I Can’t Work Because I’ve Been Injured in a Car Accident…

Most people that have auto insurance do not know this fact: their auto insurance contains coverage to replace a portion of their income if they are unable to work as a result of a motor vehicle accident. The coverage comes in the form of Income Replacement Benefits (IRB). That is the good news, the bad news is that the IRB tops out at $400 per week, regardless of how much your job pays you.

Key Takeaways

• Income Replacement Benefits (IRBs) are available through Ontario auto insurance for people who cannot work because of injuries sustained in a motor vehicle accident.
• Standard IRB coverage is limited to a maximum of $400 per week, regardless of a person’s pre-accident income.
• To continue receiving IRBs beyond two years after an accident, an injured person must meet a stricter disability test that looks at their ability to work in any occupation for which they are reasonably suited.
• IRBs are not taxable and may continue as long as the person remains eligible under the applicable disability test.
• Drivers can purchase optional benefits that increase IRB coverage to $600, $800, or $1,000 per week.
• Optional IRB coverage may be particularly important for individuals who do not have Long Term Disability (LTD) coverage through their employer or another source.

How Long IRB Is Payable

The IRB is payable for as long as you are unable to engage in your own job. However, to continue to qualify for the IRB more than two years after the accident, you must be unable to engage in “any occupation” for which you are reasonably suited having regard to your education, training and experience. This post two-year test of disability is difficult to meet but for those who are disabled from working, the IRB is a valuable source of income benefits especially if they do not have Long Term Disability Coverage (LTD). The IRB is not taxable and it is payable for as long as you are disabled from working.

Increasing IRB Through Optional Benefits

Although the standard IRB coverage tops out at $400 per week, everyone can increase this coverage from $400 per week to $600, $800 or even $1,000 per week by purchasing Optional Benefits coverage. For just pennies per day, you can double your IRB coverage. It is a very small price to pay for peace of mind.

Who Should Purchase Optional IRB Coverage?

Who should purchase the Optional IRB coverage? That’s easy – anyone who does not have LTD coverage. Surprisingly, we come across many clients who are seriously injured in an automobile accident and they do not have any type of LTD coverage through their employer or otherwise. For most clients, $400 per week does not even begin to cover their monthly expenses. These are the people that would benefit greatly from increasing their IRB coverage.

Next Steps

The vast majority of drivers have the basic IRB coverage of $400 per week. You should contact your insurer or insurance broker if you have questions about increasing your IRB coverage. The increase in IRB payable to you could make all the difference in the world should you be unable to work because of an automobile accident.

Frequently Asked Questions

What are Income Replacement Benefits in Ontario?

Income Replacement Benefits, often called IRBs, are a type of benefit available through Ontario automobile insurance policies. They are intended to provide income support when a person is unable to work because of injuries sustained in a motor vehicle accident. According to the blog, many people are unaware that this coverage exists within their auto insurance policy. IRBs can help replace a portion of lost income during a period of disability, although the amount available depends on the coverage purchased and the individual’s eligibility. These benefits can be an important source of financial support while an injured person focuses on recovery and rehabilitation.

How much does standard Income Replacement Benefits coverage provide?

The standard Income Replacement Benefit available under a basic Ontario auto insurance policy is capped at $400 per week. This maximum applies regardless of how much income a person earned before the accident. As the blog notes, many people find that $400 per week does not come close to covering their regular monthly expenses if they are unable to work for an extended period. For that reason, understanding the limits of basic coverage is an important part of evaluating whether additional optional benefits may be appropriate for your circumstances.

How long can Income Replacement Benefits be paid after a car accident?

Income Replacement Benefits may be payable for as long as an injured person remains unable to perform their own job. However, the eligibility test changes after two years. To continue receiving benefits beyond that point, the individual must be unable to engage in any occupation for which they are reasonably suited based on their education, training, and experience. The blog explains that this post two year test is more difficult to meet. Even so, for individuals who remain disabled from working, IRBs can continue to provide valuable financial support.

Are Income Replacement Benefits taxable?

No. The blog explains that Income Replacement Benefits are not taxable. This means that eligible recipients receive the benefit without having to pay income tax on those payments. While the amount available under standard coverage may be limited, the non taxable nature of the benefit can still provide meaningful support for individuals who are unable to work because of injuries sustained in a motor vehicle accident. Anyone with questions about their specific circumstances should speak with their insurer or seek professional advice.

Can I increase my Income Replacement Benefits coverage?

Yes. Ontario drivers can purchase optional benefits that increase the amount of available Income Replacement Benefits. According to the blog, coverage can be increased from the standard maximum of $400 per week to $600, $800, or even $1,000 per week. These optional benefits are purchased through an insurance provider and are designed to provide greater income protection if a serious accident prevents a person from working. Reviewing available options with your insurer or insurance broker can help you determine whether increased coverage fits your needs and financial situation.

Who should consider purchasing optional Income Replacement Benefits?

The blog suggests that optional Income Replacement Benefits may be particularly valuable for individuals who do not have Long Term Disability coverage. Many people assume they are protected if they become unable to work, only to discover after a serious accident that they have limited income replacement available. For someone living and working in Toronto, where household expenses can be significant, the difference between $400 per week and enhanced coverage could have an important financial impact. Reviewing your existing disability coverage can help you assess whether optional IRB coverage is worth considering.

What if I do not have Long Term Disability coverage?

Individuals without Long Term Disability coverage may be more financially vulnerable if they are unable to work following a motor vehicle accident. The blog notes that many seriously injured clients do not have LTD coverage through their employer or another source. In those situations, Income Replacement Benefits may become a particularly important source of income support. Because standard IRB coverage is limited, drivers without LTD coverage may wish to explore whether optional benefits are available through their automobile insurance policy.

Should I review my auto insurance coverage before an accident happens?

Yes. The blog encourages drivers to contact their insurer or insurance broker if they have questions about their Income Replacement Benefits coverage. Reviewing your policy before an accident occurs allows you to understand what protection is available and whether optional benefits may be appropriate. For families in Vaughan and throughout the Greater Toronto Area, taking the time to review insurance coverage can help avoid unexpected financial challenges if a serious injury prevents someone from returning to work. Understanding your coverage in advance allows you to make informed decisions about your insurance needs.

Why might enhanced Income Replacement Benefits be important after a serious accident?

Enhanced Income Replacement Benefits may provide greater financial stability for individuals who are unable to work for an extended period following a motor vehicle accident. Since standard coverage is capped at $400 per week, some injured people may struggle to meet ongoing financial obligations. The blog highlights that increasing coverage can provide additional peace of mind and potentially make a significant difference if an accident results in a prolonged absence from work. The value of enhanced coverage will depend on an individual’s income, expenses, and access to other disability benefits.

When should I speak with a lawyer about Income Replacement Benefits?

If you have suffered serious injuries in a motor vehicle accident and have questions about available benefits, it may be helpful to speak with an experienced Ontario personal injury lawyer. Questions about eligibility, ongoing entitlement to benefits, and the interaction between insurance coverage and other forms of disability support can sometimes be complex. Whether the accident occurred in Barrie, Mississauga, or another Ontario community, obtaining advice early can help you better understand your rights and available options. Every situation is different, and guidance should be based on the specific facts of your case.

Contact Oatley Vigmond

If you have any questions about receiving support after suffering a severe injury in a car accident, contact Oatley Vigmond for a free consultation.