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Motor vehicle accidents can lead to serious financial strain on you and your family. Due to your personal injuries sustained from a car accident in Edmonton and across Alberta, you may not be able to work and earn the way you did before the motor vehicle accident due to disability from the motor vehicle accident. Despite the financial difficulties, your rent, mortgage and other financial obligations, will not miraculously stop coming. In this blog, we do a deep dive into a few options to pay your bills and overcome financial stress after a motor vehicle accident in Edmonton and all across Alberta. Some of the financial options we discuss are: Accident Benefits disability payments; Section 581 Advance payments; short term/ long term disability; savings, WCB disability payments, settlement lender loans and private loans.  

OPTION 1- Accident Benefits (Section B) Disability payments:

The first option to reduce your financial stress after a motor vehicle accident in Edmonton and across Alberta is Accident Benefits Disability payments.  Accident Benefits is also called “Section B payments”. Section B payments are part of the no-fault portion of your own automobile insurance. The No-fault portion means you get this payment regardless of who is at fault for the motor vehicle accident. I cannot stress this enough. Accident Benefits are available to you regardless of whether you are at fault for the accident or not. Accident Benefits comes from the Section B portion of the Alberta Standard Owner’s Automobile S.P.F No. 1.

Under Part II- Total Disability portion of the S.P.F 1., you will have access to “weekly benefit for the period during which the injury shall wholly and continuously disable such insured person”. The conditions for qualification for this benefit are:

• The insured person has to employed at the date of the accident;
• The disability must come up within the first 60 days of the accident and the disability must prevent you from performing any and every duty in relation to your job. 
• There is a seven-day waiting period, so the first seven days are not covered from Accident Benefits.

These first seven days are still covered later as part of your lawsuit against the other driver, that’s if you are not at-fault for the accident.

Under this financial option you could qualify for either $600 per week or 80% of gross weekly earnings, whichever one is lesser.

Pros of Accident Benefits option (Disability Payment).

Just like every other financial option that we discuss in this blog, there are always pros and cons to consider. Here are some of the advantages and benefits of the Accident Benefits Disability Benefits Option:

• • Section B disability benefits are based on a “no-fault policy” which means that it does not depend on who is at fault for the accident.
• • Covers pedestrians: You also get access to this disability benefits even if you were injured as a pedestrian. So, you do not have to have been physically present in the vehicle at the time of the accident to get access to that vehicle’s accident benefits.  
• • Barrier to entry is low which means that to qualify, you simply have to have been either employed on the date of the accident or have been in six months within the last 12 months preceding the accident.  The 6 months in the last 12 months alternative criteria is intended to give access to the same benefits to seasonal workers who may not have been employed on the date of the accident itself.
• • Covers homemakers: Accident Benefits Section B covers individuals that are not engaged in an occupation or employment for wages or profit and unable to perform their household chores. This benefit provides $200 per week for not more 104 weeks in total.
• • You can obtain this benefit in addition to benefits payable under a “group accident insurance or life insurance contract that provides disability insurance. The weekly payment is simply pro-rated using a formula clearly stipulated in the Standard Automobile insurance policy.

Cons of Accident Benefits option (Disability Payment)

• • Paperwork: you will have to complete a lot of paper work to get your claim assessed and approved.
• • $600/week: The maximum payable is only $600/week. This may not be sufficient for medium income and high-income individuals.
• • You have to be totally disabled to qualify for this benefit or put another way, you have to be totally incapacitated. So, partial disability will not grant you access to this benefit.
• • Regular or monthly renewals: In many cases, your Accident Benefits (Section B) adjuster will likely require that you obtain your doctor’s confirmation of your disability regularly usually, every month. This may result in further incurred costs since you may have to pay for the doctor’s disability notes each time you visit them to renew your disability payment.
• • Your disability benefits may be terminated after a certain period of time if the disability is taking too long or the adjuster deems the disability not to be related to the motor vehicle accident or questionable in one way or the other.
• • Doctor’s Medical Assessment:  The insurance policy gives the insurer the right to send you for a medical assessment to confirm among other things whether the disability is as a result of the subject motor vehicle accident.

