Can I Get Both Long-Term Disability and Income Replacement Benefits at the Same Time?
The insurance systems in Ontario are designed to avoid “double recovery”, in other words, they usually prevent you from receiving compensation twice for the same loss.
However, due to the complex nature of our overlapping insurance coverages, there are times that a person can, and should, apply for more than one type of benefit for the same incident. Motor vehicle accidents (MVAs) are an excellent example.
People injured in MVAs who remain off work will often claim Long-Term Disability (LTD) benefits through their work coverage. The same people should claim Income Replacement Benefits (IRB) through their personal automobile policy’s no-fault benefits. Most LTD plans pay around 60-65% of a person’s gross wages as a benefit. IRB’s are usually calculated at 70% of a person’s gross wage, but are capped at $400.00 weekly (the government has tragically not increased this in decades).
LTD insurers are a higher “priority” payor than IRB’s. What this means is that the LTD insurer is responsible to pay you first, with the IRB insurer making up any shortfall.
As LTD benefits are usually more than $400.00 a week, most people think that it’s therefore a waste of time to apply for an IRB, as there will be no shortfall. However, this is often untrue. The IRB insurer is responsible to get a person up to 70% of their gross pre-injury wage, even if they’re receiving most of that 70% from somewhere else (like an LTD insurer).
I know that’s a complicated word-salad, it makes more sense with an example:
Assume you made $52,000 annually, that’s $1,000 per week, prior to the accident. After the accident you’re only receiving $600 weekly as your LTD benefit pays 60% of your gross wage. When you apply for an IRB, it becomes responsible to get you to 70% of your gross wage, up to a maximum of $400.00 of IRB per week.
Therefore, the IRB insurer needs to pay you $100 weekly so that your total compensation is 70% of your pre-injury wage, or $700 per week.
This is only one example of the complexities and nuances of the insurance system in Ontario. Navigating this system following an accident when you’re already dealing with injuries and rehabilitation can be extremely challenging. Consulting with a lawyer who specializes in personal injury law can help ensure that you’re getting all the compensation to which you’re entitled.
