If you drive for Uber around ByWard Market, deliver food across Centretown, run an electrical contracting business out of Orléans, rent a chair at a Westboro salon, or freelance from your apartment in Hintonburg, your income may depend on one simple fact: you have to be able to work.
Starting July 1, 2026, that reality becomes more important for Ontario auto insurance. Income replacement benefits, which have long been part of the standard accident benefits available under Ontario auto policies, are scheduled to become optional.
That does not mean every self-employed person should make the same coverage decision. It does mean the decision should be deliberate. If you decline income replacement benefits and are later injured in a motor vehicle accident, your auto insurer may not provide weekly income support for time you cannot work.
For self-employed workers, the risk is often sharper than it is for employees. You may not have paid sick leave, employer-sponsored disability benefits, payroll records, or an HR department helping you sort through forms. Your income may also be variable, seasonal, cash-flow sensitive, or tied directly to your ability to show up physically or mentally.
This article explains what is scheduled to change on July 1, 2026, how income replacement benefits are generally calculated for self-employed people, why opting out can create a serious gap, and what Ottawa workers should review before choosing or declining coverage.
The Quick Answer: What Changes for Income Replacement Benefits on July 1, 2026?
As of May 12, 2026, Ontario’s July 1, 2026 auto insurance changes are scheduled to make income replacement benefits optional under the Statutory Accident Benefits Schedule. FSRA states that medical, rehabilitation, and attendant care benefits will remain mandatory, while other accident benefits will become optional.
Ontario Regulation 383/24 specifically lists income replacement benefits as optional benefits that insurers must offer under motor vehicle liability policies.
| Policy situation | What the July 1, 2026 change means |
| Existing policy renewing after July 1, 2026 | Your current coverage and limits continue unless you and your insurer agree in writing to decline or change benefits. |
| New policy started on or after July 1, 2026 | Optional benefits, including income replacement benefits, must be reviewed and selected if you want them included. Ask your insurer, agent, or broker what is included in the quote. |
| Adding optional benefits before an accident | Optional benefits may apply going forward once properly added to the policy. |
| Trying to add IRB after an accident | The change will not apply retroactively. Only the coverage in place at the time of the accident applies. |
For a self-employed worker without employer-paid disability coverage, the practical issue is simple: if income replacement benefits are not on the policy when the crash happens, the auto insurer may not provide weekly income support for lost work income.
How Income Replacement Benefits Are Calculated for Self-Employed People
For self-employed people, income replacement benefits are generally based on self-employment income after accounting for the expenses and losses connected to earning that income. The standard benefit is calculated at 70 percent of qualifying weekly income, subject to the applicable weekly cap.
Under the current SABS framework, the standard cap is $400 per week, with optional higher limits of $600, $800, or $1,000 available before July 1, 2026. After July 1, 2026, the amount payable depends on the optional benefit selected and in force at the time of the accident.
In plain language, the calculation usually works like this:
- Start with the worker’s self-employment revenue.
- Subtract business expenses connected to earning that revenue.
- Account for self-employment losses where the SABS requires it.
- Convert the annual amount into a weekly amount.
- Apply 70 percent.
- Apply the weekly cap or optional limit in force under the policy.
This is why documentation matters. Insurers may request tax returns, T2125 forms, bank statements, business records, invoices, and sometimes an accountant’s report to assess pre-accident self-employment income.
The important practical point is that self-employed workers are often assessed closer to net business income than gross revenue. A rideshare driver, courier, stylist, contractor, or freelancer may earn significant gross revenue but show a much lower income figure after fuel, supplies, platform fees, rent, insurance, equipment, software, and other business expenses.