OPTION 2- Advance Payments (Section 581 of the Insurance Act)

The second option for dealing with the financial stress that comes with being involved in a disabling motor vehicle accident in Edmonton and across Alberta is Section 581 Advance payments. By way of an introduction, Section 581 Advance payments arise out Alberta Insurance Act and specifically the Fair Practices Regulation. These statutes give someone who has sustained injuries the right to make a claim for an advance before the case settles. You should be aware that there are statutory and common law conditions that apply to the ability to obtain an advance payment from the insurance company of the other driver. First and foremost, the payment is not made by the other driver, it is made by their insurance company and it is deducted from your settlement that will come at the end of the bodily injury claim. This means that it will be deducted from the final settlement whenever that is or at the very least it is taken in consideration when assessing and settling the claim.

To qualify for the Section 581 Advance, the insurance company or court will assess evidence of your financial issues and they will also assess all other sources of income that you may have. If you have other sources of income coming in, it might affect your ability to qualify for an advance payment.

If your lawyer makes a court application to obtain a section 581 advance, the court will be looking to assess whether you are likely to go without the necessities of life or whether you would be unable to prosecute their personal injury claims if the payment is not made. The Court would also be looking to make sure that there is no risk of overpayment to the applicant. If that happens, there is a chance that the applicant would owe money to the insurance company at the conclusion of the matter in the event that the award is less than the amount paid out as an advance.

Pros of obtaining a (Section 581) Advance Payment from the other driver’s insurance company

• • It acknowledges that you have sustained injuries and losses in the accident. By obtaining an advance payment from the at fault party’s insurance company, it is a not -so implicit acknowledgement that you have sustained injuries and losses as part of the motor vehicle accident. The insurance company will not simply make a payment if it is not clear that you have suffered the losses that you are claiming.
• • Covers treatments and injury related costs: In some cases, a Section 581 advance can be helpful to cover your treatments. If your lawyer had to go to court to obtain the advance payment for you, the court may impose specific instructions on what the money can be used for.
• • A detailed analysis of your financial need is done to ensure your financial needs are addressed. So, the eventual advance payment will be specific to your financial need.

Cons of obtaining a (Section 581) Advance Payment from the other driver’s insurance company.

• • Possible repayment: You may be required to repay the advance payment in the event your action against the other driver is not successful. 
• • You likely need to hire a personal injury lawyer to present the claim to the insurance company of the other driver, as opposed to the Accident Benefits Section B claim which you can obtain without the need of a lawyer. Although you might still need to get a lawyer for the Accident Benefits claim in the event that the adjuster is not approving your claim on time or has denied or planning to deny your claim.
• • Failure to use the money for the purpose which you gave the court or to the insurance company when you obtained it could result in the insurance company citing this failure as an evidence of failure to mitigate your injuries.  
• • String attached: Section 581 advance payments come with conditions that are attached to the payments. There may be conditions on what you can use the money obtained for.
• • You may have to disclose extensive financial and personal information about your situation. For the insurance company to assess the financial need that you are claiming, they would need to assess personal and family income documents such as credit card documents, loan documents, bank statements and documents of all the financial obligations that you and your spouse may have.  

Examples of Court Cases where the injured person applied and obtain a Section 581 Advance.

Section 581 Advance payments can be a valuable way to obtain money during difficult financial periods for the reasons stated above. Here are some examples of court cases where individuals who have sustained personal injuries after motor vehicle accidents and where they applied for Section 581 Advance payments and how courts dealt with the application.

• • In a case taken to court by our award-winning founding lawyer, David Sowemimo, Alexander v. TD General Insurance Co., the court awarded an advance payment of $75,000.00 payable as a lump sum payment.

