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Affordable car insurance in Ontario is not the same thing as the lowest premium. A policy is only affordable if it pays enough to cover a loss your household could not absorb on its own. The real test is simple: compare what a policy costs each year with what it actually pays out when you need it.
That comparison got a little trickier on July 1, 2026, when Ontario made nine accident benefits optional. Drivers now have to ask for them and pay for them separately, which means two quotes at the same price can offer very different levels of protection. If you’re hunting for a cheap policy, it pays to understand how auto insurance in Ontario is structured now and check which of these benefits each quote actually includes.
What an Ontario Car Insurance Policy Must Include
Ontario law sets the foundation for every auto policy, and the Financial Services Regulatory Authority of Ontario (FSRA) regulates how insurers sell it. Individual insurers then add their own options. A standard Ontario policy includes:
- Third-Party Liability: A mandatory legal minimum of $200,000. Any damages awarded above this limit must come directly out of the policyholder’s personal assets. Drivers can buy up to $2 million in coverage, though $1 million remains the standard step.
- Statutory Accident Benefits (SABs): No-fault benefits you can claim regardless of who caused the collision. Statutory accident benefits can have a significant impact on your ability to recover after an accident
- Direct Compensation for Property Damage (DCPD): Covers damage to your vehicle when another insured driver is at fault. Since January 2024, drivers can opt out of DCPD using a form called the OPCF 49, but signing it also removes your collision coverage. A driver who opts out to save money may be left paying for repairs after a crash they did not cause.
- Uninsured Automobile Coverage: Protects you if you are hit by an uninsured or unidentified driver.
Following the July 1, 2026 regulatory changes, only three core accident benefits remain strictly mandatory:
- Medical Care
- Rehabilitation
- Attendant Care
Together, these standard benefits pay up to $3,500 for minor injuries governed by the FSRA Minor Injury Guideline. For non-catastrophic impairments, the combined limit for treatment and attendant care is $65,000. A catastrophic impairment raises this total threshold to $1,000,000.
Which Accident Benefits Became Optional in 2026?
Under the updated insurance framework, nine specific benefit categories moved out of the mandatory standard package:
- Income replacement
- Non-earner benefits
- Caregiver benefits
- Housekeeping and home maintenance
- Death benefits
- Funeral benefits
- Expenses of visitors
- Lost educational expenses
- Damage to personal items (e.g., clothing, prescription eyewear)
Declining all nine optional endorsements saves an average Ontario driver roughly $75 to $100 per year on their premium.
Income replacement coverage pays up to 70% of a driver’s gross weekly earnings before the collision, capped at $400 per week. Because that $400 ceiling has not been adjusted upward in decades, it equates to $20,800 annually; though payments for a serious, disabling injury can extend for years.
The 2026 regulations also restricted the reach of optional benefits. Optional coverages now apply exclusively to:
- The named insured
- The named insured’s spouse or dependants
- Listed drivers specified on the policy
Under the July 1, 2026 framework, optional endorsements apply strictly to the named insured, spouse, dependants, and listed drivers on the policy. Uninsured third parties—such as pedestrians or cyclists hit by a vehicle who do not own an auto policy—are limited to mandatory medical, rehabilitation, and attendant care limits and cannot access the policyholder’s optional accident benefits (such as income replacement or caregiver benefits).
Renewals vs. New Policies
How the changes affect you depends on when and how you buy coverage:
- Existing policies: According to FSRA, existing policies must renew with the same coverages and limits until the customer agrees in writing to change them.
- New policies: Drivers buying a new policy on or after July 1, 2026 choose which optional benefits to add. Never assume a quote includes them. Ask your insurer or broker for an itemized list.
- Mid-term changes: The Registered Insurance Brokers of Ontario confirms that customers can opt out of optional coverages at any time, regardless of their renewal date.
How to Decide Which Optional Benefits to Keep
If You Earn Income From Work
Removing income replacement means waiving 70% wage protection if an injury prevents you from working. Effective July 1, 2026, auto insurance is the mandatory primary payor over private/group health plans for eligible medical and rehabilitation claims (excluding prescription medication). However, this primary payor rule applies to treatment—not income. If you drop optional Income Replacement coverage on your auto policy, auto insurance pays $0 for lost wages, shifting your income protection entirely to your employer’s Short-Term Disability (STD) or Long-Term Disability (LTD) plan.
