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Will July 1 auto insurance reforms in Ontario impact you?
Yes. Every driver and passenger will be affected by new optionality of statutory accident benefits insurers must offer, not just first-time drivers or those shopping for insurance.
The July 1 onset of Ontario’s auto insurance reforms quickly approaches. Whether you’re a parent, primary caregiver, office worker, truck driver, retail employee, or cook involved in an accident, you can be significantly affected if you cancel non-mandatory benefits. Income replacement, maintenance, and payouts tied to inflation are important insurance considerations that impact anyone caught in an unexpected vehicle mishap.
Understanding what risks you face on the road, the implications of opting out of coverage, and how to plan for the upcoming July 1 auto reforms can prevent you being underinured in case of an accident.
Which coverage is mandatory vs. optional?
Here’s a list of accident benefits for the insured policyholder, spouse, dependents, and listed drivers that remain mandatory and those shifting into Ontario’s 'a la carte' list.
Mandatory vs. optional auto insurance coverage
Mandatory coverage | Optional coverage (non-exhaustive list) |
|---|---|
Medical benefits | |
Rehabilitation benefits | |
Attendant care benefits | |
Visitor expenses | |
Damage to personal items | |
Optional benefits you may not have after July 1 cover everything from income loss to family expenses, home support, education impacts, and end of life costs. These benefits will automatically roll forward as part of your policy if you choose not to cancel them.
“When purchasing a new auto policy, or reviewing their existing policy, consumers should focus on selecting the appropriate levels of injury coverage from the outset,” says Daniel Ivans, Rates.ca insurance expert and licensed insurance broker.
While some coverage options can be adjusted in the future, Ivans strongly recommends avoiding underinsuring at the time of purchase. “Accident benefits are foundational to protecting families financially after and through serious injuries.”
Read more: Here are the changes coming to Ontario auto insurance in 2026 | Rates.ca
Risks of opting out of benefits can affect everyone
Ivans discusses real-life examples to illustrate the value of selecting the right coverage package for your current needs. “Each scenario highlights how thoughtful coverage decisions can strengthen protection and help consumers feel confident that they have made the right choice,” he says.
Income Replacement Benefit
What it is: Helps replace your paycheck (or part of it) if you’re hurt in an accident and are unable to work.
Why it matters: Your bills continue even when you stop making money.
Real-life examples:
- Office worker: Suffers a concussion and needs several weeks off for recovery.
- Delivery driver: Breaks a leg in a crash and can’t work for three months.
- Construction worker: Injures their back in an accident and can’t handle heavy lifting for months.
- Factory worker: Suffers a knee injury and can’t operate machinery safely.
- Retail employee: Has a shoulder injury that prevents stocking shelves or working the register.
- Truck driver: Gets into a collision and can’t drive for weeks due to mobility issues.
- Cook: A hand injury makes cooking impossible, forcing time off work.
Our advice: If you depend on your job income and do not have the necessary workplace benefits to replace lost revenue in the event of an injury related to a car accident, this coverage is essential.
Caregiver Benefit
What it is: Pays someone to look after your children or dependents if you are injured in an automobile accident.
Why it matters: Even when you’re down, the people you care for still need you.
Real-life examples:
- Parent with young children: After a car accident, you can’t cook, clean, or supervise your kids, so you need someone to step in.
- Primary caregiver for an elderly parent: You normally help with meals and medication, but an injury leaves you unable to assist.
- Guardian of a child with special needs: You provide daily therapy and support, but now you need temporary help.
- Stay-at-home parent with multiple kids: A broken leg means you can’t manage school runs or household tasks.
- Adult caring for a disabled sibling: You handle daily routines, but after an accident, you need someone to take over.
- Single parent recovering from surgery after a crash: You can’t lift or drive, so you hire help for childcare and errands.
- Grandparent caring for grandchildren: You’re injured and can’t provide the usual care, so require outside assistance.
Our advice: If you have dependents, particularly if you are a primary caregiver, this coverage is highly recommended.
