How new auto insurance rules impact your coverage

Big changes are coming to auto insurance in Ontario. Starting on July 1, 2026, the province will transition from a mostly standard benefits package to individual add-ons.

Currently, several accident benefits, such as income replacement, caregiver benefits, and non-earner benefits, are legally mandatory in every auto insurance policy. After July 1, 2026, many of these benefits will become optional, leaving only medical, rehabilitation, and attendant care benefits as standard inclusions.

This reform, introduced in the 2024 Ontario Budget, aims to provide more flexibility. The core idea is that if you already have certain coverages, such as disability benefits through your workplace, you shouldn't have to pay for similar protection twice.

While lower premiums may seem appealing, the actual dollar savings from opting out of accident benefits are often surprisingly small, only a few dollars each month.

Opting out of these benefits comes with significant risks. The minimal savings you achieve are negligible compared to the major financial risks you accept, leaving you vulnerable to substantial out-of-pocket expenses and without crucial support when you need it most.

What you need to know about SABS coverage changes in 2026

• Starting on July 1, 2026, new policies will include only the bare minimums by default. You must actively "opt-in" to maintain current protection levels. If your policy renews after July 1, 2026, you will keep your current benefits unless you opt out in writing.
• Removing optional benefits typically saves a few dollars a month in premiums, but can result in losing tens of thousands in support after an accident.
• Who is insured under your policy is changing effective July 1, 2026. Optional benefits under your auto policy will only apply to:
• The named insured
• The spouse of the named insured
• Dependants of the named insured and of the named insured's spouse
• Listed drivers on the policy
• Auto insurers will now become the first payer for medical and rehab, meaning you no longer have to exhaust your workplace benefits first.

How exactly will Ontario accident benefits change in 2026?

Starting July 1, 2026, significant changes will affect all insurance policies, whether they are being renewed or newly purchased. Here’s what you need to know to ensure you have the right coverage for your needs.

Renewing policies

If your policy renews on or after July 1, 2026, it will automatically keep the same benefits and limits. No action is needed to maintain your coverage unless you opt out in writing. This automatic renewal ensures your coverage remains intact and provides peace of mind.

New policies

New insurance policies will include only the basic mandatory coverages by default. This includes medical care, rehabilitation, and attendant care. Optional coverages can be added at the start to help you customize your policy to meet your needs.

Mid-term changes

You will be able to modify your coverage after July 1, 2026. You can opt out of optional coverages at any time during the policy term, even if your policy isn’t due for renewal. 

Adapting your coverage

As your lifestyle changes, your insurance policy should be updated. If you move, start a business, or have significant life changes, inform your insurance broker. This will ensure your coverage meets your current needs.

Understanding the implications of renewing or selecting new policies empowers informed insurance decisions. Staying proactive helps secure the best protection for your future. For personalized advice, consult with your insurance broker at Nacora.

What optional benefits will stay mandatory?

Every Ontario auto insurance policy currently includes a package of Statutory Accident Benefits (SABS) that provides financial assistance, regardless of who was at fault in the accident. However, starting July 1, 2026, this package will be separated.

What will become optional?

Many insurance benefits that are currently included by default will soon transition to optional endorsements, commonly known as "add-ons." It's essential to understand these changes and decide whether to opt in or opt out of these benefits, which include:

• Income replacement benefit: If you cannot work after an accident, this benefit compensates you for a portion of your lost income. The standard benefit covers 70% of your gross weekly income, up to a maximum of $400 per week.
• Caregiver benefit: If you are a full-time caregiver for dependants and are unable to continue due to catastrophic injuries, this benefit reimburses you for the costs associated with hiring help.
• Housekeeping and home maintenance: This benefit assists with expenses related to managing your household duties if your injuries prevent you from doing so. It is typically available only for catastrophic injuries.
• Death and funeral benefit: This benefit provides a lump sum payment to your spouse and dependants, along with financial assistance for funeral expenses, if you die due to an auto accident.
• Non-earner benefit: If you're not employed but are fully unable to live a normal life after an accident (for instance, if you're a student or retiree), this benefit offers $185 per week for up to two years.

