The Income Replacement Benefit

Video Description:

If you were injured in a motor vehicle accident and were employed or self-employed at the time, you may be entitled to the income replacement benefit. This is an accident benefit that is available to you if your injury from the accident prevents you from being able to work or work to the same extent. To make a claim for the income replacement benefit, the first step is to notify your insurance company within seven days of the accident or as soon as practicable afterwards. The insurance company will send you the applications forms. The insurance company can take three possible responses to your application: accept it; ask for more information to consider it further; or reject it. If the insurance company agrees with your claim, it will commence payment within 10 days of receipt of the required documentation and will continue biweekly. The amount of the benefit depends on your insurance policy but the standard amount is $400 per week. If you are already 65, or turn 65 during the payment of the benefit, the amount will be calculated differently. The benefit will last, for the first two years, so long as you are “substantially unable” to engage in the essential tasks of your pre-accident employment, and, beyond the two years, for such time as you are “completely unable” to engage in any employment for which you are reasonably suited.

 

Article:

1. What is the income replacement benefit (or “IRB”)?

The income replacement benefit supplements an insured’s lack or shortfall of income because he/she is unable to work, or work to the same extent, as a result of an impairment sustained in a motor vehicle accident.

2. Who pays for the income replacement benefit?

Your insurance company

3. What is the legal test for entitlement to the income replacement benefit?

The insured must have sustained an impairment as a result of an accident and must satisfy at least one of the following conditions:

1. The insured person was employed at the time of the accident and, as a result of the accident and within 104 weeks of the accident, suffers a substantial inability to perform the essential tasks of that employment; or was not employed at the time of the accident but
   1. was employed for at least 26 weeks in the 52 weeks preceding the accident or was receiving employment insurance benefits at the time of the accident,
   2. was at least 16 years of age or was excused from attending school under the Education Act at the time of the accident, and

• as a result of and within 104 weeks of the accident, suffers a substantial inability to perform the essential tasks of the employment in which the insured person spent the most time during the 52 weeks before the accident

1. The insured person was a self-employed person at the time of the accident and suffers, as a result of and within 104 weeks of the accident, a substantial inability to perform the essential tasks of his/her self-employment.[1]

The insured is ineligible to receive the income replacement benefit if they are eligible to receive and elect to receive either the nonearner benefit or caregiver benefit.[2]

Note that “employed” means maintaining the status of employment and does not require the performance of work or receipt of wages.

4. How do I advance a claim for the income replacement benefit?

After the insured notifies the insurer of his/her intention to apply for accident benefits, the insurer will provide the insured with a blank OCF-1 (“Application for Accident Benefits”). This must be completed and submitted within 30 days of receipt. The insured must also complete and submit with the OCF-1 an OCF-3 (“Disability Certificate”) (insured completes Parts 1-5; healthcare practitioner completes Parts 6-10).[3] The insurer will provide the insured with an OCF-10 (“Election of Income Replacement, Non-Earner or Caregiver Benefit Form”) which must be completed and submitted within 30 days of receipt.[4] Other documentation that the insured must provide includes: if the insured is employed, an OCF-2 (“Employer’s Confirmation Form”) and the four most recent pay stubs, or, if they are self-employed, an accountant’s income report.

5. When must the insurer pay the income replacement benefit?

If the insurer agrees with your claim, payment will begin within 10 days of receipt of the requisite forms and continue at least every two weeks thereafter.[5]

6. How much is the income replacement benefit?

The standard income replacement benefit in every policy is $400 per week. But it depends on the policy. The insured may have purchased additional coverage.

7. Does the insured’s age affect the quantum of the income replacement benefit?

The SABS sets out a mathematical formula that adjusts the quantum of the benefit where the insured either becomes entitled to the benefit before they turn 65 but turn 65 while receiving the benefit[6] or become entitled to the benefit after they have already reached 65 years of age.[7]

8. What is the duration of the income replacement benefit?

The duration of the income replacement benefit is the post-accident period during which the insured satisfies the disability test. However, different tests are applied at different times:

1. The test applicable to the first two years after the accident – Does the insured suffer an impairment which results in a substantial inability to engage in the essential tasks of his/her pre-accident employment?[8]

In applying this test, the adjudicator will first make a list of the essential tasks of your employment (e.g. typing, sitting for extended periods) and then make findings of fact about the extent of your impairment and whether it makes you substantially unable to engage in those tasks.

1. The test applicable to any period after two years after the accident – Does the insured suffer an impairment which results in a complete inability to engage in any employment for which he/she is reasonably suited by education, training or experience?[9]

This test is harder to meet. It requires a “complete inability” as opposed to a “substantial inability”. It is a higher standard than “substantial inability” and lower than a catastrophic impairment.[10] However, it is not so stringent as to require a complete inability to do any employment, just that for which the insured is reasonably suited by education, training or experience.[11]

It is not a mechanical test that merely requires the insured to do more than 50% of any suitable job. It means being able to engage in “a reasonably suited job, considered as a whole, including reasonable hours and productivity”.[12]

The analysis does not involve identifying a discrete series of employment competencies that an individual may be able to demonstrate under artificial testing conditions, and then assemble these together into a theorized ability to engage in employment, but rather it means to “participate actively in the work relationship over some reasonable period of time”.[13]

[1] O. Reg. 34/10 Statutory Accident Benefits Schedule (“SABS”), s. 5(1).

[2] Ibid, s. 5(2).

[3] O. Reg. 34/10 SABS, s. 32(5).

[4] Ibid, s. 35(1).

[5] Ibid, s. 36(4) and (9).

[6] Ibid, s. 8.

[7] Ibid, s. 9.

[8] Ibid, s. 6(1).

[9] Ibid, s. 6(2)(b).

[10] Lombardi v. State Farm, (2003) FSC0 A99-000957.

[11] Hensworth v. State Farm, [2013] OFSCD No. 31.

[12] Terry v. Wawanesa Mutual Insurance Company, (12 July 2001), FSCO A00-17.

[13] Shubrook v. Lombard General Insurance Co. of Canada, [2004] OFSCD No. 175.