If You Are Retired
Because pensions, registered investments, and retirement drawdowns continue after a motor vehicle collision, income replacement is often the easiest optional benefit for retirees to drop. However, consider housekeeping and home maintenance benefits carefully; a retired individual who maintains their own home may need to pay third-party services while recovering from physical injuries.
Household Members Without Their Own Policy
Spouses and dependent children living in the household qualify as insured persons under the main policy. However, non-dependants, such as adult children with independent incomes, can access optional benefits only if they are explicitly named as listed drivers on the policy or purchase their own coverage.
Does Raising Your Deductible Save Money?
A deductible is the out-of-pocket amount you pay before insurance covers the remaining costs. Raising your deductible lowers your overall annual premium because you assume a larger share of the financial risk during a claim.
Deductibles apply to Collision, Comprehensive, and Direct Compensation Property Damage (DCPD) coverages (though DCPD standardly carries a $0 deductible, which drivers can increase to $300 or $500 for a rate discount). They do not apply to Third-Party Liability or Statutory Accident Benefits.
Under Ontario Regulation 664, the standard baseline deductible for Collision and Comprehensive coverage is $500 unless the policy holder changes it. Savings for choosing a higher deductible ($1,000 or $2,500) vary by carrier.
Key Rule: Choose a deductible amount you can easily produce in cash on the day of an accident. A $2,500 deductible represents a massive proportion of a $6,000 vehicle’s value compared to a $40,000 vehicle.
Should You Opt Out of Collision Coverage on an Older Car?
On vehicles valued under $2,000, carrying collision and comprehensive coverage rarely makes financial sense; post-deductible payouts are often negligible relative to the premiums paid.
| Coverage Type | Applies When… | What Happens Without It?
|
| DCPD | Another insured driver is at fault for damage to your vehicle in Ontario. | You pay for your own repairs, even when the crash was not your fault |
| Collision | You are at fault, or the damage falls outside DCPD (for example, a hit-and-run). | You absorb the entire vehicle loss, plus towing and storage fees. |
Insurers consider a vehicle a total loss (“write-off”) when the estimated cost of repairs approaches or exceeds its Actual Cash Value (ACV). Because older or discontinued models have lower market values and scarcer replacement parts, even minor body repairs can trigger a write-off threshold.
Questions to Ask Before Buying a Cheaper Policy
Because Ontario rules require drivers to opt into optional accident benefits by name, always verify these four details before signing a contract:
- An itemized list of which specific accident benefits are included in the quote.
- The exact Third-Party Liability dollar limit.
- How your workplace or private extended health plan coordinates with primary auto insurance payouts.
- Which household members travel as cyclists or pedestrians without holding their own auto insurance policies.
What a Cheap Policy Costs at Claim Time
The true cost of a bare-minimum policy often shows up after a collision, when you are injured and trying to get support.
- Treatment limits buy less care than they used to. The maximum hourly rates insurers pay health providers are set by FSRA’s Professional Services Guideline, and those rates have applied since 2014. For example, the guideline caps massage therapy at $58.19 an hour. Clinic costs have risen since then, so a $65,000 limit covers less treatment than it did a decade ago.
- Denied benefits lead to disputes. When an insurer denies or cuts off a benefit, the dispute goes to the Licence Appeal Tribunal, which has handled accident benefits disputes since 2016. The process can be lengthy and technical. People facing a denial often turn to an insurance dispute lawyer to understand their options.
- A lawsuit is not an automatic safety net. Suing an at-fault driver depends on another person being responsible for the crash. Under section 267.5 of Ontario’s Insurance Act, a claim for pain and suffering requires a permanent serious impairment of an important physical, mental or psychological function, and most awards are reduced by a statutory deductible that exceeds $47,000 in 2026. If you were partly at fault, Ontario’s Negligence Act reduces your compensation by your share of the blame. None of this replaces the benefits you declined to save a few dollars a month.
Protect Yourself Before and After a Collision
The cheapest policy on the market can become the most expensive decision you make if a serious injury leaves you without income support. Review your accident benefits before your next renewal, ask for an itemized quote, and weigh a few dollars in savings against what you would lose if you could not work.
If you have been hurt in a collision and your insurer has denied or reduced your benefits, you do not have to face the process alone. The team of lawyers at Diamond and Diamond has experience handling car accident claims, including accident benefits disputes under Ontario’s new rules. Call our 24/7 injury hotline at 1-800-567-HURT or visit our website to speak to someone now. We offer free consultations and case evaluations. Our team of personal injury lawyers represents clients throughout Canada.
About Jeremy Diamond