Optional coverage is the wrong way to cut insurance rates 

By Paul Russell, LegalMatters Staff • Proposed changes to the auto insurance system in Ontario may allow drivers to reduce their insurance premiums but that may result in financial hardship down the road, says Ontario disability and personal injury lawyer Joshua Goldberg.

“The government has suggested people can lower their premiums by opting out of certain auto insurance coverages that will no longer be mandatory,” he says. “That will save some drivers money but at what cost if they are in an accident and need those coverages?” asks Goldberg, principal of Joshua Goldberg Law.

The proposed auto insurance rules were outlined in the recent 2024 budget released by Finance Minister Peter Bethlenfalvy. He suggested that medical, rehabilitation and attendant care benefits would continue to be mandatory for drivers, with all other coverages made optional.

“This would allow drivers to lower their premiums by taking advantage of a wider range of coverage options to meet their needs,” the provincial budget states.

Bethlenfalvy could not provide a specific estimate for how much the changes would save consumers.

Optional coverages could be ‘very important’

“If you are in an accident, such coverages as income replacement, death benefits and funeral benefits, non-earner, housekeeping and caregiver benefits may become very important,” says Goldberg.

“By saving marginally on premiums, drivers may be opening themselves up to huge costs down the road,” he adds. “And the people most likely to opt out of those coverages are the ones who need it the most.”

Goldberg says he disagrees with Bethlenfalvy that most drivers already have access to healthcare benefits through their workplace and should not have to pay twice for that coverage through their auto insurance policies.

“People who are already struggling to make ends meet, such as those who work in the gig economy or at low-wage jobs are more likely to pass on optional insurance,” he says. “It is also likely they do not have adequate workplace health benefits.

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“If they are involved in an accident it may be difficult putting food on the table for their family if they didn’t sign up for the optional insurance.”

If these proposals are accepted, Goldberg says the insurance coverage drivers once had will cost them more if they want to keep many consider to be essential benefits.

“The core price of auto insurance is subject to regulation, but drivers will have to pay more for what will become optional benefits,” he says. “Those having a difficult time paying their mortgage will not be more inclined to pay than the bare minimum.”

If implemented, the proposed changes could have a major impact on Ontario accident benefit claims as well as motor vehicle accident tort claims, Goldberg says.

“I am skeptical these changes succeed in creating any efficiencies in the system or significantly lower insurance premiums,” he says.

Proposed changes are ‘shortsighted’

“We can all agree that auto insurance rates need to come down, but the government’s plan to achieve that by making certain coverages optional is shortsighted,” says Goldberg. “Drivers will save a bit of money but they are being asked to assume unacceptable risks in exchange.”

The first changes to auto insurance came in January when motorists were allowed to opt out of direct compensation property damage (DCPD) coverage. It protects car owners from costs related to vehicle damage from a collision if they are not at fault. The coverage also covers the loss of the vehicle or its contents.

“While opting out of DCPD will reduce your insurance bill, it also means you will not be reimbursed for vehicle repairs, loss of a vehicle or its contents or a replacement vehicle while yours is repaired,” says Goldberg.

If someone is injured in an auto accident due to the actions of another driver or inadequate road maintenance, he says they should consult with a personal injury lawyer.

“Insurance claims can be complex when it comes to determining liability and compensation after an injury,” says Goldberg. “Reduced coverage may limit the compensation people expect after an accident. Accident victims need to seek legal counsel to ensure their rights are being protected.”