July 1 reforms may mean more litigation over declined benefits, inadequate advice and financial consequences of underinsurance
Until this year, an Ontario driver renewing an auto policy did not need to think about what their coverage would actually pay for if they were badly hurt in a crash. Income replacement, caregiver support, funeral costs: all of it came standard (and some of it could be ‘optioned’ upward), regardless of what the driver asked for or understood. As of July 1, 2026, that is no longer true for most of the benefits that formerly accrued by default.
Under amendments to the Statutory Accident Benefits Schedule (SABS) made through Ontario Regulation 383/24, only medical, rehabilitation, and attendant care benefits remain mandatory on new and renewing auto policies.
The rest of the accident-benefit package has become optional, including income replacement, non-earner, caregiver, housekeeping and home maintenance, lost educational expenses, expenses of visitors, damage to personal items, death and funeral benefits. Dependant care and indexation also remain optional. A driver can therefore buy a policy that satisfies Ontario’s mandatory requirements while carrying considerably less first-party protection against the financial consequences of a motor vehicle injury.
That is the point of the reform. The province has deliberately replaced a more prescriptive package with greater consumer choice, giving drivers the ability to decline optional coverages they believe they do not need in order to save on auto premiums.
However, despite consumers’ beliefs regarding their own vulnerabilities (or lack thereof) while travelling on Ontario roads, making a benefit optional does not make the underlying risk disappear or reduce it one iota. It transfers the decision about that risk to the consumer buying the policy and possibly in some cases, to the broker or agent advising them.
Foregoing optional benefits is therefore a calculated risk. It is generally less of a concern if the consumer already has in place robust safety nets outside of the motor vehicle coverage. For example:
For those who do not have the security of such independent coverage, saving a few hundred dollars annually on auto insurance premiums exposes the consumer to potentially catastrophic financial hardship or ruin in the event of a collision resulting in serious and ongoing impairments. This is especially true in circumstances where no viable tort claim exists to ultimately compensate the loss.
The previous standard benefit generally provided 70 per cent of gross income, subject to a maximum of $400 a week, with higher optional limits available. Since July 1, income replacement itself is optional for policies entered into under the new regime.
The significance of declining this optional benefit will vary between customers. Someone with substantial employer disability insurance program may have that source of income replacement while off work. A self-employed person, contract worker or employee with limited workplace benefits may not have such protection. The insurance adviser (agent or broker) will need to understand the customer’s existing insurance protections outside of the auto insurance sphere (referred to as “collateral benefit coverage”), and other resources, in order to effectively advise customers of the apparent risks of under-coverage.
The Ontario government has also changed the payment order for medical and rehabilitation expenses arising from automobile accidents, making auto insurance the first payer ahead of supplementary health plans for eligible expenses.
More importantly, a workplace health plan that pays for physiotherapy is not evidence that the same customer has adequate protection against lost earnings, caregiving costs or death. Comparing coverage requires looking at what each plan actually pays, to whom, for what, for how long, and under what conditions.
There is another wrinkle that can easily be missed. Existing policies generally renew with the same accident-benefit coverages and limits they had before the reform, until the customer agrees in writing to change them. Policy renewals after July 1 will now be under the newly formulated accident benefits regime. Moreover, the rules governing who can receive the newly optional accident benefits have also changed. Those optional benefits will be available to the named insured, their spouse, their dependants and their spouse’s dependants, as well as people specifically listed as drivers on the policy.
The Registered Insurance Brokers of Ontario (RIBO) is the regulator of the property and casualty insurance brokers in Ontario. Their stated mission is to ensure professional competence, ethical conduct, and financial responsibility, and to protect the consuming public in their interactions with insurance brokers.
One would expect that RIBO has reminded brokers that it is incumbent upon them to understand a client’s circumstances, make appropriate recommendations regarding coverage, and document the interaction so that the broker’s advice and instructions are clear from the record. Ontario’s Financial Services Regulatory Authority has said that optional coverages should be explained in plain language and that customers who are uncertain should have access to support based upon their individual profiles.
Those expectations, of course, sit alongside established case law on the duties of insurance intermediaries. Canadian courts have long recognized that brokers do more than transmit instructions. Their role can include assessing risk, identifying appropriate coverage, ensuring that consumers are made aware of the additional cost of optional coverage, and advising clients about gaps in coverage that can leave them vulnerable.
Claims or lawsuits against brokers may become more prevalent with the new statutory accident benefits regime – a regime that trades off protections for individual choice and corresponding dollar savings. However, before claimants (and their lawyers) become too emboldened over the prospect of litigation, it is important to understand that a claim against a broker will require the presence four core legal elements:
For Gluckstein’s personal injury team, the reform adds a new layer to intake. Where a claim once began with a fairly predictable review of statutory benefits, it now begins with a review of the policy itself: what was purchased, what was declined, and whether the decision to decline benefits followed a discussion of the available options and the potential risk consequences of the choices made.
The best evidence (or lack of evidence) may ultimately come from the broker’s file rather than from the client’s recollection of discussions with a broker.
One can anticipate that many Ontarians may now choose to forego optional benefits in order to control their overall insurance costs and spending generally. It’s nice to have the freedom to choose, especially when those choices come with avoidable costs.
At the same time, however, it is important to realize that less coverage on the first-party side (meaning coverage coming from one’s own auto insurer for accident benefits) can result in a potentially greater claim on the third party side (meaning a tort claim for damages) as there are fewer accident benefits to off-set the tort damages. Ontarian’s, therefore, who cause automobile injuries to others will potentially face larger tort claims.
Ontarians who for any reason do not have a viable automobile injury claim against a third party driver or owner, will be restricted to whatever accident benefits were purchased and to any available collateral source benefits.
This article was produced in partnership with Gluckstein Lawyers
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David Lackman is Senior Counsel at Gluckstein Lawyers. His litigation practice extends over 40 years, encompassing serious and complex personal injury and disability claims, and wrongful death claims. David has achieved outstanding results against some of the country’s largest corporations, including railways.
