What Is ‘Income Replacement Benefit’ (IRB) and Why It Matters More Than Ever

For decades, Ontario motor vehicle insurance policies have included an Income Replacement Benefit, often referred to as IRB. This benefit is designed to replace a portion of your income if you are injured in a motor vehicle accident and are unable to work.

But recent changes mean this critical protection may no longer be automatic, and many Ontarians don’t realize what they stand to lose.

Let’s break down what IRB is, how it works, and why it’s so important to make sure you have it.

What are Income Replacement Benefits (IRB)?

Income Replacement Benefits provide weekly payments if an accident involving a motor vehicle leaves you unable to work. Importantly, IRB doesn’t just apply to cars; it also covers accidents involving trucks, motorcycles, ATVs, and snowmobiles. It will also assist if you are a pedestrian injured by a motor vehicle.

Under standard coverage, IRB pays 70% of your gross income, up to $400 per week, unless your policy includes enhanced or optional coverage.

Drivers can choose to purchase increased IRB limits, raising the weekly maximum to $600, $800, or even $1,000 per week, depending on what best suits their income level.

A Critical Change to Know About

Starting July 1, when your auto insurance policy renews, IRB will no longer be included automatically. Unless you specifically request it as an optional benefit, your renewed policy will not include any income replacement coverage at all.

That means if you are seriously injured after your renewal date and cannot work, you could be left with no income support whatsoever.

How Does IRB Work?

Let’s look at how IRB payments are calculated and why standard coverage may not be enough for many working Ontarians, keeping in mind that income growth is on the rise and, in 2024, averaged $55,000 annually.

Standard IRB Coverage

• Pays 70% of your gross income

• Capped at $400 per week

This level of coverage may seem reasonable at first glance, but once you compare it against real-world earnings, the gaps become clear. For example:

• Earning $30,000 per year: A person at this income level would qualify for the maximum $400 per week, which aligns closely with 70% of their earnings.

• Earning $50,000 per year: Seventy percent of this income equals approximately $670 per week. With standard IRB coverage capped at $400, that creates a shortfall of roughly $270 every single week.

And the gap grows as income increases.

That’s why standard IRB coverage is inadequate for most working Ontarians, and the removal of it entirely is alarming.

Optional IRB Coverage

By purchasing optional IRB coverage, you can increase your weekly benefit to:

• $600 per week

• $800 per week

• Up to $1,000 per week, covering gross earnings of approximately $74,000 per year

The key isn’t just having IRB, it’s having enough IRB for your individual circumstances.

Why Is IRB So Important?

Many Ontarians assume they’ll be protected if they’re injured, but the reality is far more concerning.

Statistics show that nearly half of working Ontarians do not have short-term or long-term disability coverage through their workplace. This is especially true for:

• Self-employed individuals

• Gig workers

• Part-time or contract employees

• Workers without employer-sponsored benefits

If you don’t have disability coverage and you don’t have IRB, there are very limited government programs available to replace your income.

IRB applies broadly. It doesn’t matter if you are a driver, passenger, cyclist, or pedestrian; if the injury involves a motor vehicle, IRB is the primary source of wage replacement. Without IRB Coverage, you could face:

• No financial support during your recovery

• No reliable income while unable to work

• Serious strain on you and your family

• Long-term financial hardship following an accident

For many people, IRB is the only meaningful safety net available if they’re injured and can’t earn a living.

The Bottom Line

Income replacement benefits are not just another insurance add-on; they are a lifeline.

With upcoming policy changes removing IRB by default, it’s more important than ever to:

• Review your auto insurance policy

• Understand your current income protection

• Ensure you have adequate IRB coverage in place before renewal

This is one benefit we truly cannot afford to lose.

If you’re unsure whether your coverage is sufficient, now is the time to ask questions before an accident makes the consequences painfully real. Reach out to a member of our Personal Injury team.