top of page
  • ewiley43

What if I Cannot Work After a Car Accident? What Benefits Can I Receive?

Updated: 4 days ago

Unfortunately, individuals injured in car accidents must navigate a complicated web of laws and procedures to obtain financial compensation and benefits to keep them financially afloat.



More unfortunate is that Ontario law is designed to undercompensate individuals injured in car accidents for their losses of income incurred before a trial.  


This article will explain how Ontario law is designed to undercompensate individuals injured in car accidents and will outline the types of procedures and claims an individual will be required to commence after a motor vehicle accident.


The Insurance Act – Designed to Undercompensate


The Ontario Insurance Act applies to motor vehicle accident claims. It intentionally undercompensates individuals for their losses of income sustained in a motor vehicle accident.


Future income losses post-dating a trial are 100% recoverable.


However, the Insurance Act limits an individual’s pre-trial income loss claim to 70% of their earnings. The other 30% of the pre-trial income loss is not recoverable in a lawsuit and is essentially...gone. Typically, motor vehicle accident claims take several years to reach trial, which means several years where the 70% rule will apply to reduce an individual’s compensation. Meanwhile, the longer it takes for a lawsuit to reach trial, the longer the insurer of the defendant benefits from the 70% rule. 


The harshness of this rule is illustrated by the following example.


Suppose an individual makes $50,000 annually. The individual sustains significant injuries in a car accident caused by the negligence of another driver. The individual commences a lawsuit against the other driver whose insurance company responds to the claim. The claim takes three years to reach trial at which time the individual does not return to work and receives no income assistance. One might expect the individual to receive $150,000 to be fully compensated for the loss of past income. However, in Ontario, the pre-trial income loss claim will be limited to 70% of earnings, and in this case the individual will only receive $105,000 (or $35,000 a year). The individual will sustain a $45,000 shortfall over this three year period despite being involved in a car accident caused by the negligence of another party.


Individuals frequently question the unfairness of this law and outcome. The rationale behind the 70% rule is to benefit insurers who can in turn lower insurance premiums for consumers. Injured parties are also not entitled to claim lost wages for the first week following a motor vehicle accident. The aforementioned rules do not apply to other types of lawsuits (medical malpractice, product liability, slip and trip and fall claims) but only to motor vehicle accident claims.


Further stacking the odds against injured individuals is the number of and complexity of procedures arising from a motor vehicle accident claim.


Types of Claims


Loss of Income and Income Assistance


If an injured party is unable to return to work, they will typically have access to some form of sick/vacation benefit through their employment, which needs to be exhausted before receiving short-term disability benefits and then long-term disability benefits. Alternatively, they may have access to ODSP, EI, or CPP disability benefits. Finally, all individuals will have access to Accident Benefits through an auto insurance policy.


As a result, individuals injured in car accidents are often required to start at least two separate claims/procedures, which may include some combination of the following:


(i)                  a claim for accident benefits against their own insurer;

(ii)                a claim for short-term disability (STD) and long-term disability (LTD) benefits;

(iii)               a claim for CPP Disability benefits;

(iv)               and a lawsuit/legal claim against the at-fault driver who caused the collision;


This is not an exhaustive list. Other benefits that an individual may claim include other forms of social assistance like ODSP.


To avoid a claimant from "double dipping" from multiple sources of benefits and being overcompensated, insurers typically receive a credit or offset for other benefits being paid to a claimant.


The accident benefits (AB) insurer will pay an income replacement benefit (IRB) of the lesser of:


  • 70% of your pre-accident income minus any amounts received for income assistance (ie… short-term disability or long-term disability); or

  • $400


A long-term disability carrier will also receive credit for any CPP disability benefits being paid to a claimant.  


Finally, the insurer of a defendant in a lawsuit will only be required to compensate an injured party for 70% of the loss of past income and will receive a credit for all of the above benefits available to or received by a claimant (with the exception of ODSP, which will require the plaintiff to seek repayment from the defendant in a lawsuit for these amounts).


The following examples help to illustrate the above. In each example, assume the claimant’s gross weekly income is $1,000 per week:


Example 1: assume the claimant’s pre-accident income was $1,000 per week. Their 70% weekly income is $700. The payable income replacement will be $400 if there are no other benefits available. The remaining $300 per week will fall to the defendant in the lawsuit.


