Vehicles brave rush hour on the Don Valley Parkway in Toronto on Feb. 24.Fred Lum/The Globe and Mail
Ontario and Alberta are implementing changes to their auto insurance regulations. Here’s what drivers should know.
What’s changing in Ontario?
The change to minimum coverage requirements in Ontario, which was announced by the Ford government in 2024, will be implemented on July 1. A number of benefits including income replacement; non-earner benefits, which are payments for those who were not earning a regular income at the time of a severe accident, such as students or unemployed people; and funeral costs will no longer be included with basic coverage. Core medical care, rehabilitation and attendant care will remain as part of the minimum package.
For drivers in Ontario expecting to renew their auto insurance policy on or after July 1, insurers will automatically renew your plan with your existing coverage unless you choose to change it.
The full list of benefits that will become optional is: income replacement; non-earner benefits; caregiver benefits; lost educational expenses; visitor expenses; housekeeping and home maintenance; personal items damaged in an accident; death benefits, which compensates family members and funeral costs.
The upside
The Ontario government says the move will give consumers more choice. Some of the benefits, such as income replacement, are covered in employer-sponsored benefits and not every consumer will need the additional coverage, said Amanda Dean, Insurance Bureau of Canada (IBC) vice-president of Ontario and Atlantic regions.
The new regulations also make auto insurers “first payer” for medical care to treat injuries after a crash or accident. This means that consumers will no longer have to exhaust their private insurance or employer group benefits before making a claim from their auto insurance.
Ontario’s effort to reduce auto insurance premiums would offer less coverage, little savings
The risks
Ontarians pay more on average than residents of any other province on auto insurance premiums. Whether these changes lead to higher or lower premiums is unclear, but Ms. Dean says she has never seen the change as being about affordability but rather as about offering consumers choice.
Matt Hands, vice-president of insurance at Ratehub, said that marginal savings from reducing coverage won’t be significant enough to be worth it for those without employer-sponsored disability benefits or life insurance policies.
If an accident occurs, “these costs will far outweigh the savings,” Mr. Hands said.
Ms. Dean said insurers and brokers are working on communicating to drivers what the changes mean. She said consumers should consult their insurer or their broker about what makes sense for their specific needs before changing plans.
What’s changing in Alberta?
In Alberta, the government is transitioning away from a tort system, where accident benefits cover up to $50,000 in medical expenses. When costs exceed the coverage, people can sue the “at-fault” driver to cover additional expenses.
The new rules, which the government is calling “Care-First,” cover medical expenses deemed necessary by a health care professional without having to establish fault through a lawsuit. The move to a “no-fault” system brings Alberta more in line with other provinces in Canada.
The new regulations come into effect on Jan. 1, 2027.
How it affects drivers
The biggest change for consumers will be how injury claims work after an accident, said David Mayer, director of insurance markets at Rates.ca.
Mr. Mayer said under current rules, a driver who is injured in an accident has to hire a lawyer to sue for medical expenses past the $50,000 threshold.
“That can take months or years to resolve,” Mr. Mayer said. He mentioned in some cases the benefits could expire before the crash victim fully recovers.
The big guide to auto insurance
The change would also ensure crash victims receive medical care in a more timely manner, said Aaron Sutherland, IBC vice-president of Western and Pacific regions. Under the current system, victims have to determine fault in a lawsuit before they can pay for certain services such as rehabilitation.
“The goal is really to deliver faster medical treatment and income support, if required, for injured drivers,” Mr. Mayer said.
Easing cost pressures for insurers
Alberta has the second highest auto insurance premiums of any province in Canada, although this is partially due to the frequency of natural disasters such as wildfires, floods and hailstorms in the province.
Mr. Sutherland said the change would reduce legal expenses insurers pay for clients in Alberta, freeing up a greater share of money from premiums for actual medical expenses.
According to the IBC, legal expenses account for 20 per cent of a typical insurance policy in the province, amounting to an average of $200 a year per policy. Under the new rules, that amount could go down to about 2.5 per cent of the premium, according to a study commissioned by the Alberta Auto Insurance Rate Board.
It is possible to sue for damages from car accidents in Ontario, but there is an automatic deduction of almost $48,000 for total damages below about $159,000.
The auto insurance picture in the rest of Canada
Car insurance in Alberta and Ontario is offered through private companies. This is also the case in New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut, Yukon and the Northwest Territories.
British Columbia, Saskatchewan and Manitoba have government-run auto insurance for basic and enhanced coverage, while Quebec has a hybrid model where the government insurer covers medical care but additional coverage is available from private insurers.
