A guide to Ontario's 2026 auto insurance accident benefits reform
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Alyssa Prizzon, Content Marketing Strategist
This article was originally published on October 15, 2025 and was updated on May 12, 2026.
The Financial Services Regulatory Authority of Ontario (FSRA) announced new changes to Ontario’s auto insurance reform that will go into effect on July 1, 2026. While they appear to provide drivers more coverage options, it’s important that policyholders understand the implications and hidden risks associated with these changes, including the potential of underinsurance.
Many of the upcoming changes were proposed in Ontario’s 2025 budget, echoing similar sentiments to those in 2024’s budget. Let’s explore the announced changes, what they mean for Ontario drivers and the dangers behind them.
Let’s explore the announced changes and what they mean for Ontario drivers.
Key takeaways
- All accident benefits coverage in Ontario will become optional, except for standard medical, rehabilitation, and attendant care benefits.
- Ontario will eliminate the one-size-fits-all approach by allowing drivers to personalize coverage plans and use the benefits they already have.
- Auto insurance providers will become the primary payor for medical and rehabilitation claims, allowing Ontarians to reserve their workplace benefits for future needs.
- Opting out of optional accident benefits leaves drivers at risk of underinsurance for just $100 in savings per year. While they’d still receive medical treatment, compensation for benefits such as lost wages, caregivers, and home maintenance would not be provided.
- The optional benefits will no longer apply to third parties, including passengers, pedestrians and cyclists who are not named on an auto policy. A reduction in mandatory benefits means there’s a high chance of increased legal action for compensation, especially for accident victims who don’t have their own insurance coverage.
- Review your policy in depth to learn what you’re covered for before deciding which benefits to add or opt out of.
What are the changes coming to Ontario’s accident benefits reform?
1. More consumer choice
According to the FSRA, Ontario’s accident benefits will become more consumer-focused by enabling greater choice and flexibility. While specific benefits, such as standard medical, rehabilitation and attendant care, remain mandatory, all other accident benefits will become optional.
The goal is to let drivers choose the coverage that's right for them, while continuing to ensure that essential care, such as doctor visits and physiotherapy, is provided to anyone injured in an accident.
The table below outlines the benefits that will be optional starting July 1, 2026.
| Optional Benefits | What it Covers |
| Income replacement | Helps replace income lost due to an accident. |
| Non-earner | Provides financial support to students or unemployed individuals affected by an accident. |
| Caregiver benefits | Provides support for caregiving expenses if you can no longer care for a household member due to injuries. |
| Lost educational expenses | Provides financial support to cover costs lost if you can no longer attend school. |
| Expenses of visitors | Covers the expenses of visitors if you are injured in an accident. |
| Housekeeping & home maintenance | Covers expenses if you can no longer perform your regular housekeeping and maintenance tasks. |
| Damage to personal items | Provides financial support to repair or replace personal items that were damaged in an accident. For example, hearing aids or clothing. |
| Death benefits | Provides compensation to family members if you pass away due to a car accident. |
| Funeral benefits | Helps pay for funeral costs. |
The following table outlines the current optional accident benefits that will remain optional add-ons.
| Optional Benefit | What it Covers |
| Supplementary medical, rehabilitation and attendant care benefits | Covers expenses for medical benefits beyond the standard limits. |
| Dependent care benefits | Financial support to cover costs associated with caring for dependants, such as a child. |
| Indexation benefits | Ensures the income replacement benefit is adjusted to reflect inflationary changes in the cost of living. |
2. Personalized coverage plans
In addition to providing more consumer choice, the FSRA changes will eliminate the one-size-fits-all approach to accident benefits in Ontario, making them more customizable. Many Ontario drivers already have benefits through their employer or private plans. So, instead of paying for them through auto insurance, drivers can choose to remove them from their coverage and use their existing benefits to save on costs.
3. Protecting workplace benefits
Lastly, the auto reform changes will make auto insurance providers the first payor for medical and rehabilitation claims (excluding medication expenses) in the event of an accident. This means insurers will cover those costs before workplace benefits, allowing policyholders to save them for future needs.
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What are the hidden risks of Ontario’s new optional accident benefits?
