Long Term Disability payments deductible from Income Replacement Benefits

January 12, 2014, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Heard Before: Adjudicator J. R. Richards

Date of Decision: November 14, 2013




Mirko Stojanov was injured in a motor vehicle accident on October 9, 2009.  At the time of the accident, Mr. Stojanov was a self-employed drywall contractor. He applied for income replacement benefits from his automobile insurer Dominion payable under the Schedule. Mr. Stojanov also was insured under a personal accident disability insurance policy with Manulife Financial where he applied for and received $2,000.00 per month.


Dominion’s position is that the benefits Mr. Stojanov has received from Manulife constitutes payments for loss of income under an “income continuation benefit plan” and should be deductible from any income replacement benefits payable to him pursuant to subsection 7(1) of the Schedule, and they have not paid any income replacement benefits.


Mr. Stojanov claims that Dominion is not entitled to deduct the Manulife benefits from loss of income payments.


For the following reasons Arbitrator Richards found the benefit payments that Manulife Financial makes to Mr. Stojanov constitute payments for loss of income under an income continuation benefit plan, and that Dominion may deduct them from payments made.


Subsection (7)1 of the Schedule states that the amount of the income replacement benefits payable to an applicant shall be reduced by the net weekly payments for loss of income that are available to or being received by a person as a result of the accident under the laws of any jurisdiction or under an income continuation benefit plan.  


The Schedule stipulates certain kinds of payments that are deemed to be payments for loss of income under an income continuation benefit plan.  Director’s Delegate Draper, in Economical Mutual Insurance Company and Wilcox conducted an extensive review of the history of deductibility of collateral benefits and arrived at the following conclusions which have been accepted at this Commission:


  1. Injured persons should not be penalized for having access to other benefits but they should not be compensated more than once for the same loss. The deductibility provision prevents double compensation.


  1. Where non-deductibility of a type of benefit has been established, it would take the clearest legislative language to displace it.


There are other decisions regarding deductibility of benefits issued from courts and Commissions determining whether benefits are deductible. The determinative question centres on the nature of the payments to Mr. Stojanov and whether the payments constitute payments for loss of income or income continuation? 


The Manulife Policy


The Manulife Plan clearly states that the Plan is designed to replace income if an insured person becomes disabled as a result of an accident. The Manulife Plan is actually made up of three distinct parts:

  • The “24 Hour Compensation Plan” provides base compensation. The 24 Hour Accident Disability Extension Rider extends the accident disability period under the 24 Hour Compensation Policy from 2 years to age 65 where the policyholder is totally disabled. 
  • It has a “rider” attached - the “24 Hour Accident Disability Extension Rider” – that provides additional coverage.
  • The policy’s third component is the “Accidental Death and Dismemberment Rider”. The 24 Hour Compensation Plan provides benefits of $2,000.00 per month on the event of total disability. Manulife will pay this amount while total disability continues for up to 2 years.


Mr. Stojanov was not required to, and did not disclose his specific income information when he entered into the insurance contract with Manulife as he chose the lowest income replacement amount. He was however, required to be working 30 hours per week in order to qualify for the plan. The maximum benefit payable is calculated with reference to his employment income. Upon careful review of the entire policy and its definitions, the Arbitrator determined that Manulife’s payments to Mr. Stojanov are payments made under an income continuation benefit plan, and on that basis the Arbitrator dismissed Mr. Stojanov’s assertion that his Manulife plan is not an income continuation plan.

Posted under Accident Benefit News, Car Accidents, Disability Insurance

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Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.

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