Toronto Injury Lawyer Blog
If you are injured in a motor vehicle accident, regardless of whose fault the accident is; you are entitled to claim an income replacement benefit of up to $400/week. That income replacement benefit can be increased to $800/week if you purchase an optional rider on your car insurance policy.
The income replacement benefit was automatic if you were an income earner, and if you met the disability test. This means that you needed to show that you made money (hard to show cash income) and that you were too disabled from returning to work.
You did not have to purchase any additional benefits, or pay extra on your policy to qualify for the income replacement benefit. It was part of the standard automobile policy in Ontario.
Even if you didn’t own a car, or have a driver’s license, you were still entitled to claim the income replacement benefit if you were hurt or injured in a motor vehicle accident. That meant that innocent pedestrians, cyclists, or simply those who didn’t drive had the same access to income replacement benefits as those who did drive.
Things are changing when it comes to the income replacement benefit.
Ontario Regulation 383/24 was announced in the Ontario Gazette on October 11, 2024. Beginning on July 1, 2026, the income replacement benefit will now be optional:
(1.0.1) The benefits set out in Parts II, IV, V and VI of this Regulation shall be offered as optional benefits under every contract evidenced by a motor vehicle liability policy entered into or renewed on or after July 1, 2026.
(1.0.2) Subject to subsection (1.0.4), if a contract evidenced by a motor vehicle liability policy is renewed on or after July 1, 2026, the benefits set out in Parts II, IV, V and VI of this Regulation, as they read immediately before July 1, 2026, are deemed to continue as optional benefits in the amounts previously payable under the contract unless the named insured and the insurer agree, in writing, that the named insured declines any of the benefits or makes changes to the amount payable in respect of a benefit.
Benefits optional
4.1 (1) Every insurer shall offer the following optional benefits under every contract evidenced by a motor vehicle liability policy and, if a benefit is purchased, the applicable rules set out in this Part apply:
1. An income replacement benefit, as described in sections 5 to 11.
How will this play out in personal injury litigation?
I like the idea of choice. But I don’t like the concept of choice which leaves people behind and creates two tiers of insurance.
What the government is saying is that if you don’t pay into the car insurance system, then you don’t matter, and that you aren’t entitled to the same degree of coverage as others who are more vulnerable.
Pedestrians and cyclists who have made deliberate choices not to own a car and not to drive will be hurt. They won’t have access to these benefits.
People who cannot afford to drive will not have access to these benefits either.
What these changes say is that if you don’t pay, then you don’t matter.
In practice, few people will opt to get the income replacement rider. I know this because people chose the cheapest forms of car insurance available. In my experience, people opt for the standard, or bare bones when it comes to coverage assuming that accidents won’t happen. We’ve seen that when it comes to increased med/rehab benefits, or increase catastrophic injury coverage. The majority of drivers don’t opt to purchase these additional coverages.
Vulnerable people who need the money to make ends meet won’t get the financial support they need. This will cause more strain on the social security network (CPP Disability, ODSP, Ontario Works). It will also encourage personal injury lawyers to get their claims out sooner rather than later given that their clients need money away without access to an income replacement benefit.
From a personal injury litigation standpoint, it means that accident benefit claims will have decreased value. But tort claims defendants will have greater exposure for their claims given that there will be fewer instances where they can claim an income replacement benefit set off in cases where the income replacement benefit is not available.
That’s not such a bad thing because it’s always been difficult for Plaintiffs to get their heads around the concept of the tort insurer receiving such a large set off from the accident benefit insurer’s payments, or potential to pay out on a given claim. It never made sense that the at fault driver would receive all of the set off protections when they were primarily responsible for the accident and the injuries to the Plaintiff in the first place. The way that things currently work is that the first party insurer (the innocent Plaintiff’s own insurer) has to pay for the income replacement benefit provided that the Plaintiff meets the criteria and the disability test. The income replacement benefit is not automatic, nor was it ever meant to be. But once the income replacement benefits starts getting paid out, the tort insurer (the insurer for the at fault party) gets a dollar for dollar set off for any amounts paid out by the accident benefit insurer. That means that every dollar which the accident benefit insurer pays out, is a dollar which the tort insurer gets to save! Those set offs in the form of savings will soon disappear for the tort insurers, which will bring us back to a pre 1990 system, save for the applications of the threshold and the deductible which continue to be punitive against Plaintiffs across Ontario.
If drivers want the protection of the income replacement benefit, they will need to pay for it. Drivers will need to understand car insurance and what it is that they are purchasing. Insurance brokers, whether private or related to the insurer will need to do a very good job at explaining what the insurance covers, and what it does not. People who don’t have as much money to spend on insurance, or who don’t drive, or who don’t pay into the car insurance system will be left to wait to get any sort of interim financial relief. It just won’t be there as it was when income replacement benefits were automatically included on standard automobile insurance policies.
