Auto insurance reforms hurt Ontarians, say victim advocates

Ontario drivers renewing their auto insurance policies this summer are discovering that many standard benefits previously listed on their annual policy are no longer automatically available to them, which could have serious consequences if they are involved in an accident.

Effective July 1, 2026, policyholders must decide whether they want to pay extra to qualify for now optional benefits that include: income replacement; non-earner benefits for a student or person who is unemployed; lost educational expenses; caregiver benefits; housekeeping and home maintenance costs; expenses of visitors to an auto accident victim; damage to personal items, like prescription eyewear, hearing aids, and clothing; death benefits; and funeral benefits. 

“It makes [for] an extra layer of confusion and attention when you're buying your premium,” says Rhona DesRoches, chair of the Fair Association of Victims for Accident Insurance Reform (FAIR), based in Mississauga. 

“We're not big planners,” DesRoches says. “When people buy insurance, they basically want the coverage, hope they never need it, and never think about it once they write the cheque. I think that's just human nature.” 

As a result of these changes, policyholders will need to rely a lot more on their insurance broker to explain what all of the options mean, and the level of coverage involved. They also need to have those discussions documented in writing to ensure they understand what they are and are not covered for, she adds. 

Only standard medical, rehabilitation and attendant care benefits will continue to be included in all provincial auto insurance policies. 

The most recent changes only provide some baseline medical coverage, says Darcy Merkur, a partner with Thomson Rogers LLP in Toronto. “It doesn't provide a lot of other bells and whistles that people who are involved in accidents truly need to a much greater extent.” 

“We will just be getting less. It's as simple as that,” says DesRoches, who refers to the Ontario government’s move as “the insurance version of shrinkflation.”

The provincial Ministry of Finance defends the changes. 

“Our government is providing drivers with greater choice and convenience when purchasing automobile insurance so they can choose the right policy that fits their needs,” says Sarah Chapin, director of strategic communications and issues management in the office of the Ontario Minister of Finance in Toronto. 

“For drivers with existing auto insurance policies, their policy will renew automatically with their current coverage and limits,” she says. 

Furthermore, mandatory medical, rehabilitation and attendant care benefits continue to be available to eligible individuals injured in automobile accidents, meaning that pedestrians and cyclists will continue to have access to medical, rehabilitation, and attendant care benefits and will continue to receive the medical care they need, Chapin adds.  

Gutting no-fault 

“I don’t see any pros [from these changes],” says Rose Leto, a partner with Neinstein LLP in Toronto. 

Since 1990, when the Ontario government introduced no-fault auto insurance to provide victims access to timely treatment regardless of whose fault the accident was, that system has been gradually eroded, Leto says. 

No-fault insurance involved a trade-off, she explains. In exchange for providing victims with money right away to deal with medical expenses, rehabilitation, and income replacement, certain litigation rights were restricted to prevent people from starting lawsuits or reducing their claims, and to avoid having to resort to government and public benefits.

But over time, no-fault benefits have decreased, without a reciprocal increase, or removal of restrictions in tort lawsuit claims, she adds. 

A previous major change occurred in 2016 when the Ontario government reduced a $2 million limit on catastrophic injury medical and rehabilitation benefits by half, to $1 million. It also reduced the combined medical, rehabilitation and attendant care benefits from $86,000 to $65,000, says Leto. 

Historically when pedestrians or cyclists who didn’t have insurance were struck, they would be able to get the standard benefits available in Ontario through the auto policy of the driver, says Leto. 

While victims will still be eligible to receive the reduced standard benefits available following auto insurance reform, optional benefits chosen by a policyholder will now apply only to the policyholder, their spouse and dependents, or someone else listed on the policy. If they get into an accident, other victims will not have those optional benefits available to them, she adds. 

The Ontario government has “gutted what was intended to be a social safety net,” with no-fault benefits, says Merkur. 

He notes that the people who will be most impacted by these changes should they become accident victims are those who don’t own cars, who are already among the most impoverished individuals in Ontario. 

Potential financial catastrophe  

Drivers who are tempted to save money by not purchasing optional benefits could find themselves in an enormous financial deficit if they are ever in a serious accident, says Merkur.

DesRoches believes that policyholders who are in a money crunch will be the most likely to opt out of optional benefits in an effort to save money. However, they are also likely to need that extra coverage the most if they get into a costly accident, and need to make a claim, because of their precarious financial situation, she explains. 

From a practical perspective, if the average person with a job is in a car accident and can’t work as a result, they will lose their income, says Leto. The loss of the income replacement benefit through their car insurance means they will be forced to either go on employment insurance, or another social program such as the Ontario Disability Support Program or Ontario Works, she adds. 

Furthermore, with the death benefit being made optional, should a person tragically die in a car accident, their survivors could have no access to a death benefit at all, says Leto. 

“From my perspective, making the income replacement benefits and the death benefits optional stand out as [being] extremely egregious,” she adds.

The new regime is “definitely more heavily fault and lawsuit based than it was because the standard policy is so skimpy now,” says Merkur. Lawsuits will be bigger and more common because many innocent people who are hurt would need to sue for income loss, given that they no longer qualify for income replacement benefits, he predicts. 

“You could start a lawsuit and claim economic losses,” agrees Leto. “But lawsuits take a long time,” she warns. 

Protection paramount 

People with car insurance need to buy extra benefits, with liability limits of at least $2 million to protect themselves and their family members if they cause an accident or get hit by somebody who doesn’t have enough insurance, says Merkur.

“It’s a very important family protection endorsement,” he stresses. 

Other important optional benefits for policyholders to include in their policy are those covering supplemental medical, rehabilitation and attendant care benefits. If they become victims of a serious accident, they would be entitled to much more than the $65,000 currently earmarked on the standard policy, says Merkur.

A person who suffers fractures, for example, would have access to up to $1 million in benefits, and even more than that if they are catastrophically injured, he adds. 

People are trying to pay less in auto insurance premiums, says Leto. But she questions whether consumers will be aware of the changes, understand the impact of those changes to their policy and coverage, and have the means and ability to make informed decisions. 

Policyholders need to understand what optional benefits are available to them, and be able to make informed cost-benefit-related decisions about each, Leto stresses. 

Insurance Journal asked the Insurance Bureau of Canada (IBC) about criticisms of the auto insurance reforms in Ontario. 

"Insurers do not set the rules or draft the regulations – they operate within the framework established by government,” says Anne Marie Thomas, the IBC’s Toronto-based director of Consumer and Industry Relations. 

“That said, insurers are committed to implementing the government’s reforms as smoothly as possible for drivers,” Thomas adds.