Ottawa Examples: What the IRB Gap Could Look Like If You Opt Out
The following examples are illustrative only. They are not predictions of actual claim outcomes. Actual income replacement benefits depend on the policy in force, the SABS rules, the worker’s records, other income replacement assistance, post-accident income, and the facts of the injury.
| Self-employed worker | Example net income used | Approx. weekly base | 70% weekly amount | Standard IRB payable | Example gap if no IRB |
| Ottawa rideshare driver | $35,000 | $673 | $471 | $400/week | About $20,800 over one year |
| Bike courier | $30,000 | $577 | $404 | $400/week | About $10,400 over six months |
| Sole-proprietor electrician | $75,000 | $1,442 | $1,010 | $400/week standard; more if optional buy-up applies | About $41,600 over 104 weeks at the standard cap |
| Hairstylist renting a chair | $40,000 | $769 | $538 | $400/week | About $13,800 over eight months |
| Freelance designer | $55,000 | $1,058 | $740 | $400/week | About $20,800 over one year |
These examples show why the coverage decision matters. Even where the standard $400-per-week cap is modest, losing that benefit entirely can create a serious income gap for a worker who does not have paid sick leave or private disability coverage.
The gap may be larger if the worker purchased a higher optional IRB limit, such as $600, $800, or $1,000 per week. It may also be smaller or disputed if records are incomplete, income is highly variable, or the insurer disagrees with the calculation.
What Self-Employed Ottawa Workers Should Review Before July 1, 2026
Before choosing or declining income replacement benefits, self-employed Ottawa workers should review the coverage decision with their insurer, agent, or broker in writing. The goal is not to buy coverage blindly. The goal is to understand the risk before giving up a benefit that may matter after a crash.
Ask these questions before your renewal or new policy purchase:
- Does my policy include income replacement benefits after July 1, 2026?
- If IRB is included, what weekly limit applies: $400, $600, $800, or $1,000?
- How much premium would I save by declining IRB?
- Do I have private disability coverage, and would it replace enough income if I could not work?
- Would optional benefits apply only to me, or also to my spouse, dependants, or listed drivers?
- What records would I need to prove self-employment income after a crash?
- Could I manage three, six, or twelve months without income from my business?
If you have already declined optional benefits, you may be able to change your election before an accident. But a change made after a crash will not apply to that crash. Only the coverage in place at the time of an auto accident applies to the claim.
The premium savings from declining IRB may be much smaller than the income gap created by a serious work-disrupting injury, but the actual cost depends on the policy and insurer.
How MG Law Can Help After a Crash
After a serious crash, self-employed people often face two problems at once: recovery and proof. You may be dealing with pain, treatment, reduced work capacity, insurer forms, income records, business expenses, and uncertainty about whether the work will still be there when you are ready to return.
MG Law helps injured people in Ottawa and across Ontario understand accident benefits claims, including income replacement benefit issues for self-employed workers. That may include reviewing the policy in force at the time of the accident, helping identify the records needed to support income, explaining how insurers may assess self-employment earnings, and considering whether other claims may be available depending on the facts.
General information can help you understand the issue, but it cannot answer every case-specific question. The right next step depends on your accident, your policy, your work, your medical condition, and your financial situation.
If you are unsure what applies to you, MG Law can review your situation and help you understand your options in a clear, no-pressure conversation.
References
- Government of Ontario. Ontario Regulation 383/24: Amendments to the Statutory Accident Benefits Schedule. https://www.ontario.ca/laws/regulation/r24383
- Government of Ontario. Ontario Regulation 34/10: Statutory Accident Benefits Schedule – Effective September 1, 2010. https://www.ontario.ca/laws/regulation/100034
- Government of Ontario. Insurance Act, R.S.O. 1990, c. I.8. https://www.ontario.ca/laws/statute/90i08
- Financial Services Regulatory Authority of Ontario. Changes to Statutory Accident Benefits Coverage in Ontario as of July 1, 2026. https://www.fsrao.ca/industry/auto-insurance/changes-statutory-accident-benefits-coverage-ontario-july-1-2026
- Insurance Bureau of Canada. Ontario Auto Insurance Changes. https://www.ibc.ca/issues-and-advocacy/auto-insurance/ontario-auto-insurance-changes
- Government of Canada. Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), section 9: Income or Loss from a Business or Property. https://laws-lois.justice.gc.ca/eng/acts/i-3.3/
- Canada Revenue Agency. Form T2125: Statement of Business or Professional Activities. https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2125.html
- Tribunals Ontario. Licence Appeal Tribunal: Automobile Accident Benefits Service. https://tribunalsontario.ca/lat/
