Ontario is making significant changes to its automobile insurance system, and brokers will be at the forefront of making clients aware of them.

Beginning July 1, 2026, key accident benefits coverages such as income replacement benefits, caregiver benefits, non-earner benefits, and funeral and death benefits — all of which are currently included automatically in every automobile policy — will become optional purchases.

For insurance brokers, these changes represent both an opportunity and a challenge.

On the plus side, a wider range of optional benefits will let brokers better tailor coverage to clients’ needs, potentially leading to cost savings for consumers and improved client satisfaction and retention.

But more optional coverages means increased responsibility and greater complexity for brokers when advising clients on the available options and their suitability for clients’ needs.

Make no mistake, these changes increase a broker’s risk of liability exposure. An insured who experiences a shortfall in accident benefits due to a failure to purchase optional coverage may claim their broker did not fully explain all the available options, or didn’t inform the client of the consequences of not purchasing them.

Client confusion is even more likely, since the newly optional benefits were previously part of the standard offering.

 

What courts are saying

Canadian courts have consistently held the standard of care requires insurance brokers to provide sufficient information and advice to ensure clients make informed coverage decisions.

Past Ontario court decisions in broker negligence cases illustrate how this standard is likely to be applied. For example, in Zefferino v. Meloche Monnex Insurance Co., an insured alleged his broker failed to properly offer optional enhanced income replacement benefits as part of his automobile policy, which could have increased his income replacement from the basic $400 per week up to an optional $1,000 per week.

In that case, although the broker did tell the insured optional benefits were available to purchase, the broker did not make any additional inquiries about the insured’s financial circumstances or income level. The broker also didn’t talk with the insured to determine if the optional benefits would be suitable.

Significantly, the court found the broker’s failure to review the suitability of the optional benefits coverage with the insured fell below the requisite standard of care.

It noted the broker failed to offer the optional benefits coverage in any ‘meaningful’ way and that the offer was “more in the nature of a mention accompanied by a solicitation of interest,” which was not sufficient to allow the insured to make an informed decision about optional coverage.

Ultimately, the court dismissed the claim. It was not satisfied the insured would have purchased the optional benefits coverage, even if it had been properly offered. (The evidence indicated the insured had always purchased the least expensive insurance available.)

 

A different take

That decision differs from Godina v. Tripemco Burlington Insurance, a similar broker negligence claim stemming from an alleged failure to properly offer optional income replacement benefits. In that case, the court held the broker met the applicable standard of care.

It noted the broker advised the insured of the different optional benefits available and, although the broker did not review the insured’s finances or income level, made inquiries about whether the minimum coverage would be sufficient in the event the insured was unable to work.

In Godina, the court held brokers meet the applicable standard of care if they inform insureds about the existence of optional benefits, explain what those are, and ask if the minimum coverage would be sufficient if the insured sustained an injury.

 

Shielding against risks

Brokers can do several things to prepare for upcoming changes to Ontario’s accident benefits to reduce their risk of liability exposure for optional benefits:

  • Educate clients thoroughly

Inform clients about optional benefits available, and clearly explain the purpose and scope of each benefit

  • Explain the changes

Identify and explain which of the previously standard benefits have become optional for clients to purchase

  • Review and assess client needs

Ask clients about their specific circumstances and whether the minimum coverage would be sufficient for them in the event of an injury

  • Document client interactions

Keep detailed records of all client communications, particularly about optional benefits reviewed, inquiries made about whether minimum coverage would be sufficient, any recommendations made, and the client’s final decision

  • Stay informed and proactive

Monitor regulatory updates and emerging case law in this area to ensure compliance with evolving standards.

 

Alex Reyes and Sonya Katrycz, are partners specializing in insurance coverages and broker liability at Zarek Taylor Grossman Hanrahan. This article is excerpted from one that appeared in the February-March print edition of Canadian Underwriter. Feature image by iStock/adventtr