Understanding Income Replacement Coverage on Your Ontario Auto Insurance

When you think about a car accident, vehicle repairs and medical care may come to mind first. But what happens if your injuries also keep you from working?

Your mortgage or rent, groceries, utilities and loan payments do not stop while you recover. Even a short break in income can put real pressure on your household.

That is where Income Replacement coverage comes in.

Ontario drivers now have more choice over this benefit, which also means more reason to understand it. At Merit Insurance, we want you to know what this protection does before you decide whether it belongs on your policy.

What Changed With Ontario Accident Benefits?

On July 1, 2026, Income Replacement became an optional Accident Benefit on Ontario auto insurance policies. Medical, rehabilitation and attendant care benefits remain mandatory. Several other Accident Benefits are now optional as well. You can read more about the changes from the Financial Services Regulatory Authority of Ontario (FSRA).

If you already have an Ontario auto policy, your Income Replacement coverage does not automatically disappear. Existing policies renew with the same coverages and limits unless you agree to a change in writing. More choice is a good thing. It also means more decisions.

Whether you are renewing, buying a new policy or thinking about making changes, it is worth understanding what this benefit could mean for your household before you remove it. If you are also weighing your Caregiver and Housekeeping coverage, our guide An Impairment vs. Catastrophic Only: Understanding Your Ontario Auto Insurance Options explains those choices.

How Does Income Replacement Help?

If you carry this coverage and meet the eligibility requirements, Income Replacement benefits may provide financial support when injuries from an auto accident prevent you from working.

There are a few things to keep in mind:

• It replaces a portion of your income. Payments cover only part of your eligible earnings and are subject to your coverage limit and policy terms.
• It does not start right away. A seven-day waiting period generally applies, so the benefit will not cover the first days you miss work.
• Your limit matters. Having coverage is only part of the picture. You also need to know how much it could pay and how that compares with what you normally earn and spend.

Your Merit broker can explain your current limit and walk you through the options available for your policy.

Are Your Workplace Benefits Enough?

If your employer provides disability benefits, you may already have some income protection. The next question is how that protection would work if you were injured in a car accident.

Take a look at your benefits information and ask yourself:

• When do payments begin? Is there a waiting period, and how would you cover expenses in the meantime?
• How much do they pay? What percentage of your income is covered, and is there a maximum payment?
• How long do they last? Would benefits continue if your recovery took longer than expected?
• Who and what qualifies? Are there eligibility conditions or exclusions that could affect you?

It is also important to know that other disability benefits can affect the amount payable under your auto Income Replacement coverage. Carrying both does not necessarily mean you would receive the full amount from each.

That is why the two should be reviewed together.

Bring your workplace benefits details when you speak with your Merit broker. Knowing what you already have makes it easier to see where a gap might exist.

Self-Employed or Working on Contract?

If you are self-employed, freelance or work on contract, time away from work can mean lost income, often without employer sick leave or disability benefits to fall back on.

Think about how your household would manage if you could not complete projects, meet with clients or do the physical work your job requires:

• Would any income continue?
• Do you have personal disability insurance?
• How long could you rely on your savings?

Income Replacement coverage may be especially relevant in these situations, depending on your eligibility and how your income is calculated. Keep in mind that it is personal income protection. It should not be counted on to cover your business’s ongoing operating expenses.

Start With Your Household Budget

A practical first step is to add up the expenses that would continue if you were unable to work. Include housing, food, utilities, debt payments and other regular bills.

Then compare that total with the income and benefits you could realistically count on while you recover. Think about both the initial waiting period and a longer absence from work.

How large would the gap be, and how long could you manage it?

You do not need every answer before you call us. The goal is simply to start the conversation so you can make an informed decision.

The Merit Difference

At Merit Insurance, we believe the best way to insure you is to know your story. Your work, your household and the benefits you already have all shape what the right coverage looks like for you.

As an independent Ontario brokerage, we work for you, not for one insurance company. Before you decline or reduce Income Replacement coverage, speak with your Merit broker. We can help you understand your options, look for potential gaps and see how your auto policy fits with the protection you already have.

There is no single answer that is right for every Ontario driver. There is the one that is right for you.

Have questions about Income Replacement or your Ontario auto policy? Contact a Merit Insurance broker today to review your Accident Benefits, or request a free quote.

Coverage is subject to the terms, conditions, limits, exclusions and eligibility requirements of your policy. Speak with your Merit broker for information specific to your coverage.