Who doesn't love a bargain, especially in recent years when inflation has driven the cost of practically everything to new heights. When the opportunity to save some money presents itself, we don't always question why. We are just happy to hold on to our hard-earned cash.
Certainly, cutting costs whenever possible can help to keep a healthy bottom line and Canadians can be quite adept when it comes to economizing. However, there are times when it truly makes sense to look a gift horse in the mouth and read the fine print.
Beginning on July 1, 2026, Ontario drivers will see the provincial no-fault automobile insurance regime move to an "à la carte" model, making all coverage optional except for medical, rehabilitation and attendant care benefits.
What that means is policyholders will be required to opt-in if they want coverage for such things as death benefits, lost wages, non-earner benefits, caregiver expenses, housekeeping expenses, funeral benefits and expenses for damage to personal items. Of course, those coverages will come at a cost.
Changes Announced in 2024 Budget.
These changes were outlined by Finance Minister Peter Bethlenfalvy in the 2024 provincial budget.
"We're going to allow consumers to have more convenience and choice," he told a news conference earlier this year. "We want insurance to be affordable."
The plan was designed to "provide drivers with an opportunity to lower their premiums by taking advantage of a wider range of coverage options to meet their needs," according to the budget outline.
On its surface, that seems like a fine concept. However, as Gluckstein Lawyers Senior Counsel M. Steven Rastin asserted at the time, there is a real possibility that some drivers could be left under-insured.
Will consumers save money when the new regime kicks in? Yes. But with the caveat that while they will be paying less for a basic policy, they will be receiving less coverage than they have today.
"This plan could mean the insurance coverage you once had will cost you more if you want to keep what are arguably essential benefits," Rastin states. "It should be noted that the core price of auto insurance is subject to regulation, but insurers are allowed to set the price of optional benefits. It seems unlikely that those drivers who are having a difficult time making ends meet will be inclined to pay an extra $20, $30 or $50 a month for benefit options."
Many People May Not Understand Their Auto Insurance.
Auto insurance is something we must have to legally drive in Ontario. The odds of getting into an accident are fairly low given the number of automobiles on the road and the number of miles driven. For that reason, many view insurance as an expensive necessity, something they pay for but rarely, if ever, use. Still, more than 49,000 drivers were involved in fatal and personal injury collisions in this province in 2023, according to the Ministry of Transportation.
It can be reasonably argued that people seldom think about their auto insurance policies until it is time to renew or if they are making a claim. It can also be argued that many people may not have a handle on what their coverage entails.
Insurance Business magazine reports a U.S. survey found that about 96 per cent of Americans "do not understand the fundamental aspects of their auto insurance policy."
Drivers were polled about their policies, questioned about what is covered and the factors that affect their insurance rates, according to the magazine.
"The average American driver spends over $1,632 on car insurance a year, but they might not even understand what that money is going towards," said Kacie Saxer-Taulbee, manager of research and content for insurance comparison website Insurify. "We wanted to publish this report to demystify car insurance basics and help drivers make more responsible decisions when buying coverage."
Consumers May Gamble With Their Future.
Simply putting cost first is what makes the Ontario government's auto insurance reform potentially risky for consumers, Rastin points out.
"Will people even buy optional insurance? Times are tight and those who are struggling financially look at ways to save money," he writes. "However, these are also some of the people who can least afford to be without coverage."
"I am worried that this plan could ultimately be putting people in the position of gambling with their future. Those who don't have alternative benefits through no fault of their own could get into a car accident and find themselves with little or no coverage. They would then not have the money to pay for the basic necessities and forced to turn to welfare or the Ontario Disability Support Program. So what was once the primary responsibility of the insurance company could indirectly become the primary responsibility of the taxpayer."
Make an Informed Choice.
Starting in July 2026, consumers will face an important decision. Do you save money or pay extra for coverage that could be vital in the unfortunate event that you do get into a serious accident?
If you opt not to pay for the income replacement benefit, for example, will you be able to pay your bills if you are injured in a collision and are unable to work? Is it worth paying for caregiver benefits or housekeeping benefits? Should you opt-in for funeral expenses?
When first arranging auto insurance coverage, drivers usually speak to a broker to discuss the available options and ensure they have adequate coverage that meets their needs. However, after you sign up for a policy, the insurer typically sends out annual renewal notices. Unless a driver has questions about their premium or wants to change their coverage, it is unlikely they would have direct contact with their broker. And that process is repeated year after year on the anniversary the policy was issued.
The danger is that after the new regime is introduced, many consumers will get their renewal notice, see the new, lower cost, and not give opt-in benefits the serious consideration they should.
There is nothing more expensive than regret. There are times when it is necessary to look at the real cost of a bargain and this is one. While it is impossible to predict the future, it is important to consider every contingency. Talk to your broker and make an informed choice.
We Are Here to Help.
The experienced and dedicated team of motor vehicle accident lawyers at Gluckstein Lawyers have been representing clients injured in motor vehicle accidents since 1962. We encourage those who have questions about insurance reform or a car accident claim to contact us.
We are also ready to help if you or a loved one have been injured in a collision, with personal injury lawyers in Toronto, Ottawa, Niagara and Barrie to serve clients across Ontario. Contact us today for a no-obligation consultation.