Why Minimum Liability Limits May Not Be Enough in 2026

In the current economic climate, many Ontario business owners are looking for ways to reduce overhead costs. It’s tempting to look at your insurance policy and wonder if you can save a few dollars by selecting the "minimum" liability coverage. However, the strategy of "cutting corners" on your liability limits is becoming increasingly risky.

At Roughley, we believe insurance doesn’t have to be complicated. Part of making it better is ensuring you have the "Roughley Advantage": the right coverage to protect everything you've worked so hard to build.

Here is why minimums are no longer enough to protect your business in 2026.

1. The 2026 Auto Insurance Shake-Up

Starting July 1, 2026, Ontario is moving to an "à la carte" auto insurance model. Many benefits that were previously mandatory, like income replacement and caregiver support, are becoming optional.

What this means for your business liability: If you or an employee are in an accident and have opted out of these benefits, you may lose your automatic safety net. This shift is expected to push more people toward tort claims (lawsuits) to recover lost wages and care costs. If your business is found liable in a collision, you could face much higher legal demands than in previous years.

2. Social Inflation and "Nuclear Verdicts"

We are seeing a rise in what experts call "social inflation": a trend where jury awards and legal settlements are increasing at a rate much higher than standard inflation.

• Third-party litigation funding is now enabling more people to pursue long, complex lawsuits that were once too expensive to maintain.
• Settlement costs for liability claims are reaching new highs, with even "routine" professional liability claims in Ontario now averaging around $115,000.
• A minimum $1 million or $2 million limit might have felt like plenty a decade ago, but in 2026, a single serious injury or complex legal battle can exhaust those funds quickly, leaving your personal assets exposed.

3. The Rising Cost of Everything

Liability isn’t just about the settlement; it’s about the cost to fix the damage.

• Inflation in materials: The cost of construction materials and auto parts has skyrocketed, meaning property damage claims are more expensive to settle.
• Rising legal fees: Even if you win a lawsuit, the cost of a strong legal defence can easily exceed $50,000. If you have a low coverage limit, a large chunk of that "protection" could be eaten up by lawyer fees before a single dollar is paid to the claimant.

The Real Cost of Being Underinsured

Choosing the minimum limit might save you $20 or $50 a month on premiums, but the exposure you take on is massive.

Consequences of inadequate limits include:

• Personal Liability: If a court award exceeds your policy limit, you (and your business) are personally responsible for paying the difference.
• Business Failure: Many small businesses cannot recover from a single uninsured event or a massive out-of-pocket legal bill.
• Reputational Damage: Being unable to fulfill a settlement can erode trust with your clients and partners, making it difficult to keep your doors open.

Get the Roughley Advantage

You didn't start your business to gamble with its future. At Roughley, we act as your strategic partner, helping you find the sweet spot between affordable premiums and ironclad protection.

We recommend a comprehensive risk audit for 2026. We’ll look at your industry, your specific operations, and the new legislative landscape to ensure your limits are up to the task.

Are you still relying on 2016 limits for your 2026 risks?

Don't wait for a claim to find out you're underinsured. Call us at 905.576.7770 or visit our offices in Oshawa, Bowmanville, or Port Perry. Let’s make sure your business is in the best possible position for the years ahead.