Auto Reform

What is the big picture: why does "standard becomes optional" matter?

For decades, Ontario auto policies have included a long list of accident benefits automatically: coverage that applies if a person is injured in a car accident, regardless of who was at fault. Under the 2026 reforms most of those benefits move from standard to optional. They do not vanish; the policyholder now actively chooses whether to keep them, and at what level.

The one major exception is core medical, rehabilitation and attendant care coverage, which remains mandatory at the same limits as today: $65,000 for non-catastrophic injuries and $1 million for catastrophic injuries.

The practical shift is from a default that was decided for every Ontario driver to a decision that belongs to each policyholder. The benefit amounts, the eligibility and the limits become a conversation between a policyholder and their broker rather than a fixed part of the contract.

What are the two dates to remember?

There are two timelines, and they do not happen at the same moment for everyone. July 1st, 2026 is when certain rules change for every Ontario driver at once. A policy's own first renewal on or after that date is when its coverage formally moves to the new optional structure.

This distinction is the single thing most Ontario drivers get wrong. There is no province-wide switchover day for individual policies: the election arrives quietly inside a renewal package, which is easy to sign without reading.

What changes for everyone on July 1st, 2026?

Four changes apply to all Ontario auto policies on July 1st, 2026, regardless of renewal date: the scope of the newly optional benefits narrows, third parties are excluded from them, auto insurance becomes the first payor for medical and rehabilitation expenses, and coverage can be changed mid-term.

• Narrowed scope of coverage. The nine newly optional benefits apply only to the named insured, their spouse, dependants of either of them, and drivers specifically listed on the policy.
• Third-party exclusion. Uninsured pedestrians, cyclists or passengers who are not covered persons on a policy receive the standard mandatory benefits only, not these optional ones.
• First-payor status. For medical and rehabilitation expenses excluding medication, auto insurance becomes the primary payer regardless of renewal date, which may affect how it coordinates with workplace or extended health benefits.
• Ability to make mid-term changes. From 1 July there is no need to wait for a renewal. Benefits can be declined or added at any time.

What changes on your renewal date?

On a policy's first renewal on or after July 1st, 2026, benefits that were previously standard are formally deemed optional. The policy renews automatically with the same coverage levels and limits it carried before the reform, and those limits change only if the policyholder agrees in writing.

In other words, the system defaults to protecting the policyholder. What is new is the range of choices now available at renewal, and that those choices have to be made deliberately.

• Deemed optional status. Benefits that were previously standard are officially deemed optional benefits as of the renewal.
• Automatic carryover. The policy renews with the same coverage levels and limits as before, so nobody is left unprotected by default.
• Written agreement required. Limits change only on written agreement to decline benefits or modify amounts. Nothing is taken away unless the policyholder chooses to change it.

Which accident benefits are becoming optional?

Nine benefits move from standard to optional on July 1st, 2026: income replacement, non-earner benefits, caregiver benefits, housekeeping and home maintenance, lost educational expenses, expenses of visitors, damage to personal items, death benefits and funeral benefits. Three benefits were already optional and remain available to add.

Non-catastrophic and catastrophic refer to the two injury limits in the Statutory Accident Benefits Schedule. The final three categories were already optional and remain available to add. Dollar figures are the standard limits and can vary by policy.

In plain terms: core medical, rehabilitation and attendant care coverage stays mandatory with the same limits. Most other benefits move to optional. They do not disappear, but they are now actively chosen and set at a level. The benefits that were already optional simply stay that way.

What should you do now?

No immediate action is required. An existing policy continues exactly as it is until its renewal date. Three things are worth doing in the months before that renewal: read the full bulletin, think through the household's actual needs, and speak to a broker before the renewal package arrives.

There is no one-size-fits-all answer here, which is exactly why these changes matter. What suits one household will be wrong for the next one, and the reform moves that judgement from the regulation to the policyholder.

1. Review the full bulletin. The client bulletin above walks through every benefit category, what changes, and what it means in plain terms.
2. Think about the household's real needs. A sole income earner with young children weighs income replacement and caregiver benefits differently from a retired couple with no dependants and workplace coverage already in place.
3. Talk to a broker before the renewal. The new system gives more control, and more control means more decisions. A short conversation before the renewal package arrives is the difference between choosing coverage and inheriting it.

Should I keep income replacement benefits?

That depends on circumstances no policy can know in advance. Electing income replacement keeps a weekly benefit if an injury stops you working; declining it lowers the premium and removes that benefit. The criteria below are the ones that actually bear on the decision, and a licensed Sutherland Insurance broker can set out the options and amounts available.

The same reasoning applies to caregiver, housekeeping and non-earner benefits: each is a question about what a particular household would need if someone in it were seriously injured.

• Whether the household depends on the policyholder's earnings, and how much of the total those earnings represent.
• Whether an employer already provides short-term and long-term disability coverage, and what it pays.
• How long the household could absorb a loss of income before the shortfall became serious.
• Whether there are dependants, and whether another adult's income would continue.
• Whether self-employment means there is no employer coverage behind the policyholder at all.
• What the premium difference actually is between the available amounts, which varies by insurer.

Who counts as a covered person under the new rules?

From July 1st, 2026 the nine newly optional benefits apply only to the named insured, their spouse, dependants of either of them, and drivers specifically listed on the policy. Everyone else falls outside them, which is the practical effect of the narrowed scope introduced by the reform.

This is a change in who the optional benefits reach, not a change in the mandatory ones. A pedestrian or cyclist struck by a vehicle, or a passenger who is not a covered person on any policy, still receives the standard mandatory benefits (medical, rehabilitation and attendant care) at the limits that continue to apply after the reform.

Households where an adult child, a parent or a regular driver uses the vehicle without being listed on the policy are the ones most affected by the wording. Whether a particular person is a listed driver is a question of what the policy says, and a licensed Sutherland Insurance broker can confirm it from the policy itself.

What happens if I do nothing before my renewal?

The policy renews with the same coverage levels and limits it carried before the reform. Doing nothing does not remove a benefit: the previously standard benefits are deemed optional but carry over automatically, and any reduction requires the policyholder's written agreement.

Doing nothing is therefore a safe default rather than a risk, which is the opposite of how these reforms are often described. The reason to look at a renewal package is not that coverage disappears silently. It is that the reform makes several amounts adjustable for the first time, and those amounts are now worth deciding rather than inheriting.

Sutherland Insurance reviews every client's renewal before that decision has to be made.

Why does having an independent broker matter for this reform?

Sutherland Insurance has guided Ontario families through insurance decisions for five generations. Reforms like this one are the moments when an independent broker, one who works for the client rather than an insurer, is most useful, because the decision is now the policyholder's to make and the options differ between insurers.

Sutherland Insurance will reach out to walk clients through their options before their renewal. Questions before then are welcome at any time: 519-822-0160, or the 24/7 virtual assistant at 226-771-9224.

Sources

• Financial Services Regulatory Authority of Ontario
• Ontario Ministry of Finance
• Insurance Act, R.S.O. 1990, c. I.8
• Statutory Accident Benefits Schedule, O. Reg. 34/10