Cashing out your Accident Benefits Claim under the SABS (Statutory Accident Benefits Schedule)

The Ontario Motorist Protection Plan (Bill 68) came to effect on June 22nd, 1990. The passage of this bill resulted in permanent changes in the landscape of personal injury litigation across Ontario.

Generally, the right to seek damages for economic loss and pain and suffering was significantly restricted. This led to a significant decline in tort litigation. The trend continued following the enactment of Bill 164 as well as Bill 59 that came to effect on November 1st, 1996.

To successfully ‘cash out’ your accident benefits claim it’s crucial to recognize the nuances of different statutory accident benefit schemes and the relationship between SABS and the tort system.

When should you ‘cash out’?

If you sustained catastrophic injuries, you could cash your claim once you acquire your long-term care cost report and the accounting/auctorial report. In many cases, it’s prudent to wait until you get a prognosis to negotiate a claim settlement. Also, you can start negotiating with the right insurance company once you have recovered fully or reached a plateau.

It is best to speak to your lawyer about whether or not the time is right to negotiate a cash-out settlement of your accident benefits claim.

What information does an insurer need?

Before you undertake any negotiations, get a letter from the insurer that outlines the total amount of benefits paid up until the specific date, this payment summary should include:

• Income replacement or Non-earner benefits;
• Medical Rehabilitation and all relevant medical expenses;
• Miscellaneous expenses;
• Caregiver or attendant care expenses;
• The amount paid for all medical assessments; and
• The amount paid for case management for all rehabilitation services;

It’s recommended to obtain a copy of the entire accident benefits file. The file contains all your medical and rehabilitation reports just to be sure that the insurer has the same details. In essence, you need to be sure of the exact amount that has been paid out. This will give you an idea of the amount that the insurer paid in the past and what should be paid in the future.

Cashing out accident benefits under Bill 164

This process is different compared to cashing out under the OMPP and Bill 59. Your weekly income replacement benefits will be indexed to inflation. Besides, rehabilitation and medical benefits aren’t limited to time. This is a significant risk and exposure on the part of the insurer due to the open-ended nature of the statutory litigation. Fortunately, it creates a considerable incentive to negotiate the so-called cash out of accident benefits claim.

Cashing out accident benefits under Bill 59

Unless you have purchased an optional coverage of $1,000,000 for attendant care and medical rehabilitation, in a non-catastrophic incident, the accident benefits are modest compared to Bill 164 and OMPP. The size of the cash out is likely to be modest too. The $1 million limits for rehabilitation and medical care benefits may be available for 5-10 from the day of the accident, depending on the case and the terms of your auto policy.

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What is cashing out?

You have an option to settle and cash our available collateral automobile accident benefits. When you decide to cash out you agree to accept a lump sum payment from your insurance company in full and final payment of the benefit. When you agree, you will receive no further benefit payments. The insurance company considers the lump sum payment a full settlement of past, current and future needs arising from the accident.

Either party can bring up the issue of cashing out. It usually comes about under the following set of circumstances;

• You have been collecting benefits for a protracted period and indications are that you will continue to do so
• You and your insurance company have started legal process to settle a dispute
• You have a medical opinion on your prognosis so it is possible to estimate your likely future needs and rights
• The insurance company wants to end the relationship to acquit themselves of the costs of keeping your file open

Whether you decide to take the cash out option or not you should get advice from a lawyer, who can help you to determine whether the estimated payout is fair, reasonable and sufficient to meet your needs. Once you accept it, there is no going back.

When Should I Avoid Cashing Out?

It’s understandable that some people cash out when they really should rather have hung in there. Fighting with your insurance company for your benefits that should be your due can be quite exhausting and sometimes you just want out.

It really isn’t a good idea to cash out unless you have a clear prognosis and you have a pretty good idea of what you’ll need in the years ahead.

If your insurer is threatening to discontinue payment of the benefits and force you to go to their doctors for re-assessment, call your lawyer. Don’t cash out.

If your injuries are the result of an accident where the driver was at fault and you’re involved in a law suit against the driver cashing out could prejudice your case.

If you have decided to cash out the law gives you two business days to change your mind. If you change your mind you must inform your insurance company in writing of your decision.

In most cases there can be no cash out until a year after the accident took place.

How is the right number determined?

Depending on the circumstances, the calculation could be quite complex or relatively simple. Before you agree to anything, you should consult with a personal injury lawyer who can help you to ensure that all is above board and that you’re not losing out in any way.

There are some essential factors that will need consideration before an estimate of your future entitlements and costs are correctly tallied up. They include;

• Your prognosis
• Whether you have suffered catastrophic injuries
• Your age and life expectancy
• How much you have already claimed in benefits
• How much you are paid in monthly benefits
• Plans for your future care
• Actuarial calculations of the future benefits’ values
• The legal costs of fighting with your insurer and for any future third party claims
• An estimate of what benefits you are legally entitled to

When it comes to negotiating a cash out, you’d be well advised to understand your shortcomings. The insurance company will send a skilled negotiator with plenty of resources at hand. Before you settle, you should seek the advice of;

• A doctor – you can’t even start to calculate your future needs unless you have a clear idea of what the future holds health wise
• A lawyer – don’t sign away your rights to benefits without input from your lawyer
• Financial advisor – you need the best advice on what to do with the money when you receive it. It will have to cover your future needs for a long time.