Non-Earner Benefit (NEB)
What it is: The Non-Earner Benefit helps people who weren’t working when they were injured in a car accident—like students, retirees, or stay-at-home parents. If your injuries stop you from living your normal life, your insurance can provide regular support for a set period after a short waiting time. This benefit isn’t based on income, so it’s designed to give you help even if you didn’t have a job at the time of the crash.
Why it matters: You might not have a job, but life can still hit you with unexpected costs.
Real-life examples:
- Full-time student: Sarah is a university student with no job. She’s in a car accident and suffers injuries that make it impossible to attend classes or do daily activities. She qualifies for $185/week after the 4-week waiting period.
- Stay-at-home parent: Mark stays home to care for his kids while his partner works. After an accident, he can’t cook, clean, or manage childcare. Since he wasn’t earning an income, he would receive the Non-Earner Benefit.
- Recent graduate: Emma graduated last month and was planning to start job hunting. A crash leaves her unable to function normally. She qualifies because she wasn’t employed yet and meets the “complete inability” test.
- Retiree: John is retired and living independently. After an accident, he can’t manage basic tasks like shopping or self-care. He receives NEB for up to two years (or longer if over 65).
Our advice: If you're a student, retiree, stay-at-home caregiver, or anyone currently without employment income, Non-Earner Benefit coverage could be useful.
Housekeeping and Home Maintenance
What it is: Covers help for chores when injuries make them impossible.
Why it matters: Household tasks don’t stop because you’re injured.
Real-life examples:
- Broken arm or shoulder injury: Can’t wash dishes, fold laundry, or vacuum floors.
- Back injury: Unable to lift, bend, or carry items for chores like laundry or cleaning.
- Leg fracture: Can’t stand for long periods to cook or clean.
- Severe sprain or torn ligament: Makes sweeping, mopping, or grocery shopping impossible.
- Post-surgery recovery after accident: Restricted movement prevents basic household tasks.
- Winter accident injury: Can’t shovel snow or clear ice from walkways.
- Gardening or yard work: Back or knee injuries prevent lawn mowing or planting.
- Single parent with mobility issues: Needs help with daily chores while caring for kids.
- Elderly person injured in crash: Can’t manage cleaning or meal prep without assistance.
Our advice: If you are a senior or single parent without nearby support, housekeeping coverage is a great option.
Death and Funeral Benefits
What it is: Covers funeral costs and gives some financial support to your family if you pass away from a vehicle accident.
Why it matters: Funerals are costly and this coverage helps lift that burden. Lump sums of cash to family can help with debts or other financial commitments.
Real-life examples:
A fatal crash leaves a family arranging an unexpected funeral.
Our advice: You can protect your loved ones from financial burden of funeral expenses in a relatively inexpensive way, in otherwise tragic circumstances.
Indexation Benefit
What it is: Indexation is like a cost-of-living raise for your insurance benefits. If you’re injured in a car accident and receive weekly payments or coverage for medical bills, those benefits might last for years. Without indexation, the amount stays the same while prices go up – meaning your money buys less over time.
Adding indexation to your policy means your payments and coverage limits automatically increase every January based on inflation. For example, $400/week today becomes $408 next year if inflation is 2%, instead of staying stuck at $400 forever.
Why it matters: What covers $1,000 today won’t tomorrow.
Real-life examples:
- Home care services: If you need an attendant or caregiver, their hourly rates typically rise with inflation.
- Medical equipment: Wheelchairs, braces, or assistive devices become more expensive over time.
- Prescription drugs: Medication prices can climb annually, especially for long-term conditions.
- Transportation costs: Accessible transit or medical travel expenses increase with fuel and service costs.
- Therapy and counseling: Mental health support fees often go up each year.
- Home modifications: Renovations for accessibility (ramps, lifts) cost more as material and labor prices rise.
- Inflation on living expenses: Groceries, utilities, and rent all increase, making fixed benefits less effective.
- Specialized programs: Vocational rehab or return-to-work programs may cost more in future years.
- Assistive technology upgrades: Devices like speech aids or mobility tech become pricier with new models.
