What you need to know about Ontario’s new auto insurance rules coming in 2026

If you’re a driver living in Ontario there are some big changes coming to your insurance. Starting July 1, 2026, the province is transitioning to a new “a la carte” model, which means you will have more choice when picking what’s in your car insurance policy. Shifts are coming to the Accident Benefits Schedule (SABS) and, in case of collision; there will be changes for accident victims’ access support. 

Let’s look at the current system. Auto insurance in Ontario usually offers a standard package of accident benefits. Currently there are mandatory benefits, which include: 

• Medical, rehabilitation and attendant care; 
• Caregiver benefits; 
• Non-earner and income replacement benefits; 
• Housekeeping and home maintenance expenses; and 
• Death & funeral benefits 

Why the Change? 

In 2026, only medical, rehabilitation and attendant care will be mandatory. Everything else on that list will become options, which means you must specifically select (or opt-in to) those benefits, and purchase them. While this may mean more flexibility to choose the benefits you want, and potentially lower your premiums (according to the government), you will have to actively choose the benefits that you feel will adequately provide you coverage. 

According to the Ontario 2024 Budget, which outlines the new rules: “This would provide drivers with an opportunity to lower their premiums by taking advantage of a wider range of coverage options to meet their needs. For example, drivers may already have access to certain benefits through their workplace benefit plans, so they should have the choice not to have to pay for them twice through their auto insurance policies.” 

Kori Duff, Licensed Insurance Advisor with Surex, says that “Although opting out of these benefits may result in a lower premium, it also increases the risk of being without critical protection in the event of an accident-related injury.” 

The budget notes that auto insurance companies would be on the hook first for medical and rehabilitation costs, even if people were also covered by other insurers. Regardless of the extent of the injuries sustained in a car crash, these “first-payer” costs would have to be paid by auto insurers first before other, extended health-care plans would come into play. That change, the province said, would help make sure it is auto insurers that pay for the people they cover, while also reducing red tape for both patients and health-care providers. 

Other coverages that you may want to opt-in to, and would have to pay extra for, would include: lost wages, non-earner benefits, housekeeping expenses, caregiver expenses, educational expenses, visitor expenses, damage to personal items and death and funeral benefits. 

At your next renewal (on or after July 1, 2026), you’ll be required to choose which optional benefits you keep. If you simply accept the lowest premium without first looking at your risks, you may end up with the bare minimum protection. The problem may be that many drivers will assume their coverage will be what it was. This is not true. The shift means you must actively review what your policy will cover.  

Other Changes 

A significant change, briefly mentioned above, has to do with automatic income replacement benefits. Under the current system, individuals injured in a car accident are entitled to up to $400 per week in income replacement benefits, regardless of fault. If additional coverage was purchased, this benefit could be increased to $800 per week. This benefit is available to income earners who meet the disability test, without needing additional riders or coverage. It also applies to pedestrians, cyclists, and individuals who were involved in the respective accident, but who do not own cars or hold a driver’s license. 

The new rules will eliminate this automatic benefit. It will be up to insurers to ensure their customers are fully aware of the implications of opting out (or not opting in).  

“It is essential that we, as brokers, provide a clear explanation of all optional accident benefits. When changes come in 2026, when these benefits are no longer mandated, we will ensure that clients receive clear and detailed guidance regarding their available coverage options,” explains Duff. 

Also, pedestrians, cyclists, or anyone who does not drive a car could be particularly vulnerable, as they will have limited access to the income replacement benefit unless they have an alternate form of coverage. 

Part of the new rules will also mean that the government is reviewing how car insurance rates are determined by using territorial and/or postal code ratings. This, they say, will improve fairness in pricing. There is a pilot program underway in the GTA that may expand to the rest of the province. 

Using a Broker 

New rules will likely create initial confusion and misunderstandings by drivers of what they are covered for and what they may claim. Brokers are a valuable resource to help educate consumers about the new rules and how not opting-in to certain benefits, may seem like a cost saving, but actually could be quite costly in the long run.  

Brokers have regulatory knowledge and are well versed in the latest rules that can help clients navigate changes. Also, brokers are well equipped to navigate different products on behalf of their clients and recommend suitable policies to meet everyone’s needs. They also work with multiple insurance companies, which provide even further options and can help save costs by seeking out the best premiums against the clients’ needs. This, in turn, helps mitigate client risks, and hopefully prevents costly claims or penalties in the future.  

It’s really about simplifying the process for consumers. “Our responsibility is to support clients in making fully informed decisions by outlining both the potential cost savings and the associated coverage implications,” says Duff. 

Regardless, a shift is coming. Yes, there will be freedom of choice, and possibly the ability to lower premiums, but staying informed, asking the right questions, and seeking out the right resources, will help make navigating those new rules an easier task.