Example 2: there is a Short-Term/LTD benefit of $700, which is equal to 70% of the claimant’s pre-accident weekly income. The IRB will be reduced to 0 as 70% of the claimant’s gross weekly income $700) is reduced by $700 in benefits to 0. There will theoretically be no loss of past income falling to the defendant in a lawsuit should this situation remain unchanged to the date of trial (practically, however, wages adjusted for inflation from the date of the claim to the date of trial may result in a small loss of income claim being advanced).


Example 3: the Short-term/LTD benefit is $200 weekly, which is 20% of the claimant’s income. The IRB will still be $400 since 70% of the gross weekly income is $700 and is reduced by $200 in Short-term/LTDs to $500. The AB insurer will pay an IRB that is the lesser of $400 and $500. The remaining $100 per week will fall to the defendant in the lawsuit.


Example 4: the Short-term/LTD benefit is 50% of the claimant’s income ($500 weekly). The IRB will be reduced to $200 (since 70% of the gross weekly income is $700 and is reduced by $500 in short-term/LTD benefits to $200). The AB insurer will pay an IRB that is the lesser of $200 and $400. Again, there will theoretically be no loss of past income falling to the defendant (subject to wage adjustments for inflation from the date of the claim to the date of trial).


Example 5: the Short-term disability/LTD is 90% of the claimant’s income ($900 weekly) there is no IRB payable and there is no loss of past income falling to the defendant.


Example 6: the same individual is receiving LTDs of 50% ($500 weekly), and then becomes entitled to CPP of $300 weekly. The LTD insurer will receive a credit for CPP and pay $200 weekly. The IRB from accident benefits will be $200 since $700 (70% of gross pre-accident weekly income) - $300 (CPP) – $200 (new LTD after CPP) = $200. In this situation, there will theoretically be no loss of past income falling to the defendant as the claimant is receiving 70% of the past income loss from LTDs, CPP, and IRBs.


Please note, that the above examples are rudimentary examples of the interplay between a Tort motor vehicle accident lawsuit, ABs, and other schemes of benefits, and are not meant to apply to your specific case. Your short-term/LTD policies and income may not match the above examples.


Deductibility of Settlements from Future Amounts?


With respect to future losses of income, settlements are typically negotiated with the provision of a credit to a defendant for future income assistance benefits being credited against a future income loss claim. After a trial however, if a defendant is ordered to pay a future income loss claim, the defendant will likely be entitled to an assignment of future benefits payable to a claimant (ie… to receive future benefits) to avoid the plaintiff receiving double recovery.   


In some cases, a claimant may settle out their LTD or Accident Benefits files and receive a lump sum settlement. In such situations, the defendant in a lawsuit will be entitled to a full credit for these settlement amounts against the loss of income claim. If a settlement is improvidently low, a defendant may be entitled to a credit for benefits that were available to the claimant but not received in the settlement. The deductibility of settlement amounts from a loss of income claim is another complicated topic not fully explored in this article.


Another crucial point is that the defendant in a lawsuit is entitled to a credit for benefits “available to” a claimant and not necessarily received. For example, if a claimant fails to apply for benefits, then the defendant in a lawsuit may nevertheless receive a credit for the income replacement benefits and short-term disability/LTDs available to the claimant that were available but not actually applied for and received. Claimants are obligated to mitigate (reduce) their losses as much as reasonably possible which includes applying for all benefits available to them. If a claimant applies for but is denied a certain benefit, then this will be sufficient to meet their obligation of mitigating their losses thereby precluding a defendant from receiving a credit/deduction.   


Finally, it is worth noting that defendants in a motor vehicle accident lawsuit will also receive a credit for medical or attendant care benefits available or received against any award for damages for medical rehabilitation and attendant care benefits. The Ontario Court of Appeal confirmed that benefits available or received that fall within the same "silo"/type of claim being advanced are to be deducted from that claim.


Expert evidence from an accountant is required to accurately calculate entitlement to income replacement benefits for accident benefits and past and future losses of income in a lawsuit. It is highly recommended that you consult with a personal injury lawyer to ensure you are receiving the correct benefits and advancing proper economic loss claims.  




Hillier & Hillier combine their expertise in gathering the necessary and relevant evidence with their knowledge of the law to ensure their clients receive the maximum benefits and compensation available to them under the law. The lawyers at Hillier & Hillier specialize exclusively in personal injury law and have a combined experience of over 50 years of practice. Contact Hillier & Hillier at 905 453 8636 to schedule a free consultation by zoom videoconferencing, in person, or by telephone.


Please note that this article is not intended to constitute legal advice. The author recommends that you obtain legal advice from an experienced personal injury lawyer.



29 views0 comments

Commenti


bottom of page