Reminder: Ontario auto insurance reforms coming June 1, 2016

Published: May 31, 2016

Updated: July 24, 2018

Author: Luke Jones



Changes to the auto insurance laws will come into effect in Ontario tomorrow (June 1, 2016). The reforms are part of the Liberal government’s plans to cut auto insurance premiums by 15 per cent, making coverage more affordable for consumers in Canada’s most populated province.

However, while the Financial Services Commission of Ontario (FSCO) says the reforms will help reduce premiums and offer more choice to customers, industry experts warn more choice means paying more for benefits. The reforms will change benefits for drivers involved in catastrophic and non-catastrophic collisions, and the FSCO describes the reform as such:

"Some [benefits and coverage] have been reduced, some options for increased coverage have been eliminated or changed, and some new options have been introduced.”

Customer are reminded that the changes come into effect starting June 1 and will be applicable to any new policy or renewed coverage thereafter. During the current term of existing policy, the former laws will apply until the end of coverage.

The Insurance Brokers Association of Ontario (IBAO) recently found that 42 per cent of Ontarians are unsure about the reforms, with many unaware they were being implemented. Medical and rehabilitation care will see the most change, as Shop Insurance Canada discussed in a previous report:

The former law meant that any payout to a victim from suing an at-fault driver for injury would be subject to a $30,000 deductible if the awarded amount was less than $100,000,” says Shop Insurance Canada in a news item published last September.

There has always been an issue with this law simply because the deductible was an entirely arbitrary figure and was seen as a way to just take money from victims, sending it right back to car insurance companies.

It meant that a payout of $50,000 to a victim awarded by a judge would result in the insurance provider of the at-fault driver only paying $20,000 after the deductible was removed. Across the board, both now and before, the deductible rule has been kept very quiet, so much so that most drivers do not know about it. More importantly, jurors are also largely unaware as car insurance companies keep the law an almost inside secret in fear payouts would be increased.

The situation has now been made wholly worse by the new regulations announced by the Ontario government last month. Now the deductible has been raised to $36,540, so that $50,000 awarded payout from a jury would result in a $13,460 payout by the insurance company. Victims are being hit further as Ontario has also raised the minimum threshold for the deductible from $100,000 to $121,799.

With the changes set to be enforced within a few hours, customer need to be aware that they will all be affected by the reforms.