What Auto Insurance Coverage Do You Actually Need in Ontario?

Ontario law says you cannot register a vehicle or legally drive without auto insurance. But the legal minimum and what you actually need are two very different things. The province's $200,000 liability minimum has not kept pace with modern claim costs, and starting July 1, 2026, significant changes to the Statutory Accident Benefits Schedule (SABS) will shift several previously automatic benefits to optional status.

Here is a clear breakdown of mandatory coverage, smart optional add-ons, and what every driver should know about the 2026 changes.

The Four Mandatory Coverages in Ontario

Every Ontario auto insurance policy issued under the Ontario Automobile Policy (OAP 1) must include four coverages. These are not optional. If any one is missing, your policy does not meet the legal requirements set out in the Compulsory Automobile Insurance Act.

1. Third-Party Liability Coverage

Third-party liability is the coverage most people think of first. It protects you financially if you injure someone, kill someone, or damage their property in an at-fault accident. Your insurer pays for claims and lawsuits against you, up to your policy limit, including legal defence costs.

The legal minimum is $200,000. That sounds like a lot until you look at actual claim data. Between 2012 and 2016, Ontario saw more than 6,500 auto-related lawsuits exceeding $200,000 each, with average payouts near half a million dollars. A collision that causes permanent disability can produce a judgment well into the millions when you factor in lost future income, ongoing medical costs, and pain and suffering.

If the judgment exceeds your policy limit, you are personally responsible for the difference. Your savings, your home, and your future earnings are all exposed.

What we recommend: At least $1 million in liability coverage, with $2 million becoming the standard. The cost difference is surprisingly small, often around $10 per month to go from $200,000 to $2 million.

2. Statutory Accident Benefits Coverage

Accident benefits (sometimes called "no-fault" benefits) provide you with financial support if you are injured in a car accident, regardless of who caused it. You do not need to prove fault and you do not need to sue anyone. Your own insurer pays these benefits.

Under the current SABS, the standard policy includes:

• Medical, rehabilitation, and attendant care: Up to $65,000 combined for non-catastrophic injuries, or up to $1,000,000 for catastrophic injuries. Minor injuries falling under the Minor Injury Guideline (MIG) are capped at $3,500.
• Income replacement: 70% of your gross income, capped at $400 per week if you cannot work due to your injuries (can be increased to $1,000 per week with an optional buy-up).
• Non-earner benefits: $185 per week if you do not qualify for income replacement (for students, caregivers, and others without employment income).
• Caregiver, housekeeping, and other benefits: Various amounts for those who can no longer perform caregiving or household duties.
• Death and funeral benefits: Lump-sum payments to dependants.

Important: Major changes take effect July 1, 2026. See the section below for details.

3. Direct Compensation-Property Damage (DCPD)

DCPD handles damage to your vehicle when the other driver is at fault. Under Ontario's no-fault system, you deal directly with your own insurer rather than chasing the at-fault driver's company.

DCPD covers repair or replacement costs, loss of use (rental car), and damage to personal contents inside your vehicle. Because you are not at fault, there is typically no deductible.

4. Uninsured Automobile Coverage

This coverage protects you and your family if you are injured by a hit-and-run driver or someone driving without insurance. It also covers damage to your vehicle caused by an identified uninsured driver, up to $25,000 with a mandatory $300 deductible.

Given that an estimated 1 in 10 Ontario drivers may be uninsured or underinsured, this coverage is an essential safety net.

Optional Coverages Worth Considering

The four mandatory coverages protect you from the most common scenarios, but they leave real gaps, especially when it comes to damage to your own vehicle. These optional coverages fill those gaps.

Collision or Upset Coverage

Pays for damage to your vehicle when it collides with another object (including another vehicle) or rolls over, regardless of who is at fault. Without collision coverage, if you cause an accident, you pay out of pocket for your own vehicle's repairs or replacement.

Comprehensive Coverage

Covers non-collision losses: theft, attempted theft, vandalism, fire, hail, windstorm, flooding, falling or flying objects, and contact with animals. If a tree falls on your car during an ice storm or your vehicle is stolen from a parking lot, comprehensive coverage responds.

Specified Perils Coverage

A more limited (and less expensive) alternative to comprehensive. It covers only the specific perils named in your policy, typically fire, theft, lightning, windstorm, hail, and earthquake. It does not cover vandalism or contact with animals, which comprehensive does.

All Perils Coverage

Combines collision and comprehensive into a single coverage. It also adds protection against theft by someone who lives in your household or an employee who drives, services, or repairs the vehicle, a scenario that neither collision nor comprehensive covers on its own.

Which Optional Coverage Should You Choose?

