ACCIDENT BENEFITS (AB) DEFINITION
The payments for medical treatment and income replacement that a policyholder receives under an auto insurance policy in the event of a covered automobile accident. Accident benefits are payable to injured insured parties, even if they are at fault, as long as they have complied with the insurance policy. Accident benefits may cover part or all of the following expenses: (1) medical, rehabilitation and attendant care; (2) daily caregiving; (3) housekeeping and home maintenance; (4) income replacement; (5) death and funeral expenses. However, an individual who was violating the law at the time of their accident, such as by driving without a valid driver’s license, using an automobile in connection with a crime or driving under the influence, will not be eligible for accident benefits.
Example
Nick is driving home from a hockey game one night when his vehicle is struck by a drunk driver. He is hospitalized for several weeks with severe injuries. Because of the accident benefits provided under his auto insurance policy, Nick doesn’t suffer devastating financial losses in addition to the physical and psychological damage the accident caused. His accident benefits cover any medical bills that his government health insurance doesn’t; they also provide him with income during the weeks of recovery when he’s unable to work. When Nick is able to leave the hospital, his accident benefits also help cover the cost of a home aide who helps him with daily living activities like bathing and getting dressed while he recovers.
First Foundation Tips
The laws of each province govern what accident benefits an auto insurance policy must provide. In Ontario, for example, these benefits are described in the Insurance Act under the Statutory Accident Benefits Schedule. In general, a standard policy provides a basic level of benefits, such as $1 million for medical and rehabilitation benefits for catastrophic injuries, a $25,000 lump sum death benefit to an eligible spouse and income replacement of 70 percent of gross income up to $400 per week. In exchange for paying a higher premium, policyholders can receive greater accident benefits, such as an additional $1 million for medical and rehabilitation benefits for catastrophic injuries, a $50,000 lump sum death benefit to an eligible spouse and income replacement up to $1,000 per week.
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