucial to not only report the accident; fill out the accident benefit forms; but also to contact a personal injury lawyer so that can know your rights and protect your interests.