• • In Bennett v. Certas Home and Auto Insurance Co., the court awarded $25,000.00 with $5,000 payable as a lump sum up front, with the remaining paid to the injured party in $1,000 intervals over a 20-month period.

• • In a case called Han v. Royal Sun Alliance Insurance Co. of Canada., the court awarded a $40,000 advance in installment payments of $20,000, $10,000 and $10,000.00.

• • In Macrae v. Intact Insurance, the court awarded an advance in the amount of $75,000, payable as a lump sum.

As the examples above show, Section 581 advance payments can be made in situations where the injured payment has established that they have financial need and that the risk of overpayment is minimal.

OPTION 3- Short-term/Long-term Disability with your employer

Group benefits from your employer is another potential option to deal with financial issues after a motor vehicle accident in Edmonton and all across Alberta. These payments are usually part of a private insurance policy with your employer. After an accident, you would have to notify your Human Resources department that you have been injured and then they would typically provide you with application forms to assess your eligibility for the disability payments. Depending on several factors such as the private insurance policy, the claimant’s salary and the kind of policy, the policy could cover between 60% to 80% of the claimant’s gross income.

Pros of disability benefits (Short term/Long term Disability).

• • Typically provides higher payment than Accident Benefits Section B payments.
• • It can be pro-rated with Section B disability benefits.
• • Practically speaking, qualification for private disability payments is usually a good indication and signal to the insurance company of the other driver that you have sustained serious injuries that in fact affected your ability to work.

Cons of disability benefits (Short term/long term disability).

• • Unavailable to someone who was either unemployed or underemployed at the time of the accident.
• • Impersonal: The insurance plan is usually administered by a private insurance company that is separate from the injured party’s employer. There is an element of lack of familiarity there.
•  • Similar to the cons in the Accident Benefits option, there are several paperwork that needs to be completed.
• • You may also have to be assessed by a medical doctor in relation to your claim.

OPTION 4- Worker Compensation Board disability payments.

It is possible for a WCB claim to intersect with a motor vehicle accident claim. This would typically happen when an accident happens while you are in the course of your employment. WCB would first have to make a determination as to whether you were in the course of employment when the accident happened.

Note that if your motor vehicle accident occurs while you are in the course of employment, you would have to apply for disability benefits under WCB law. Temporary partial disability benefits are calculated as a proportionate part of 90% of a worker’s net earnings, based on the difference between the worker’s pre-accident and post-accident earnings. In the event of a WCB related claim, there would be a WCB adjudicator and case manager who will be in charge of calculating and determining your total disability.

OPTION 5- Settlement lender companies.

There are companies whose primary function is to loan money to individual claimants who need money while their claims are still ongoing.  The companies that do this work would usually reach out to the lawyer handling the file to get details of the ongoing claim and to then determine whether a loan would be an appropriate fit for the claim and claimant. Essentially, the settlement lender company is looking to make sure that the loan is only provided when there is a strong likelihood of success of the claim so as to ensure the loan is protected and payment is likely to occur. As a lawyer, I usually don’t encourage this option due to the well-known disadvantages such as the interest and other fees that are associated with this option.  

Pros of the settlement lender option

• • Quick service: Depending on the settlement lender company, the service can be very quick, and some clients can see the money within days of the lending company approving the money.
• • There is usually a chance for a high loan amount since the loan is paid with a view on the value of the eventual claim.
• • Minimal paperwork: While there is usually paperwork associated with this option, it is not as cumbersome as some of the other options on this list. Your personal injury lawyer will usually have to complete more paper work to inform the settlement lending company of the value of the claim and to assess what the chance of success would be.

Cons of the settlement lender option.

• • High lending interest rates: This issue is self-explanatory. The settlement lending companies are in a lending business and will charge interest and fees that would come out of the eventual settlement.
• • Reduced settlement at the end of the case: This con is closely related to the interest rate issue mentioned above, when the claim settles, the claimant would see the settlement repayment deducted from the final settlement. This deduction is in addition to other deductions such as legal fees and GST.
• • An assignment is attached to the eventual settlement or court award. Some loan companies will use an assignment to ensure that their loan is eventually repayed.  This is the legal mechanism that is used to ensure that the loaned money is repayed.

