Effective July 1, 2026, Ontario auto insurance will shift from a mandatory to a customizable accident benefits model. Insurance companies have marketed the reduction of mandatory coverages as giving Ontario drivers more choice and control over their coverage. In reality, the reduction in mandatory coverage will incentivize Ontario drivers to remove important benefits from their policies in pursuit of finding the lowest-cost insurance option.
Really, how often do people shopping for insurance consider which policy will provide the best coverage should a loss occur? After more than a decade of assisting individuals with claims arising from motor vehicle accidents, I can confidently say that very few people consider the benefits they will receive from their insurer should a loss occur when comparing policy costs.
So, here is a note from an experienced personal injury litigator to you, dear Ontarian, looking to obtain or renew an auto insurance policy: don’t gamble with your future to save a few dollars in the present. Removing mandatory coverages in favour of providing Ontario drivers with more choice was not done out of the goodness of the insurance industry’s heart. It was done to save insurers a considerable amount of money.
While essential coverages will remain mandatory, previously mandatory protections such as income replacement, caregiver, and death benefits will become optional. Of these three, the most commonly used is the income replacement benefit. As such, it is worth exploring how this benefit works and the potential consequences of not adding it to your policy in the future.
The Income Replacement Benefit
Prior to July 1, 2026, pursuant to Ontario’s Statutory Accident Benefits Schedule, if you were involved in a motor vehicle accident and were unable to return to work as a result, you would be entitled to income replacement benefits from your auto insurer equal to 70% of your gross income, up to a maximum of $400 per week.
Essentially, if you earned $30,000 or more annually before your accident, you would be entitled to the maximum $400 per week under the mandatory coverage available prior to July 1, 2026. Significantly, income replacement benefits are payable until age 65 and are then adjusted and paid for the remainder of the injured person’s life.
Under the new customizable accident benefits model, if income replacement benefits are not added to your policy, a person injured in a motor vehicle accident who is unable to return to work will receive no income replacement benefits from their auto insurer.
Now, dear Ontarian, I know what you are thinking. You are thinking that you would not be so foolish as to waive such an important benefit simply because it has become optional. And I would like to give you the benefit of the doubt and believe that you would not decline such an important protection to save a few dollars on your insurance premium.
However, that brings us to the current state of your auto insurance policy.
If you earn more than $30,000 per year—perhaps significantly more—have you taken advantage of the existing opportunity to increase your income replacement benefit from $400 per week to $600, $800, or even $1,000 per week?
I would wager that you have not.
Why? Because doing so would increase your insurance premium.
The reality is that most people purchase insurance hoping they will never need it. When comparing policies, price often outweighs protection. That is exactly why the move to optional accident benefits should concern Ontario drivers. Many people will decline valuable coverage to reduce their premiums without fully understanding what they are giving up.
The consequences of that decision can be devastating.
Imagine being unable to work for months, years, or even permanently after a serious motor vehicle accident. Without income replacement benefits, you could find yourself relying solely on savings, disability benefits, or the support of family members while trying to recover from life-altering injuries. The small premium savings achieved today may pale in comparison to the financial hardship experienced after a serious collision.
Before You Renew, Know What You’re Giving Up
Insurance is designed to protect you when the unexpected happens. While the new accident benefits model gives Ontario drivers more choice, it also places more responsibility on individuals to understand their coverage and the risks associated with removing it.
Before renewing or changing your auto insurance policy, take the time to review your accident benefits coverage carefully. Ask questions. Understand what is included, what is optional, and what the real-world consequences may be if you choose not to purchase additional protection.
The cheapest policy is not always the best policy.
As the old saying goes, you get what you pay for.
If you have questions about Ontario’s new accident benefits regime or want to better understand how these changes could affect you or your family, contact Mike Wade or a member of Soloway Wright’s Personal Injury Group. Our team has extensive experience helping accident victims navigate Ontario’s insurance system and can help you understand the protections available to you before you need them.
Mike Wade is a partner in Soloway Wright LLP’s Personal Injury Group. He represents individuals who have suffered serious injuries in motor vehicle accidents and helps clients navigate complex insurance and litigation matters throughout Ontario.
