- Ontario just turned nine standard insurance benefits into optional add-ons.
- Income replacement is now something drivers can accidentally opt out of.
- Declining every optional benefit saves roughly $100 a year, or $2 a week.
Changes to car insurance policies in Ontario, Canada, could leave self-employed residents thousands of dollars out of pocket if they opt out of certain benefits to trim their annual premium. The savings are small, and the exposure on the other side is anything but.
Up until this month, every car insurance policy in Ontario came with nine types of benefits as standard. Those include caregiver benefits, housekeeping and home maintenance, death and funeral benefits, non-earner benefits for retirees and students, visitor expenses, damage to personal items, lost education expenses, and perhaps the most important of the lot, income replacement.
Read: One In Seven Crashes Now Ends With A Hit-And-Run Driver
All of those once-automatic benefits have now become optional. That hands drivers more flexibility to shape an insurance policy around their needs, and potentially save up to $100 a year in premiums if they decline every optional benefit, but going that route probably isn’t wise, especially when the payoff works out to about $2 a week.
Speaking with CTV News, insurance brokerage firm Surex laid out how a self-employed contractor injured in a crash and forced to take a year off work could lose up to $20,800 in income replacement benefits after opting out of their policy. The brokerage noted that self-employed Canadians are particularly exposed here, since many have no employer-provided safety net to fall back on when the work stops.
Is The Lower Premium Worth It?
The reforms could also fuel more legal fights after accidents, when drivers drop benefits without fully grasping the potential cost, according to RH Insurance. The disputes tend to start in the gap between what people think they bought and what they actually have.
“Ontario drivers are gaining more flexibility under the new reforms, but more choice also means more responsibility,” RH Insurance’s Morgan Roberts told CTV News. “The premium reduction from removing optional benefits is relatively small, roughly the cost of a couple of coffees each month, but the financial consequences of being underinsured after a major accident could be significant.”
Roberts also said the added flexibility could gradually nudge the industry toward more personalized insurance pricing over time.
Read The Fine Print
Whether a motorist opts in for every optional benefit or opts out entirely, all standard Ontario car insurance policies still include the usual medical, rehabilitation, and attendant care coverage. As before, other benefits stay optional, including rehabilitation and indexation.
Motorists looking to renew their insurance policies would be wise to go over it with a fine-tooth comb, ensuring they will retain the benefits they expect. Existing policyholders shouldn’t have changes made to their policies, but it’s possible that alterations will be made to who is covered. For example, pedestrians, cyclists, and certain passengers who may have previously been covered under an old policy may no longer be covered under a new policy.
