What 2026 accident benefits changes mean for uninsureds

We are entering a phase of two tiered no-fault insurance for auto customers.

Beginning July 1, 2026, Ontarians’ entitlement to statutory accident benefits will be reduced from a robust system of coverages, in place since 1990 in various incarnations, to medical, rehabilitation and attendant care benefits only. This will primarily impact pedestrians, cyclists and occupants of vehicles who are otherwise uninsured.

That’s because Ontario Regulation 383/24, which passed last October, removes previously mandatory benefits coverages, including income replacement, non-earner, caregiver, and educational and visitor expenses. The changes also revoke expenses for damage to personal items, death benefits and funeral benefits. 

It’s unlikely these changes will actually result in lower premiums over the mid-to-long term, because the risk for damages transfers to the at-fault tort system, or to the public purse via OHIP, welfare, ODSP, etc.

Related: Insurer, broker views on proposed optional Ontario auto accident benefits

People who are not insured under their own policies will have significantly less funding if they’re injured in a car accident. Consumers will need to not only understand their policies – putting increased pressure on brokers – but pay extra for coverages that were previously included in the standard package.

The incoming amendments restrict optional benefits to:

(a) the named insured

(b) the spouse of the named insured

(c) dependants of the named insured and of the named insured’s spouse, and

(d) any persons specified in the policy as drivers of the insured automobile.

Here are two examples of ways things could go wrong.

An elderly widower who lives alone and does not have a driver’s licence is struck by a car that is slowly backing out of a parking spot. He is not seriously injured, and unlikely to pursue a tort claim, but his prescription glasses and hearing aid are damaged. It’s a modest claim, but if the accident took place today, he would have those items replaced by the insurer of the vehicle that hit him as part of that driver’s Standard Accident Benefits Schedule (SABS) claim.

These coverages will disappear for him on an insurance policy quoted and bound after July 1, 2026, even if the vehicle’s policy has optional benefits.

Related: Ontario proposing end to most mandatory accident benefits, and brokers are concerned

So, how will the elderly widower on a fixed income afford to replace these costly items? Will he bring a suit in Small Claims Court to recoup from the at-fault driver? The driver, having been served with the claim, will expect his insurer to defend him. What was once quickly and efficiently paid for under the accident benefits portion of the driver’s policy, will shift to the third-party liability insurer.

Perhaps the adjuster will pay the claim and incur little to no legal fees. However, with a duty to defend and indemnify, and a desire of many stakeholders to make the government feel the impact of these reductions, we can anticipate more nominal tort claims, more load on the Small Claims Court and Superior Court (under the Simplified Procedure) and more expense to liability insurers than was previously paid by the no-fault carrier. 

Now consider a serious and complex injury. The claimant is 25, fresh out of business school and three weeks into her dream job as an investment banker. But, instead of enjoying a long, fruitful career, she’ll never work again due to a single-vehicle accident that she caused while driving a friend’s car. Because she wasn’t the primary insured or listed as a driver, the vehicle’s policy would not apply to her even if it had included optional benefits.

And because the accident occurred on a policy that renewed after July 1, 2026, she doesn’t have access to income replacement benefits. She will never recover anything for her permanent loss of income. 

That’s what the 2026 SABS changes mean to what the law calls ‘strangers to auto insurance.’

Related: Ontario’s most dangerous cities for road rage

Now, consider the consequences for the named insured and the broker.

How does an industry that is used to automatic renewals, and email correspondence, pivot by July 1, 2026, to educate its customers so that they make informed decisions and purchase optional benefits? How does a broker, in a climate of inflation that’s significantly increasing the cost of living, convince a customer to spend more than mandated on a product nobody expects to need…until they do? 

The reality is the broker will not be able to convince every client about these risks. This means the broker must paper their files to show the effort they made and the instructions that were received by clients, who then declined optional coverages.

Without that, brokers won’t be able to protect themselves when the litigation flows. And it will flow.

Kadey B.J. Schultz is the founder and managing partner, and Kayly Machado is an associate lawyer at Schultz Law Group LLP in Toronto.