Car insurance reform in Ontario—what you need to know

For this week’s Top Story, we’re looking at the changes in auto insurance in Ontario and whether or not opting out will truly save you money. Not in Ontario? Check out how to save on auto insurance for drivers in the rest of Canada.

If there’s one thing Ontario drivers love to complain about more than construction season, it’s the cost of car insurance. But the provincial government’s latest cost-cutting measures might leave drivers on the hook for a much higher price if they get into an accident.

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Ontario car insurance has undergone a massive overhaul, moving mandatory coverage to a modular à la carte model where you can build your own insurance package. As of July 1, 2026, standard statutory accident benefits (SABS)—like medical, rehabilitation and attendant care—remain mandatory, while income replacement, caregiver and death benefits become optional. Framed by the provincial government as a means to “empower Ontario drivers with more affordable options,” these reforms are changing the face of car insurance coverage—and risk. And many drivers are asking: What do I need to know?

“If a consumer strips their policy down to the absolute bare minimum, they might see a minor drop in their monthly premium, maybe the cost of a couple of coffees. But the second they get into a serious accident, they’ll realize they traded tens of thousands of dollars in critical healthcare protection just to save a few bucks a month,” says Lucas Paulger, insurance advisor with Westminster Mutual Insurance Company.

What stays the same for Ontario car insurance

Statutory accident benefits provide financial support if you are injured in a car accident, regardless of who caused the collision. The core benefit package that remains mandatory in all policies provides a combined financial support of up to $65,000 for non-catastrophic injuries and up to $1 million for catastrophic injuries. It provides financial support for essential recovery needs:

• Medical: accident-related medical treatments
• Rehabilitation: supplemental recovery services, like physiotherapy
• Attendant care: assistance with daily personal needs

What’s changing with auto insurance in Ontario

Now for how your auto insurance policy can change. “Consumers can now tailor their coverage to better fit their needs instead of purchasing coverage they may not want,” says Natalia Pellati, manager of training and development, McDougall Insurance and Financial.

The following accident benefits that were previously included are now optional:

• Income replacement: replaces up to 70% of your gross weekly income if you cannot work after an accident
• Caregiver benefits: covers caregiving expenses for a child, aging parent or other dependent, if an accident prevents you from carrying out your duties
• Non-earner benefits: provides financial support during recovery for students, retirees or the unemployed
• Lost educational expenses: covers incurred costs, such as tuition, if you’re unable to attend school due to a car accident injury
• Housekeeping and home maintenance: covers costs if you cannot perform your usual household tasks
• Expenses of visitors: provides financial support for transportation and lodging for family members during recovery
• Damage to personal items: covers repair or replacement of items damaged during a car accident
• Death benefits: provides a lump-sum payout to a surviving spouse and/or dependents
• Funeral benefits: helps with funeral costs

These insurance reforms also change who qualifies for coverage on your policy—namely your spouse, named dependents and listed drivers. This means passengers, pedestrians, and cyclists will no longer have access to coverage if involved in an accident.

The upside to the insurance changes

Under the new insurance reforms, you can eliminate redundant costs by opting out of benefits that don’t apply to your situation, whether you lack dependents, are no longer a student, or already hold employer-backed coverage.

“If you already have a solid extended health care plan through your employer that covers private accident rehab and/or long-term disability, these reforms theoretically allow you to stop paying twice for some overlapping coverage,” says Paulger. “Alternatively, if you’re retired, you may not need the income replacement which steps in to pay up to 70% of your wages in the event of an accident that forces you to take time off work.”

The risks of opting out of certain auto insurance

Let’s look under the hood. A car accident can impact much more than your vehicle. Lost income, caregiving needs and recovery costs can quickly add up, leaving you financially exposed. 

“The biggest risk is underinsurance. If consumers don’t fully understand what they’re removing, or simply decline coverage to save a relatively small amount, they may discover after a serious accident that they no longer have access to benefits they expected, leaving them or their families with potentially significant out-of-pocket costs,” says Pellati.

What’s more, certain people face higher risks than others, such as self-employed workers who do not have any work-sponsored income replacement coverage, or caregivers with dependents of any age.

“Insurance is not a generic commodity, and a cheaper premium is not a ‘win’ if it leaves you vulnerable,” says Paulger.

Should you opt out?

While cost savings are touted as one of the benefits for the insurance reform in Ontario, comprehensive and collision coverage make up a much larger portion of your premium. “Most drivers probably won’t see substantial savings from removing their optional coverages,” says Pellati. “Consumers should carefully weigh the relatively small savings against the protection they’re giving up.”

If you do nothing, your existing policy will auto-renew with the current coverage, including any optional benefits. New policies purchased after July 1, 2026, will include only the mandatory minimums unless optional benefits are selected.

The Financial Services Regulatory Authority of Ontario (FSRA) provides a self-assessment checklist to help you decide which optional coverages you may need, but speaking with a licensed professional can help identify any gaps.

“There is not going to be a one-size-fits-all answer for everyone,” says Pellati. “People should talk to their broker, do their research on their coverages and make an informed decision from there.”

Read more from this issue of The Get:

1. Find out how to repair your stuff (from tech to clothes) for free
2. How to spot deepfakes; tips from investigative journalist Craig Silverman
3. Here’s how Canadians can save on baggage fees at the airport
4. Which provinces have the best wines for the best value?