All Ontarians know that automobile insurance is mandatory before you get behind the wheel of your car. This insurance includes coverage if you get in an accident, providing you with financial protection to cover you for any injuries you may sustain. Insurance allows you to be covered if your vehicle is damaged. With this mandatory policy comes the opportunity to add on optional auto benefits. These will provide you with additional protection, depending on the package purchased. Ontario’s 2024 budget proposes more choices for auto insurance consumers, allowing the purchase of additional accident benefits coverage. So, what does this mean for those buying auto insurance? Let’s take a look.

2024 budget proposing expanded choices for optional auto benefits

The new 2024 budget may change the way we purchase auto insurance in the future. The budget proposes an expanded selection for those purchasing optional accident benefit coverage. Additionally, it proposes to make insurers the first payer for medical and rehab benefits in the event of an accident. Currently, insurers are labeled the second payer, meaning if a second policy is in place, the accident victim must first use those auto benefits before claiming with their auto policy.

Scott Blodgett, the Senior Media Relations Advisor at Ontario’s Ministry of Finance, told Canadian Underwriter that he believes these changes will “empower Ontario drivers with more choice, improved access to benefits and create a more modern system.” On top of this, the changes will allow consumers to use their extended benefits for other purposes while reducing the burden on insurers and health service providers. However, not everyone agrees these changes are beneficial. Some believe too many choices can result in people making the wrong choices, more often than not.

“What people are searching for when they’re citing choice is value and comfort, and that they can right-size it for them,” states Adam Mitchell, CEO of Ontario brokerage, Mitch Insurance. “But choice is anxiety-inducing, It leaves room for the wrong choice, and the more choice you have, the more wrong choices there are.”

What are some key optional auto benefits?

Optional auto benefits in Ontario are designed to offer customers the ability to increase their accident auto benefits above your classic auto package. With these options, customers can tailor their auto benefits to provide additional support in case more unique accidents occur. Generally, these optional benefits will result in a higher premium cost, though the protection they offer provides more peace of mind. Some examples of additional auto benefits include:

Enhanced Accident Benefits. These provide more coverage for any medical expenses that occur in the event of an accident. These auto benefits are beneficial for those who want extra support in the event of a serious injury. This package will cover you beyond the basic accident auto benefits coverage that you get when purchasing a mandatory policy.
Comprehensive Coverage. This coverage will protect you if your vehicle is damaged from something other than an accident or collision. This can include theft, vandalism, and even natural disasters. This is generally recommended to customers who have more expensive vehicles that if damaged, will result in costly repairs.
Loss of Use coverage. This will reimburse clients if their vehicle is unusable after an accident. This can be useful for people who heavily rely on their vehicles as a mode of transportation. It will assist them with money to go towards a rental vehicle or other mode of transportation while their vehicle is repaired or replaced.
Roadside Assistance coverage. This package will provide you with services such as battery boosting, fuel delivery, or towing in the event your car breaks down or has an emergency and requires assistance.

Is allowing customers to “opt-out” a slippery slope?

Mitchell acknowledges the idea of trying to improve auto insurance for the betterment of consumers. However, he believes “giving people the easy-door option to opt out of coverage could be a pretty slippery slope. You’re just transferring the coverage from the policy over to their visa statement,” Mitchell states. “And they may not be able to do that.”

With this in mind, Mitchell believes it’s too early to tell if these changes will be beneficial, looking towards the time Direct Compensation Property Damage (DCPD) was made optional last year.

“It’s too early to tell,” Mitchell says. “We’re taking the cake out before it’s even ready to go in the oven.” Mitchell advises that when it comes to their clients, brokers should evaluate optional coverage by looking at their income and income replacement. On top of this, take a look at the customer’s other auto benefits in Ontario, and decide how it can mesh with today’s auto product.

Conclusion

When referring to the DCPD, Mitchell points back to a LinkedIn comment he saw that showed a “complete overlap.” A Venn diagram shows people who will go without the coverage versus those who simply cannot afford to do so.

“Insurance in this form is really a buy-now, benefit-later system,” Mitchell believes. “If you can’t afford to buy the product now, you really probably can’t afford to do it without the auto benefits later.”

It can be difficult to decipher how these auto benefits will affect the way we purchase insurance. Until then, it is important to acknowledge the importance of optional insurance policies and how they can deliver safety and peace of mind. If you are shopping around before renewal or looking for more coverage, contact us or request a car insurance quote today!