Summary: The New SABS (O. Reg. 34/10) have introduced changes which will require continued efforts on the part of an adjuster to confirm what benefits may be considered payments for loss of income, and subsequently, what will be deductible as other income replacement assistance.
Payments for loss of income which are deductible from an IRB are outlined in paragraph 3(7)(d) of the New SABS. This paragraph is a change from the Old SABS subsection 2(9), apparently codifying previous FSCO arbitrations decisions, such as Sharma-Singh and Co-operators General (A07-000588).
For details on other income replacement assistance, we refer you to our ADS Blog.
So what changes did the New SABS bring?
Insurance Contract – The first change deals with contracts under which periodic payments of insurance are deemed to be payments for loss of income. Specifically, payments are now deemed to be payments for loss of income “irrespective of whether the contract for the insurance provides”:
Summary: The Insured received collateral benefits which were deemed to be of a non-indemnity nature, and as such, not payments for loss of income under an income continuation benefit plan. On this basis, they are not deductible from an Income Replacement Benefit (IRB).
This decision relates to accidents which occurred from November 1996 to September 2010.=
Roana Codling-Mokoena and CAA Insurance Company, FSCO A04 B000017, October 17, 2006 – Arbitrator Leitch
Date of MVA – September 20, 2000.
The insurer disputed payment of IRBs, arguing the IRBs should be reduced by the insured’s receipt of benefits under a disability insurance policy she purchased prior to the accident from Crown Life.
Summary: Unlike CPP disability benefits, CPP child benefits are not deductible as payments for loss of income from the IRB.
What is the CPP Child Benefit, and when is it paid?
Let’s first look at what a qualifying child is:
- The natural child of the CPP contributor
- A child “adopted legally” or “in fact” by the CPP contributor while under the age of 21
- A child “legally” or “in fact” in the custody and control of the CPP contributor while under the age of 21
Further, the dependent child must be either:
- under the age of 18, or,
- if between the ages of 18 and 25, they must be a full time student.
In regard to the benefit itself, there are two different types available:
- For a child who is in the care of an individual receiving the CPP disability benefit; and,
- For a child who was in the care of an individual at the time of the individual’s death.
In both instances, the individual must have made enough contributions to CPP to qualify. To determine whether an insured might qualify for CPP disability benefits, see our blog on that very topic.
The CPP child benefit is paid monthly and fluctuates annually with the Consumer Price Index. The payment is received as a single lump sum amount, combined with the CPP disability benefit. It is for this reason, you must be able to assess if CPP child benefits are being received.
When it comes to calculating Income Replacement Benefits (IRB) for a claimant, we need to look at every financial aspect of the claim, including collateral benefits.
But what, exactly, constitutes a collateral benefit and when is it a factor in calculating the IRB payable?
This post relates to the post-September 2010 legislation. For our blog on the pre-September 2010 legislation, you may find it here.
Under the post-September 2010 legislation, 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 IRBs and Non-Earner benefits (NEB), only if they are being received by the insured and considered temporary when the insured first qualified for the IRB or NEB.