Ontario’s 2024 budget – What it means for your auto insurance
Government reforms aren't the only path to savings. Compare car insurance quotes from Ontario's top providers to find your most affordable option today.
Jessica Ho
It’s no surprise that auto insurance rates continue to rise within Ontario. According to FSRA data, the average annual premium from October 2023 was $1,796 – an approximate 7% increase when compared to the average from a year before ($1,673). Plus, drivers within the Greater Toronto Area continue to face some of the highest rates at an average of $2,391.
Last week, the Ford government announced the 2024 Ontario Budget which includes proposed changes in hopes of tackling the issue of rising Ontario auto insurance rates. Here’s everything you need to know.
Key takeaways on the 2024 Ontario budget and your auto insurance
- As part of the 2024 budget, the provincial government has announced a few changes to the Ontario auto insurance system. This includes allowing consumers to opt out of certain accident benefits and making insurers pay out medical and rehabilitation claims before other health plans are accessed.
- As the government has yet to provide more details, it’s difficult to determine the full impact of such a shift. While removing coverages may reduce premiums for some, it can also expose others to greater financial risk.
- Be sure to consult a trusted broker to determine what will work for you. In the meantime, one way to lower your car insurance rate is to shop the Ontario market – take matters into your own hands by comparing car insurance quotes across all different providers.
Enabling more consumer choice: Opting out of accident benefits
The biggest change the Ontario government has proposed in the budget is the enablement of more customer choice within the auto insurance system – specifically, allowing customers to opt out of some accident benefits coverages. The reasoning is they believe less mandatory coverage could help lower your car insurance premium. The government also cites that some drivers may be paying for certain benefits coverages twice, for instance, in the case of a policyholder who already has certain accident benefits through their workplace group benefits plan.
What are accident benefits in Ontario?
What accident benefits will become optional?
Currently, the standard accident benefits on an Ontario auto insurance policy are as follows (with options to increase coverage limits, according to the FSRA):
The 2024 budget states that accident benefits for medical, rehabilitation, and attendant care will remain mandatory while all other coverages will become optional – this can include the caregiver benefit, housekeeping and home maintenance expenses, income replacement benefit, as well as death and funeral benefits.
Should I opt out of optional accident benefits?
Whether a driver should opt out of optional accident benefits should be determined on a case-to-case basis. It’s too early to tell about the potential cost savings, and the government also hasn’t released enough information on how this will work.
There are many potential implications that can come out of this. Could lawsuits be opened up if a driver doesn’t have sufficient accident benefits for their passenger? Could brokers be held liable for errors and omissions if a driver opts out without understanding all the risks? And what if you lose your job, along with your health benefits plan – could you opt back into optional accident benefits on your auto insurance policy then?
One callout from the opposition parties is that it’s not immediately clear how the government plans to educate consumers on what they’re giving up in order to save money – without the guidance of a trusted broker, drivers may be making uninformed decisions. The NDP party leader stated that Ontarians who are looking for cheaper options will be forced to take on risks they shouldn’t have to.
Some experts are also concerned that the change could leave certain Ontarians vulnerable – those who opt out may be doing so because of unaffordability, not because they already have sufficient health benefits in place. And if an accident leading to injury were to happen, the financial burden could be even worse.
So if you’re interested in altering your coverage, be sure to discuss your case with a licenced auto insurance broker in Ontario for more insight – while considering factors such as alternative benefit plans you’re already enrolled in, as well as your personal financial situation.
A look back at optional DCPD in Ontario
As of January 2024, direct compensation for property damage (DCPD) became optional for Ontario drivers. This coverage is an integral part of the province’s no-fault auto insurance system – with DCPD, drivers can recoup funds from their own insurer for property damage claims following a car accident. The idea is that if you aren’t at fault, and you don’t have the optional collision insurance, you could still be financially protected from the loss and damage of your vehicle.
Experts continue to warn drivers about the implications of opting out of such coverage. You’re essentially waiving your right to claim any funds for property damage after a collision – even if you had no fault in the accident at all. The potential savings likely aren’t worth the huge financial risk you’d be taking on by doing so.