Savings on insurance premiums are minimal, averaging around 5%, which often translates to only a few dollars off each month. Drivers may risk losing critical protections for minimal savings. It’s crucial to carefully review these changes and consider your coverage options to ensure financial security and adequate support in the event of an accident.

What are the risks of opting out of accident benefits?

While having more options may seem advantageous, the underlying issue is that many people lack the necessary information to fully understand the consequences of their decisions. Without knowledge of the risks associated with declining certain coverages, making informed choices becomes much more difficult.

Declining coverage always increases the risk of exposure. Insurance is designed to protect against these risks, whether they are financial, emotional, or physical. However, claims do occur.

People may need income replacement, in-home healthcare, housekeeping, and other support services. Insurance companies set pricing based on real-time claims data, underscoring that these risks are not merely hypothetical; they are real and frequent.

The dangers of being under-insured

The insurance reforms are framed as a way to offer consumers more choices in spending, rather than as a means of achieving significant savings.

However, savings from opting out of coverages are often minimal compared to the significant financial risks of being underinsured. While lower premiums may seem attractive, inadequate coverage can lead to devastating costs.

An example of the risks of being under-insured

In 2026, a self-employed tradesperson earning $1,500 per week (totalling $78,000 annually) could face a significant financial loss if a collision prevents them from working for 6 months. They may lose $39,000 in income during this period. With standard benefits, they would only receive $10,400 due to a weekly benefit cap of $400. This results in a shortfall of $28,600, making it difficult to cover bills and mortgage payments.

If they decide to opt out of income replacement to save on premiums, they would receive $0, further worsening their financial situation.

Even the standard $400 weekly benefit could provide essential relief, enhanced limits are available to alleviate some of this financial burden.

Ultimately, the risks of being underinsured far outweigh the short-term savings from opting for lower premiums. The decision may be yours, but understanding the potential consequences is crucial for making an informed choice.

Who is most at risk for these changes?

While opting out of insurance saves money immediately, the financial risks must be understood. This choice carries risk for everyone, but unexpected events can be devastating for those with limited financial flexibility.

• Self-employed individuals or temporary workers: Often lacking workplace disability plans, these individuals depend entirely on their ability to work for income. E-bikes and scooters, commonly used for work, add financial risks if accidents occur without adequate coverage.
• Students and retirees: The non-earner benefit protects these groups, but accidents can disrupt studies or deplete retirement savings. E-bike and scooter riders here face less protection than car drivers.
• Stay-at-home parents: Their essential unpaid labour means that caregiver and housekeeping benefits can be crucial if they are injured. Those using e-bikes and scooters may find themselves at greater risk with less coverage available.
• Low-income earners: While tempted to lower premiums, this group has the least capacity to absorb injury costs. E-bike and scooter riders might be particularly vulnerable due to insufficient protection.
• E-bike and scooter riders to receive fewer protections: Currently, riders in collisions with vehicles can access no-fault benefits. Post-2026 reforms, these protections will only apply to insured individuals and their families, leaving e-bike and scooter riders with only medical coverage. This creates significant gaps without litigation or additional coverage.

What do drivers need to do before the accident benefits changes come into effect?

As changes approach, it’s crucial to stay informed about your auto insurance. Start by asking: What optional coverages do I have, and how will these changes affect me?

Here are four key best practices:

1. Review your current coverage: Understand your policy, especially the ‘accident benefits’ section and coverage limits.
2. Assess your needs and benefits: Examine any employer or private benefits, including short and long-term disability coverage, and whether your extended health plan covers services such as physiotherapy.
3. Don’t choose the cheapest option: From 2026, low-cost policies may lack key benefits, potentially leading to significant out-of-pocket expenses.
4. Consult a professional: Your insurance broker can clarify the new system, help you compare benefits, and recommend an appropriate policy.

The upcoming reforms empower you, but it’s essential to make informed choices.

Don't compromise your financial future for minimal short-term gain

The move to optional accident benefits in Ontario shifts the responsibility for maintaining adequate protection firmly onto the consumer. While the allure of lower premiums is real, the financial security provided by comprehensive accident benefits far outweighs the small monthly savings.