While the coming changes present more choices for Ontario drivers, opting out of benefits comes with certain dangers and unexpected consequences:
1. Greater risk of underinsurance
Removing optional accident benefits, such as income replacement, leaves drivers without complete financial support if they were to get into an accident. For example, if you are a victim of a car crash and are unable to work due to your injuries, without the optional benefits, you would have to rely on your own personal insurance, such as employer-provided disability coverage, to receive income replacement.
In some cases, your private insurance plan may have stricter eligibility rules or lower benefit amounts than Ontario auto accident benefits, putting you at risk of financial strain. Ontario drivers without employer benefits, such as lower-income workers and self-employed individuals, are at even greater risk if they do not have private insurance to fall back on.
2. Total annual savings are just $100
In many cases, the risk of removing accident benefits outweighs the savings. As a driver, you may assume opting out of coverage will result in a significant break on your premiums. But the savings work out to about $8 per month, which is minimal compared to the risk you’d assume by removing optional accident benefits from your auto policy.
3. Reduced coverage for others
Once the changes go into effect in Ontario, optional accident benefits will only cover the insured person named on the auto insurance policy, their spouse, dependents, and other listed drivers. Any other person is no longer automatically protected.
Morgan Roberts, the Vice President of RH Insurance, explains the risk: “A child passenger who is not covered under a household auto policy may no longer qualify for optional accident benefits under the driver’s policy after July 1, 2026. They would still receive mandatory medical/rehab benefits, but families may need to rely more heavily on lawsuits to recover losses not covered by those mandatory benefits.”
This new rule also extends to individuals outside of your vehicle. For example, if you accidentally hit a pedestrian who does not have their own auto insurance policy, they would have no choice but to take legal action against you.
Remember that the mandatory accident benefits will still apply to all passengers, pedestrians and cyclists.
4. Increased legal battles
Ontario’s ‘no-fault’ auto insurance system is designed to protect accident victims by providing immediate financial support. While drivers can file a lawsuit against the at-fault driver, there is little incentive to do so because accident benefits are received right away.
However, with many benefits becoming optional and third-party coverage reduced, it’s extremely likely that more accident victims will need to rely on lawsuits to recover their losses. Without accident benefits, injured victims won’t get financial support from their insurer and, as a result, are likely to sue the at-fault driver.
An increase in lawsuits is expected to lead to payout delays and greater financial uncertainty for accident victims.
5. Don’t assume your broker is a personal injury benefits expert
There is a real danger that many drivers will rely on their brokers as their go-to source for benefits advice. This is not fair to the auto insurance broker, as they are not trained in personal or group benefits coverage. You will need to do your own extensive research before deciding whether or not to opt out of any accident benefits protection. It is the responsibility of the policy owner to do their research, and don’t be surprised if your broker has you sign a waiver for opting out of accident benefits coverage.
What are the next steps for Ontario drivers?
You can start to review your policy now to understand your current coverage and decide on any benefits you may want to opt out of.
- Review your existing auto insurance policy and become familiar with what you’re covered for.
- Review other insurance policies you may have, either through group benefits or private plans and confirm your coverage.
- Identify any gaps in coverage and what you need to have in place for proper protection.
- Connect with your auto insurance broker or agent to learn about your options.
Your policy will renew with your current coverage, but you will have the chance to remove or add any optional accident benefits once the changes go into effect.
The bottom line
Changes are coming to Ontario’s accident benefits reform as of July 1, 2026. Drivers will have more choice in their coverage as certain benefits become optional. They will also have more opportunities to utilize the benefits they already have, rather than paying for them through their auto premiums. Drivers will also be able to preserve workplace benefits, as insurers will become the primary payor for claims.
Although the changes offer more choice, they also pose the risk of underinsurance. Opting out of the optional benefits will result in just $100 in annual savings, which is minimal compared to the potential coverage gaps. The changes also mean a reduction in optional benefits coverage for passengers, cyclists and pedestrians, increasing the risk of lawsuits in the event of an accident.
Before making changes to your coverage, review your policy in depth to learn what you’re covered for and decide which benefits are necessary for your unique situation.
To find affordable coverage, compare Ontario auto insurance quotes online today at Ratehub.ca.