Other proposed changes to Ontario’s auto insurance system
Aside from enabling more choice for consumers, the government has also proposed a few other changes regarding the Ontario auto insurance system, including the following:
Making auto insurers pay out medical and rehabilitation benefits first – This means that medical and rehabilitation benefits will be paid out through your auto insurance before accessing alternative health plans. The idea behind this is to reduce paperwork and red tape for both patients and their healthcare providers.
Reviewing health service provider guidelines and frameworks – The government is asking the FSRA to review and potentially update the Professional Services Guideline and the Attendant Care Hourly Rate Guideline while considering findings in future reviews for Ontario’s auto insurance accident benefits. Along with that, the Health Service Provider Framework and Health Claims for Auto Insurance (HCAI) system will also be reviewed with the goal of improving administrative and cost-efficiency. The idea behind the reviews is to ensure victims of auto accidents can still continue to receive proper care while compensating healthcare providers appropriately.
Identify product and service innovation opportunities – The government plans to collaborate with the FSRA to explore additional opportunities for innovation, competition, and cost reduction. This is a follow-up to the Test and Drive Environment launched in early 2022.
Ensuring fair use of territorial ratings – The government will also continue its collaboration with the FSRA to ensure the fair use of territorial ratings – essentially, reviewing how rates are determined, depending on where you live. As of January 2024, a pilot program was launched in the GTA, allowing auto insurers to propose and test changes regarding their private vehicle rating system.
Other proposed changes that will impact Ontario drivers
Aside from the changes to the auto insurance system, there are a few other proposed changes in the 2024 budget aimed at saving drivers across the province money – these include the following:
- Freezing Ontario driver’s licence fees
- Eliminating licence plate renewal fees and stickers
- Extending the temporary gas tax and fuel tax rate cuts
Funding the police to crack down on auto theft
The 2024 budget also addressed a plan to tackle auto theft – one of the major contributors to rising car insurance premiums across the province. According to Équité Association (a non-profit organization, dedicated to fighting crime and insurance fraud in Canada), a vehicle is stolen every five minutes across the country – and 2022 numbers showed that theft rates in Ontario increased by 48%.
In response to the overwhelming numbers, the Ontario government has allocated $49 million in police funding to crack down on car theft and dismantle the organized crime networks behind it. On top of that, over three years, another $46 million will be used on a new air support plan (which includes purchasing four helicopters for police services within the GTA).
Will my auto insurance rate actually decrease?
It’s tough to say whether the proposed changes will actually make a big difference in consumers’ financial well-being. While opting out of accident benefits will lead to a lower premium for individual policyholders, the Ontario auto insurance system as a whole is complex – the potential savings won’t necessarily translate into decreased rates across the board.
According to one article from The Globe and Mail, auto insurance premiums could actually go up further due to the proposed changes – as mentioned above, this could be a result of making auto insurance companies pay out benefits before other plans are exhausted. This is because an increase in accident benefits claims will likely lead to insurers charging more in consumer premiums to recoup the funds. That, and it can lead to more auto insurance fraud.
To add on, the Insurance Bureau of Canada has stated that while it does support the review of health provider fees, increasing these fees can also increase how much drivers pay for coverage (because health claims may become more expensive for insurers to cover).
To make sure you’re paying the lowest rate possible, be sure to compare car insurance quotes with different providers across the province. The free auto insurance market in Ontario allows insurers to compete for your business, enabling you to take advantage of a wide range of coverage options. While rates across the province continue to surge, that doesn’t mean you can’t take some matters into your own hands.
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The bottom line
According to Impact Public Affairs (a partner of the Insurance Brokers Association of Ontario), implementing these changes may take quite some time – the announced budget is a policy decision, and official legislation is expected to happen in the fall or winter of this year while the final implementation of the measures can be expected sometime in 2026.
So while there is no definitive timeline for all the changes to Ontario’s auto insurance system, it’s important for drivers to continue to stay informed. Only time will tell as to whether drivers across the province will actually catch a break when it comes to their car insurance bill.