What are Collateral Benefits and How Are They Related to the Statutory Accident Benefits Schedules?
In Ontario, all insurance providers of automobile insurance coverages are required to provide accident benefits to the insured party by way of the Statutory Accident Benefits Schedules (SABS). The SABS is a form of no-fault insurance coverage. It is mandatory and included in all standard auto insurance policies within the province. These benefits are regulated under the Ontario Insurance Act and have been put in place by the Ontario government in order to help the insured party pay for out-of-pocket injury-related expenses such as health costs not covered by OHIP, as well as help, provide the insured with an avenue for income replacement should they meet the requirements under the SABS.
Standard benefits available under the SABS include income replacement; non-earner benefits; caregiver benefits; medical and rehabilitation benefits; death and funeral expenses; childcare expenses for stay-at-home parents if they are unable to care for their children as a result of the injury; costs to assist an injured person while at home; housekeeping costs; repair or replacement of eyeglasses, clothing and other personal items damaged in the accident.
Related Article: Non-Earner and Income Replacement Benefits in Ontario
As lawyers, it is our professional duty to advocate zealously for each client. Therefore, it is important to determine which of the above benefits are available to our client, so that they can take full advantage of the financial aids provided to them by their insurance company.
Moreover, it is equally important to keep in mind that an auto-insurer is entitled to deduct certain benefits received by their insured from benefits that would otherwise be payable pursuant to the SABS. These deductions are known as collateral benefits.
Collateral benefits are received by an insured as a result of a prior incident, meaning an incident which occurred prior to the automobile accident. They are deductible from the amount payable for income replacement benefits and non-earner benefits, only if they are being received by the insured and considered temporary when the insured first qualified for the income replacement benefits or non-earner benefits.
The legislation considers benefits received for the current accident to be “Other Income Replacement Assistance”, provided they meet the criteria outlined in subsection 4(1) of the SABS.
Understanding when and how an insurer is entitled to deduct collateral benefits plays a key role in ensuring the maximum amount of recovery from the insurer. Therefore, in order to determine this, there are a series of questions regarding collateral benefits that will help determine whether or not the amount is deductible by the insurer:
- Does the collateral benefit meet the definition of a temporary benefit pursuant to s.47(3) of the Regulation?
- If it does not currently meet the definition of temporary benefit, did it at the time of the accident?
- Was the collateral benefit being received, as opposed to receivable, by the insured when it was deemed temporary?
If based on these above questions, you cannot say the collateral benefit was being received when it was deemed temporary, the collateral benefit will not be deductible.
For injuries occurring after September 1, 2010, the insurer may deduct the following amounts from the amount payable to an insured person as an income replacement or non-earner benefit under the Regulation.
- Any temporary disability benefits being received by the insured person in respect of a period following the accident and in respect of an impairment that occurred before the accident.
- Any other periodic benefit being received by the insured person in respect of a period following the accident and in respect of an impairment that occurred before the accident, if the insured person was receiving that other periodic benefit at the time he or she first qualified for the income replacement or non-earner benefit and, at that time, the other benefit was a temporary disability benefit.
Temporary disability benefit is defined as an income replacement or non-earner benefit paid during the first 104 weeks after onset of disability. It is also important to note that what may have been a temporary disability at one point in time, can eventually become a long-term or permanent disability benefit.
If the insured is eligible for a temporary disability benefit for a period following the accident due to an impairment that occurred prior to the accident, the insurer can deduct the amount payable to the insured for that benefit from the income replacement benefit or non-earner benefit, as long as it continues to be received.
Related Article: How Do You Tell Your Insurance Benefits Are Being Unfairly Denied?
Medical, Rehabilitation and Attendant Care Deductions
Furthermore, the insurance company can refuse to provide payment of a medical, rehabilitation or attendant care benefit or a benefit under Part IV for which payment is reasonably available to the insured person under any other plan or law. This means that the accident benefits insurer is a payor of last resort. If any medical, rehabilitation or attendant care benefit is payable by an extended health care provider or government plan (e.g. ADP) the accident benefits insurer is not required to pay.
With respect to collateral benefits, almost every case is different. It is a good practice to make a list of all collateral benefits that may be available to your client. Once that has been done a quick reference to s. 267.8 of the Insurance Act and the SABS will assist you in determining which benefits may be subject to a deduction in accident benefits.
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