TORONTO – New changes affecting auto insurance in Ontario are set to kick in Wednesday offering drivers more flexibility when it comes to their plans, but insurers say it’s important to consider the risks of refusing certain coverages.
As of July 1, nine types of insurance accident benefits that had previously been automatic in every Ontario policy will be optional.
Those include income replacement, caregiver benefits, housekeeping and home maintenance, death and funeral benefits, non-earner benefits for students and retirees, lost educational expenses, visitor expenses, and damage to personal items.
Insurance brokerage Surex says declining all optional benefits may save a driver around $75 to $100 annually in premiums, with income replacement accounting for nearly three-quarters of those savings.
However, doing so could pose added risks. Surex says self-employed Canadians are most vulnerable, with most having no employer safety net to fall back on.
The firm estimated that a self-employed contractor off work for a year after a serious crash could lose up to $20,800 in income replacement benefits for the sake of saving $75 per year.
The reforms could lead to more legal disputes following accidents if drivers opt out of benefits without fully understanding the financial consequences, said Morgan Roberts, vice-president of RH Insurance, Ratehub.ca’s in-house property and casualty brokerage.
“Ontario drivers are gaining more flexibility under the new reforms, but more choice also means more responsibility,” Roberts said in a news release.
“The premium reduction from removing optional benefits is relatively small, roughly the cost of a couple of coffees each month, but the financial consequences of being underinsured after a major accident could be significant.”
Roberts added that as the system becomes more customizable, the industry could shift toward more personalized insurance pricing over time.
Standard medical, rehabilitation and attendant care benefits will still be included in all auto insurance policies, and policyholders will continue to have the option to purchase additional or increased benefits, such as supplementary medical, rehabilitation, attendant care, dependent care and indexation benefits.
Nainesh Kotak, founder of Kotak Personal Injury Law, said existing policyholders should not assume that nothing changes for their plan upon renewal. While current policies would renew with the same optional benefits and limits unless specified in writing, there could be changes to who is covered under those optional benefits.
As part of the new rules, some people who may have been previously covered by another driver’s policy — such as pedestrians, cyclists and certain passengers — may no longer be eligible for accident benefits.
Optional accident benefits will only apply to the named insured, the spouse of the named insured, dependents of the named insured and of the named insured’s spouse, and people listed in the policy as drivers of the automobile.
Insurers are required to notify policyholders 30 to 60 days before renewal. Drivers whose policies renew on July 1 would have already received their notification letter.
New policy customers as of July 1 need to decide which optional benefits they want to add to their policy, or otherwise risk not being covered.
Kotak said that if policyholders are considering reducing their coverage, they should assess their risk tolerance along with their financial situation.
“Ask yourself whether you could afford lost income, caregiving costs, housekeeping expenses or other out-of-pocket losses after a serious collision,” Kotak said.
“We all want to save on auto insurance rates, but it should not come at the expense of sacrificing essential coverage. These changes could leave people exposed to out-of-pocket costs if a claim happens.”
This report by The Canadian Press was first published June 30, 2026.