Self-Assessment Checklist: 

• Read each set of questions carefully
• Tick the box if your answer is “yes” for you or others covered under your policy. Leave it blank if your answer is “no”
• If you check one or more boxes in a section, the benefit described may be worth considering
• Speak to your insurer, agent or broker to review your coverage and learn more about your options 

Before you begin: 

If you have a private or workplace benefits plan, you may already have coverage for some of the following benefits. Before making changes to the optional benefits on your auto insurance policy, review your existing workplace or private plan or speak with your benefits advisor to confirm that you have appropriate coverage.

1. Income replacement benefit 

• Do you rely on your employment income to support yourself or others?
• If you were injured, would you not have access to disability benefits through your employer benefits or private disability insurance?

What it covers: Helps replace income you or another covered person may lose because of an auto accident.

2. Non-earner benefit

• Are you a student, unemployed, or retired?
• Would an injury affect your ability to live independently or pursue education?

What it covers: If you or another covered person is a student or unemployed and an auto accident keeps you from leading a normal life, this benefit can provide financial support while you recover.

3. Caregiver benefit

• Are you the primary caregiver for children, aging parents, or disabled family members?
• Are you a single parent? 

What it covers: Helps cover caregiving expenses if you or another covered person is injured in an auto accident and can no longer provide care for a household member such as a child or aging parent, who needs it.

4. Lost educational expenses

• Are you a full- or part-time student? 

What it covers: If an auto accident keeps you or another covered person from attending school or an education program, this benefit can help cover the costs you have lost. 

5. Expenses of visitors benefit

• Do your family members live far away?
• Would your family need to visit you if you were seriously injured? 

What it covers: Helps cover reasonable and necessary expenses of visitors, such as a sibling or parents, if you or another covered person is injured in an auto accident.

6. Housekeeping and home maintenance benefit

• Would you need to hire someone to take over housekeeping duties if you were injured?

What it covers: Helps cover costs if you or another covered person is unable to perform the housekeeping and home maintenance tasks normally done before an auto accident.

7. Damage to personal items benefit

• Do you regularly carry valuable items such as glasses, hearing aids, or mobility devices?
• Would replacing these items be costly if damaged in an accident? 

What it covers: Helps cover the cost to repair or replace personal items (e.g., clothing, prescription eyewear, hearing aids, etc.) damaged in an auto accident. 

8. Death benefit

• Would your family need financial support to cover ongoing expenses if you passed away in an auto accident?
• Do you lack life insurance or other coverage for funeral expenses?

What it covers: Compensates some family members if you or another covered person die due to an auto accident.

9. Funeral benefit

• Would your family struggle to cover funeral or burial expenses? 

What it covers: Helps cover some funeral costs if you or another covered person die due to an auto accident.

10. Supplementary medical, rehabilitation and attendant care benefits

• Do you think the standard coverage for medical, rehabilitation or attendant care may not be enough to meet your needs?
• Do you have a high-risk lifestyle, underlying health conditions, or limited access to care through other plans?

What it covers: Helps cover expenses for medical benefits beyond the standard limits. 

11. Dependant care benefit

• Do you have children or dependants who rely on you for daily care?
• Would an injury prevent you from working and caring for your dependants at the same time?

What it covers: Helps cover reasonable and necessary additional expenses associated with caring for dependants such as a child, spouse, or aging parent.

12. Indexation benefit

• Are you concerned about the cost of living reducing the value of your benefits over time?

What it covers: Helps to ensure that certain weekly payments and monetary limits are adjusted annually to reflect changes in the cost of living.

We are here to help!

As Ontario's auto insurance benefits change on July 1, 2026, understanding your options is the best way to ensure you and your family remain protected. Nacora is committed to making this transition as simple and transparent as possible. If you have questions about your coverage, need help selecting optional benefits, or want guidance tailored to your situation, we're here for you.

For more information, please contact your Nacora broker directly or connect with us at 905-507-1551. 

Optional Accident Benefits

available after July 1, 2026

Ontario’s Auto Reform allows you to tailor your insurance to your needs. Optional Accident Benefits help protect the lifestyle of you and your family. Here is a summary of coverages available:

**Coverage options & limits may vary depending on insurance company. 

Disclaimer: The descriptions of the statutory accident benefits in this document is a summary of the statutory accident benefits in Ontario Regulation 34/10 (the “SABS”). Do not rely on this summary alone. For full details, refer to the SABS or speak with your Nacora broker.