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Ontario auto-insurance changes could leave some vulnerable, says expert

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The Ontario government is introducing changes to auto-insurance, but some experts say the move is ill-advised.

As part of its 2024 provincial budget – unveiled Tuesday – the government says it will move forward with a plan to allow drivers to opt out of some coverage. The idea is to avoid duplication with workplace health plans.

Drivers will continue to pay into mandatory auto insurance, which covers health and personal injury.

After that, it would be up to the driver to opt in or out of some other optional benefits, including damage to property, death benefits, visitor expenses, income replacement, and home maintenance benefits.

“The big ones would be loss of income,” said Mary Kelly, chair of insurance at Wilfrid Laurier University’s School of Business and Economics. “Or if you were a caregiver, there were funds for a caregiver if they were injured.”

While the hope is the changes will help drivers save money, some experts are concerned it could leave some people exposed.

“I don't think it makes sense at all,” Kelly said. “The people who are going to be the ones most likely to opt out are the people who find there's a huge financial burden in paying their insurance premiums. I would suspect that's highly correlated with people who don't have great benefits at work. So people who are doing a lot of work in the gig economy or cobbling together jobs.”

If they opt out without coverage through work, people could be in a tough spot in the event of an accident.

Insurance rates rising

The changes come as Ontario motorists are feeling the pinch of rising insurance premiums.

Guelph driver Tyson Hinschberger says his rates increased 10.75 per cent this year over last. It was a shock, given his provider agreed he’s a good driver.

“Everything was marked ten out of ten, which they described below as, you know, no incidents in the last six years, no fault accidents, no claims history,” he explained, holding a letter from his provider.

Guelph driver Tyson Hinschberger reviews a letter from his auto insurance provider detailing a rate increase. (Jeff Pickel/CTV Kitchener)

In 2022, an Ontario Auditor General report found the average premium increased 14 per cent between 2017 and 2021.

A report by RateScore.ca shows premiums have risen 12 per cent from 2021 to 2023.

It’s unclear how much saving the new rules will create. Drivers, meanwhile, continue to feel the pinch.

“We’re talking about numbers that are really plausibly going to impact somebody's bottom line, they may have to make other concessions,” Hinschberger said.

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