The Ontario government has announced significant changes to the province’s no-fault automobile insurance regime, set to take effect on July 1, 2026. These changes are poised to reshape the landscape of auto insurance in Ontario, negatively impacting those injured in motor vehicle accidents. Here’s a detailed look at what these changes entail and their potential implications.
Current No-Fault System
Under the current no-fault system, individuals injured in automobile accidents in Ontario are eligible for insurance coverage regardless of who is at fault. The intent of the system is to provide a range of benefits, including medical and rehabilitation expenses, income replacement, and attendant care. The stated goal is to ensure that accident victims receive timely and adequate support without the need for lengthy legal battles to determine fault. However, in practice, this is not the case. The current system is already unfair to most people injured in motor vehicle accidents with insurers delaying payments and a dispute resolution system that favours insurance companies. These changes will only compound the difficulties for those injured.
Key Changes Effective July 2026
The upcoming changes will slash no-fault accident benefits under the guise of consumer choice. Here are the main changes:
- Optional Coverage: Starting July 1, 2026, all accident benefits, except for medical rehabilitation and attendant care, will become optional. This means that policyholders will need to actively choose and purchase additional coverages such as income replacement, non-earner benefits, and housekeeping and caregiver benefits.
- First Payer Rule: Automobile insurers will become the first payer for benefits in all automobile accidents, regardless of the injury sustained. This change eliminates the requirement for claimants to exhaust collateral benefits before claiming from their auto insurer.
- Alleged Simplified Claims Process: The new system aims to streamline the claims process, reducing administrative burdens and speeding up the delivery of benefits to accident victims. However, based on past experience, I don’t expect that the process will be streamlined.
- Consumer Choice: By making most coverages optional, the government aims to give consumers greater control over their insurance costs. While this may be the intent of the changes, the reality is that premiums are not likely to go down and people will be left with reduced coverage when they need the benefits. Think about the working person who does not have disability coverage and is injured in a motor vehicle collision. If they did not buy the optional income replacement benefit coverage, they will have no source of income while they are unable to work.
Implications for Consumers
The shift to optional coverages means that policyholders will need to be more proactive in understanding their insurance needs and making informed decisions about their coverage. Here are some key considerations:
- Risk Assessment: Individuals will need to assess their personal risk factors and decide which optional coverages are essential for their protection. For example, those with dependents may prioritize income replacement and caregiver benefits, while others might focus on medical and rehabilitation coverage. Inadequate coverage could lead to significant out-of-pocket expenses in the event of an accident.
- Education and Awareness: Insurance providers and brokers will play a crucial role in educating consumers about the new system and helping them navigate their options. Clear communication and guidance will be essential to ensure that consumers make well-informed choices.
Concerns
The overhaul of Ontario’s no-fault accident benefits system is quite concerning:
- Underinsurance Risk: Most consumers will opt out of critical coverages to save on premiums, leaving them underinsured in the event of a serious accident. This could result in financial hardship and increased reliance on public healthcare and social services.
- Market Complexity: The introduction of optional coverages will complicate the insurance market, making it more challenging for consumers to compare policies and make informed decisions. Clear and transparent communication from insurers will be essential to mitigate this risk.
- Failure to Protect Pedestrians: The government has neglected to account for those individuals who are injured who don’t drive and therefore don’t purchase automobile insurance. They did not make the choice to have reduced coverage and will no longer be able to obtain the care they need if they are seriously injured.
- Consumers Without Any Choice: Insured persons who do not have their own policy and who claim no-fault accident benefits under a fleet policy insuring a vehicle involved in an accident. These individuals did not make a choice for reduced benefits but will be forced to accept the reduced benefits. This includes all: company vehicles, transport truck drivers, garbage trucks, taxis, rental cars and Uber/Lyft/Rideshare etc.
- Increased Premiums: For those consumers who opt-in and purchase the optional benefits, you can expect that their premiums will rise dramatically.
- Increased Reliance on Social Security: These changes will necessarily increase the need for those injured in motor vehicle accidents to rely on taxpayer funded social security. Without income replacement benefits, if a working person is injured in an accident, they will likely need to turn to ODSP or Ontario Works to survive.
The Need for Corresponding Changes to Tort (At-Fault System)
The justification for the severe limitations on compensating those who are innocently injured in a motor vehicle collision can no longer be justified. Currently, if you are injured directly or indirectly by a motor vehicle, you will face significant limitations on what you can recover in a lawsuit:
- Threshold on not being able to recover any money for your pain and suffering unless you suffer a serious and permanent impairment to an important physical or psychological function.
- If you suffer a threshold injury, a deductible on your pain and suffering damages. In 2024, the deductible on pain and suffering damages is $46,053.20, meaning that if a judge or jury determines that fair compensation for your pain and suffering is $100,000, you only get $53,946.80. The insurance company for the negligent driver gets to keep the deductible.[1]
- Limit your pre-trial loss of income to 70 percent.
These limitations were part of the bargain for “generous” no-fault accident benefits. With the no-fault accident benefits being gutted by these changes, there is no longer any justification to limit fair compensation to those who are innocently injured by the negligent drivers.
Conclusion
The upcoming changes to Ontario’s no-fault accident benefits system represent a significant shift in favour of insurance companies at the expense of consumers and in particular those who are injured in motor vehicle accidents. There is still time to act to prevent these changes from taking place or to lobby the government to make the corresponding necessary changes to the tort (at-fault) system to balance the scales. If these changes go forward and there are no changes to the tort system, consumers and injured victims will be the ones paying a heavy price.
Kristian Bonn
Lawyer, Bonn Law
Past President of Ontario Trial Lawyers Association
[1]If your pain and suffering damages are assessed at $153,509.39, there is no deductible. However, most pain and suffering damages assessed in Ontario are for less than $100,000 and thus, virtually all injured victims will be subject to the deductible.