Article by Jacklyn Barrios
On March 26, 2024, the Government of Ontario announced its 2024 Budget: Building a Better Ontario which proposed reforms to auto insurance. These reforms were suggested as a way to keep costs down for drivers and improve access to benefits.
The budget suggests that mandatory auto insurance accident benefit coverage will continue to apply to medical, rehabilitation, and attendant care benefits, with all other benefits becoming optional.
Some examples of optional benefits under the 2024 Budget are as follows:
Liability coverage, which covers damage caused to other vehicles or people, up to the liability limit in your insurance policy.
Collision insurance, which covers the cost of repairing or replacing your car if you are in a motor vehicle accident.
Comprehensive insurance, which covers the cost of repairing or replacing your car due to damage or loss such as theft or vandalism.
Benefits
According to the budget, this opt-in method will provide an opportunity for policy holders to lower their premiums. For example, if they have access to certain benefits through their workplace insurance plans, they can opt-out of those benefits rather than “doubling-up.” Insurance payments may therefore be cheaper if an individual opts out of optional benefits.
Drawbacks
The budget states that implementation of these proposed changes will be done in a way to ensure drivers are able to make informed decisions when they are deciding whether to opt-in to coverage. However, the Government of Ontario has not stated who will ensure this, how this will be done, or what the standard is for an informed decision.
Additionally, some individuals may be covered by their workplace’s insurance benefits and will therefore choose not to “double up” on their auto insurance coverage. However, should an individual lose their job, they will also lose their insurance benefits and would then have to opt-in to any non-mandatory benefits to claim coverage upon getting into an accident. This extra cost can be significant. While you may have put aside emergency funds for this situation, you may not have considered an increase in your insurance premiums and this can significantly affect your savings over time.
This is especially important to note when considering the 2024 Budget did not propose a cost or cap on insurance companies for optional benefits. Insurance companies may charge a significant amount to add optional benefits onto your insurance policy. Should you want all the benefits currently included in automobile insurance plans, the cost may be significantly higher once the proposed reforms take place.
What does this mean for you?
You can typically change your insurance policy coverage at any time (depending on your insurer), but you cannot opt-into coverage for a current claim. This means that if you choose not to opt-in to non-mandatory benefits you will not have coverage if you get into an accident.
For example, if liability coverage is not selected and you rear-end someone you will have to pay out of pocket if you are sued by the other driver. While your insurance premium may be lower, you may have to pay hundreds of thousands of dollars in settlement costs.
Should you opt-in to non-mandatory insurance benefits? If the changes proposed in the 2024 Budget are implemented, the decision is ultimately yours. However, it is important to understand that these changes do not come with no strings attached. You may end up paying avoidable, but significant out of pocket costs.
If you find yourself questioning whether to opt-in to certain automobile insurance benefits, you can reach out to one of our experienced lawyers at Reybroek Barristers for guidance.