Our advice: If you don't have a lot of savings or are on a fixed budget, indexation coverage is a smart long-term protection.
Learn more: Ontario’s budget 2024: Drivers will soon be able to opt out of certain mandatory auto insurance coverage
What to know if you lend your car to family and friends
What if my teen on my policy gets in an accident with their friends in the car and their parents don't have auto insurance?
Your teenager’s friends and parents may end up suing you if they need extended coverage if they are involved in an accident with your dependent.
What about stepchildren that we have shared custody of, but don't live with us full-time. Are they considered dependents?
Stepchildren function as dependents and, in most cases, will carry the same benefits of your policy.
Will my friend's kid be covered if I drive them home from school and am in an accident?
No, they are not eligible for payouts for all injuries.
Can I still let my friends borrow my car?
Yes, and you should feel more comfortable doing so if your friend has their own policy. But if they don’t, then there is a good chance they wouldn’t be properly covered for injuries sustained while driving. Your friend is covered under your policy for the accident itself, but may not be properly covered for income replacement or other optional benefits.
What should I do to prepare for July 1 reforms?
If you don’t make any changes, your current accident benefits package simply rolls forward—even though many benefits become optional for new policies. You can always change your mind and add options or further enhance your injury coverage to financially protect you and your family after an accident. Insurance experts strongly recommend you avoid underinsuring at purchase.
Be informed of implications of these auto insurance reforms and risks everyone could face if optional coverage is cancelled. Check out Ivan’s answers to questions you may have on planning for upcoming changes.
Frequently Asked Questions
Will my insurance actually be cheaper if I cancel optional coverage? By how much?
Yes. By reducing coverage initial costs will be very slightly decreased. Insurance costs as a whole are a reflection of claims levels, and other items may cause spikes in rates that easily offset savings from minimizing or removing optional benefits – which is why this is not recommended.
Is opting out worth the risk?
Not in most cases. If cutting coverage will have a meaningful impact on your monthly budget, then not having that assistance when required could be financially perilous for you.
How do these changes interact with my workplace benefits?
When a claim is made, your auto insurer pays first. Instead of burning through your workplace benefits right away, your claim goes through your auto policy first. You’re way less likely to drain your employee plan. It also tends to move faster because insurers are set up to handle these situations efficiently.
Who pays first for medical treatment after a crash now?
Your auto insurer pays first for medical treatment after a crash. Workplace benefits only step in after your auto benefits are used – essentially acting as excess coverage. This is a reversal from how it worked before.
What happens if I’m seriously injured and don’t have optional benefits?
You have to pay out of pocket, which could exceed six figures in financial loss.
How do I know what coverage is right for me?
Coverage should reflect lifestyle – talk to a broker to find the product that insures protection from potential financial devastation.
Will my broker or insurer explain this to me, or do I have to ask?
Brokers should be explaining, but it is very important to ask a lot of questions. Don’t accept answers you don’t understand. Don’t let anyone rush the conversation.
Do the July 1 reforms change what information I should exchange or what I should do if I'm in an accident?
No, the new guidance does not change the steps you follow in the event of an accident.
What happens if I hit a pedestrian without insurance? Will they sue me personally? Will I have to pay for legal fees?
Yes, that is a possibility you could get sued by a pedestrian without insurance.
What happens if I don't have auto insurance? Will my home insurance cover me if I'm in an accident?
No. Home insurance excludes motor vehicle accidents entirely, because cars require a separate auto policy by law in Ontario. Home insurance won’t cover your liability, your injuries, or any damage to the vehicle. At most, home insurance might cover some personal contents inside of the car, such as damaged belongings, but nothing related to the actual accident itself or the person you may have injured.
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Joan Pinto, Managing Editor
Joan Pinto is a Managing Editor at Rates.ca. She is a seasoned publisher with over 15 years of experience managing and developing multi-asset financial markets content across platforms at leading Canadian banks. As a financial research analyst with a cross-asset strategy team, she specialized in energy markets. She also worked as a journalist covering the volatile global environmental policy landscape for three years.
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