• Newer or financed/leased vehicles: Your lender or lessor will almost certainly require collision and comprehensive (or all perils) as a condition of the agreement. This is not technically "optional" for you.
• Vehicles with significant value: The annual premium is typically a fraction of the repair or replacement cost. Collision and comprehensive coverage protects an asset worth tens of thousands of dollars.
• Older vehicles with low market value: At some point, premiums may approach the vehicle's actual cash value. Your broker can help you determine when it makes sense to self-insure.

All optional coverages are subject to a deductible (commonly $500 or $1,000). A higher deductible lowers your premium but increases your out-of-pocket cost at claim time.

What Is Changing in July 2026

The Ontario government has amended the Statutory Accident Benefits Schedule with changes taking effect July 1, 2026. This is the most significant restructuring of Ontario auto insurance in over a decade.

What Stays Mandatory

Medical, rehabilitation, and attendant care benefits remain mandatory in every policy. These are the benefits that cover your treatment and recovery costs after an accident.

What Becomes Optional

Several benefits that have been automatically included in every Ontario auto policy will shift to optional, opt-in coverage:

• Income replacement benefits
• Non-earner benefits
• Caregiver benefits
• Housekeeping and home maintenance benefits
• Death benefits
• Funeral benefits

This means that unless you actively choose (and pay for) these coverages, they will not be part of your policy.

How the Transition Works

The Financial Services Regulatory Authority of Ontario (FSRA) has set clear transition rules:

• Policies renewing on or after July 1, 2026: Your existing benefits and limits carry forward automatically unless you opt out in writing. Your coverage will not be reduced without your explicit consent.
• New policies purchased on or after July 1, 2026: Only the mandatory minimums (medical, rehabilitation, and attendant care) are included by default. All other benefits must be actively selected.
• The new OPCF 47R endorsement replaces the older OPCF 47 and governs how optional benefits are documented on your policy. It specifies which benefits apply, to whom (named insured, spouse, dependants, listed drivers), and at what limits.

Why This Matters

If you are injured in an accident and cannot work, income replacement benefits could be the difference between financial stability and crisis. Under the current system, those benefits are automatic. After July 2026, they could be absent from your policy if you did not opt in.

This is especially critical for self-employed drivers, freelancers, or households that depend on a single income. Non-earner benefits for students and caregivers also become optional.

Our recommendation: Review every optional benefit with your broker before your next renewal. The cost of adding these coverages is far less than the cost of being without them when you need them most.

What to Do Right Now

1. Pull out your current policy declarations page. Check your liability limit. If it is still at $200,000, call your broker about increasing it. The cost difference is minimal.
2. Review your accident benefits. Know what you currently have so you can make informed decisions when the 2026 changes apply to your renewal.
3. Check your optional coverages. If you have a newer vehicle and no collision or comprehensive coverage, you are carrying significant financial risk.
4. Talk to your broker before your next renewal. Do not wait for the July 2026 changes to catch you off guard. A 15-minute conversation can identify gaps in your coverage that could cost you thousands.

At Roughley Insurance, we compare plans and pricing across a wide range of carriers to find coverage that fits your situation and budget. If you have questions or want a no-obligation review, get a quote online or call us at (905) 576-7770.

Frequently Asked Questions

What happens if I drive without insurance in Ontario?

A first offence carries a fine between $5,000 and $25,000 (plus a 25% victim surcharge), licence suspension of 30 days to one year, and vehicle impoundment for up to three months. A second offence doubles the fine range. The conviction stays on your record for three years and classifies you as high-risk.

Is $200,000 liability coverage enough?

Most insurance professionals consider it dangerously inadequate. Serious injury claims routinely exceed $200,000, and catastrophic cases reach into the millions. If a judgment exceeds your limit, you are personally liable. Increasing to $2 million typically costs around $10 per month.

What is the difference between comprehensive and collision coverage?

Collision covers damage from a crash or rollover. Comprehensive covers non-collision events: theft, vandalism, fire, hail, flooding, falling objects, and animal strikes. All perils combines both and adds household theft protection. If your vehicle is financed or leased, your lender almost certainly requires both.

Do I need to do anything before the July 2026 SABS changes?

If your policy renews after July 1, 2026, your current benefits carry forward unless you actively opt out. You should still review your policy with your broker before renewal to understand which benefits become optional. For new policies after July 1, 2026, only medical, rehabilitation, and attendant care benefits are included by default.

How does DCPD work if the other driver is at fault?

You submit your claim to your own insurer, not the at-fault driver's company. Your insurer covers repair costs, a rental vehicle, and damaged contents. There is typically no deductible since you were not at fault. The accident must occur in Ontario and involve at least one other insured vehicle.