OPTION 6- Private Loan Option

This option is self-explanatory. First, you would have to know a private individual, or group of individuals that are willing to provide a loan to you in the meantime before your case is resolved. This option carries with it several concerns and reasons to be cautious. Similar to the settlement lender option above, you may need to also pay interests on a private loan. Some of these interests may be much higher as it is not necessarily regulated like a loan obtained from a financial lending institution.

Pros of a private loan option:

• • Chance of favorable terms: Depending on the source of this loan, you may be able to get the loan on favorable repayment terms such as when the repayment will be made and under what conditions and terms under which it will be made.
• • If the loan is from a family member or close friend, there is even a chance that they may not charge interest at all and they may allow you to defer payments till much later.
• • Minimal paper work: This option may be the best option for someone who does not want to spend several hours completing paper work.
• • Minimal procedural steps: Depending on the source of this loan, there will be minimal or no formal procedural steps to getting the loan approved. It might be as simple as a phone call to this person.

Cons of a Private Loan Option:

• • Lack of privacy: The private loan option may require you to share the reasons for the financial situation in the first place. You may need to explain the nature of your injuries, and provide some explanation as to the level of your disability. Even if the person providing the loan is a family member, you may not always want to reveal this sort of private and financial information to them.
• • Unavailable: This option may simply not be unavailable to some of us who have no rich uncle or aunt who is willing and able to provide loans.
• • Unsecured loan: It could be an issue if the injured party refuses to repay the private loan despite getting their case being settled.  Since there may not be a legal assignment document, again, depending on the source of the private loan, there may not be a way for the lender to know when the case has resolved. This may lead to further issues down the line when the lender finally realizes that the case had been settled and that the injured party simply failed to pay them back.

OPTION 7- Personal savings, credit cards and lines of credit.

I left this option to the last one since most of the options above anticipates that you have no savings, and may have already maxed out your credit cards and lines of credit if you have those before the subject accident. It should be noted that if you apply for Section 581 Advance payment mentioned above, then one of the things the court will look at in assessing your claim is how much personal and family debt you have already accumulated. This is one of the pieces of evidence that the courts will look at to determine the level of your financial difficulty. Also, if you had savings prior to the accident, and then afterwards, your financial situation got so bad that you had to deplete all your savings, then you can show this to the courts as evidence of your changed financial situation.

Pros of the personal savings, credit cards and lines of credit option.

• • No paperwork: as this is your own finances, there is no paper work or onerous procedures to go through to get the payment approved.
• • No need to divulge private and financial information to a third party.
• • There is limited chance of being at the receiving end of being taken advantage of due to your financial situation. In the other loan options above, the third parties are aware of your financial difficulty or even desperation. There is a chance that they could impose much harsher conditions due to your situation. In the case of your own personal loan facility or lines of credit, the conditions are much more standard.

Cons of personal savings, credit cards and lines of credit option:

• • Limited: This may be limited in scope, which means that you may not have enough in the bank or available credit limit or line of credit to ensure assist you with through the difficult period.
• • The credit card and lines of credit option may not be sustainable due to the length of time it takes for most personal injury cases to settle.
• • Potential negative impact on your credit rating: if you default on a payment under this category, you may see a negative impact on personal credit rating since these lending options are connected to your credit.

In conclusion, personal injuries sustained due to motor vehicle accidents in Edmonton and across Alberta can bring serious financial issues. You may have drained out your savings, and may have maxed out your credit cards and lines of credit. Bills will not simply stop because you do not have money coming in. You still have to service your financial obligations. If you need assistance with navigating the options mentioned above, I suggest you consult an experienced Accident and Personal Injury lawyer at Watchmaker Law to assist. Our legal team is available to your 24/7 at 825-203-9801.