The Ontario Government is planning new auto insurance rules. These changes are currently in the form of a policy proposal as part of the Ontario Government’s proposed budget, to be followed by actual legislation (law) in the upcoming months and likely enforced by 2026.
These changes could alter how auto insurance works in the province.
While some frame these changes as providing more choice to Ontarians and offering savings on insurance premiums, we must question if they truly benefit Ontarians.
Under the proposed changes, essential benefits like medical and rehabilitation benefits will remain mandatory. However, many other benefits currently included in standard policies will become optional.
For example, Income Replacement Benefits (IRBs), which provide financial support if you cannot work due to injuries from a car accident, will become optional.
Let us explore what this means. Currently, if you are injured in a car accident and cannot work because of your injuries, you may receive up to $400 a week to replace your income (IRB).
If this IRB benefit becomes an optional benefit and you do not ask your insurance company to include it in your automobile insurance policy, you will not have access to this money after a car accident. You will have to go back to work even though you are injured or live without an income until you recover from your injuries and can work again.
Therefore, it's important to consider the potential consequences of opting out of optional benefits.
Without adequate coverage, drivers may face financial difficulties after an accident, especially if they don't qualify for other support programs through work like Short Term Disability (STD) or Long-Term Disability (LTD) benefits or government benefits like ODSP.
The decision to opt out of certain benefits should not be taken lightly, especially considering the risks involved.
Young adults, single-income households, low-income families, and new drivers may want to do without optional benefits to save on insurance premiums, but they will be impacted negatively if they cannot work due to injuries sustained in an accident.
While opting into optional benefits might increase monthly premiums slightly (an increase of $5-$15 a month on average), it could provide valuable financial protection in case of an accident.
Ontario drivers are advised to carefully weigh their options and consider their individual circumstances when making insurance decisions.
When discussing insurance options with insurance brokers, drivers should consider opting into benefits like Income Replacement (IRB), death benefits, funeral expenses, education expenses, and other important ones to ensure they have adequate coverage in the event of a car accident.
When you purchase a new automobile policy or renew yours, make sure to ask your broker or insurance representative to explain what benefits are standard and which ones are optional so you choose the right benefits for you and your loved ones.