Here’s what you need to know about Ontario’s new auto insurance rules

Here's a piece of advice: Take a good look at your auto insurance policy.

Starting July 1, Ontario is introducing some significant reforms to auto insurance rules. Simply put, some coverage that is now mandatory will soon become optional — including certain accident benefits like income replacement and death and funeral costs.

Those in favour of the new system say it gives drivers more choice and flexibility — and potentially lower rates — while some experts worry the new rules could leave people unknowingly exposed to major costs after a serious crash.

Joining us on Village Media's Closer Look podcast to dissect the changes is lawyer Tudor Gagea, an associate at the personal injury firm Oakley Vigmond, which has offices in Toronto, Sudbury Barrie and North Bay. 

Transcript

SPEAKER_01 0:00

Even if the holder of the benefits has the most Cadillac plan you can think of, someone like a pedestrian or a cyclist with no benefits who's involved in an accident, that's the absolute worst case scenario.

SPEAKER_02 0:43

In the room as well. I always feel now that we've shifted to this weekly thing uh that we should just, you know, pour a cup of morning Sunday coffee and just kind of get caught up because we never see each other. I know.

SPEAKER_03 0:54

Actually, I don't see you at all anymore. I know. It's crazy. There's a void. We did have that big blowout before we went weekly. That's part of the reason. Don't start real. That's part of the reason. No. Yeah, it is. It's a different pace. I miss the daily show, but I'm enjoying the weekly show. I was just to think about how nice you look with that little kerchief or whatever you got on there. What do you call those things?

SPEAKER_02 1:10

Well, I some call it a puff, some call it a pocket square, although it's not shaped square.

SPEAKER_03 1:15

No, it's like a it's nice. It actually matches your shirt. See? We don't have to talk anymore. See, I should just pull that out. It's just you could just stick it right near. It's like a magic drink. See that? Yeah, that's right. How much do those things cost? Oh, huge. You're gonna have to.

SPEAKER_02 1:32

I mean, now, unless of course you go to Moore's clothing for men. Yes, that's right. Then not huge. On Great Northern Road. And all across this great country of ours. Yes. Uh it's funny you talk about the uh price of pocket squares, which I don't think uh has gone up very much. Everything else around us, though, certainly has.

SPEAKER_03 1:50

Yeah, I just we it's a broken record, but you know, just being at the grocery store, any services were you you're you feel like you're getting as the the nice weather comes in is just way more expensive. Um I'm not a I'm not a person that eats out a lot. We barely go to restaurants, but we had a little thing to celebrate the other day and we went out for dinner and it was just crazy the price. Really. But I also feel for the restaurants, their their costs have gone up like crazy, right? So they're passing it along to the customer. Um it's just people are feeling the pinch, and I and I feel like it's still the calm before the storm. It's just gonna get worse, right? Depending on what happens with oil prices. But it's uh it's just I I I wish and I'm sure it's out there on the great thing called the internet. Yes. But imagine a flyer in 2017 for no frills or food basics. It would be almost like a joke. Do you think it's all it's a joke when if you could find one from back then, like how much milk was, how much cheese was, uh, for how much fruits were. I mean, it's just insane how much the price has gone up. And uh you know, I've always been that we've talked about food safety and best before dates on the show in the past too, but I'm a nutcase for not wasting food. I don't waste anything around. Absolutely, man. If there's some in the fridge that's gotta go, I'm I make something with that. Like I work around it. When the kids know we don't chuck food and I can't stand doing that. But it's forcing you to be even more careful not just because throwing some food out is just you may as well take the cash and put it in the garbage can. Absolutely. That's how much it costs. And then you talk about things like just the cost of an oil change. Is it I I again, a world. Remember an oil change was $29.99 or $39.99? Yep. You're paying like triple digits now, $150, $180 for you.

SPEAKER_02 3:24

When did oil become a $150 thing? It's crazy, man. It's crazy. It's like swapping winter tires. Now, look, some will call me a boomer, and that's fine. But I remember getting my winter tires taken off, and it would cost $5 a tire. Oh, is that what it was? Yeah. And it with tax it came to like $22.65. What is it now? Uh it is not that. It is I th I think at the dealership that I went went uh go to, it it was sixty dollars. Per tire? No, no, total. Total, yeah. But that's three times what I paid less than I'm gonna say five years ago.

SPEAKER_03 3:54

Yeah, yeah, it's crazy. And then you talk about the cost of like you renewing your home insurance or your auto insurance, and that's what we're gonna talk about today because there's some new auto insurance rules coming into place. Is it July 1st? So July 1st. And we're gonna get into it with a great guest today, but in terms of the idea is that it might save a few bucks for consumers, but it might also put you on the hook in the worst case scenarios if you don't have the right insurance. So we're gonna talk about all that today. Who's our guest?

SPEAKER_02 4:18

Our guest is a uh returning guest, friend of the show, as we like to call him, Tudor Gadget. He's an associate lawyer with Oatley Vigmond law firm in Barrie. Starting July 1st, Ontario drivers will face one of the biggest shakeups to auto insurance in decades. The Ford government says the new system gives drivers more choice and flexibility, but critics warn, among other things, it could leave people unknowingly exposed after a serious crash. Supporters say it modernizes insurance and may lower premiums. Opponents, meantime, say it shifts financial risk from insurers onto families at the worst possible moment after a devastating accident. Joining us to talk about the changes is lawyer Tudor Gadge from Oatley Vigmont, who works closely with accident victims and understands what these benefits actually mean when someone's life changes in an instant. Uh, Tudor, welcome back to the show. Always good to see you.

SPEAKER_01 5:14

Hi, Mike. Hi, Scott. Thanks for having me again.

SPEAKER_03 5:16

No problem. We were just talking before we went on air just about how the last time we had you on, we were talking about candy being thrown from parade floats, which I still think is a fascinating issue. Like I said, as we were saying, I'm sure it was the highlight of your career to come on and talk about that.

SPEAKER_01 5:28

Yeah, this might be a more hot button issue, but uh but we'll see.

SPEAKER_02 5:31

I think you're right. Uh okay, let's uh jump in here, uh, Tudor. For people hearing about this for the first time, and and many of them are, what's the single biggest thing uh that Ontario drivers may not realize that they're about to lose?

SPEAKER_01 5:45

Yeah, I think the single biggest thing that people might not realize is that accident benefits is it's more than just about protecting yourself. In in case where, you know, you get in an accident and maybe you need some repairs done to your car. It almost functions as another type of disability benefits, if you want to think of it that way. And I'll explain what I mean by that. A lot of people, you know, think about accident benefits. You think, um, well, you know, I might be covered for some medical treatment. My doctor says, you know, I need 10 weeks of physio after my accident. And so accident benefits will come in and we'll cover some of those costs. But accident benefits also include income replacement. So up to $400 a week for people currently for people who are working. Uh, and that doesn't sound like a lot, but that's because it hasn't changed since you know 1996, I believe, uh, with inflation. But it's something, right? It also includes non-earner benefits. So if you're a student, maybe and you're and you're driving, it can still cover you for some of those. Lost educational expenses. Um, all of those things are going to become optional starting July 1st, right? If you already have a policy with your insurance company, those benefits that you already have are going to continue unless you provide consent to remove some of them. Um, but for new uh policies, so anyone who's who is maybe a new driver, a young driver, um, those are not going to be added to your policy unless you explicitly ask for them, right? And that'll come with an increased premium. So the question is just, are people going to go for them? I don't, I don't think so, right? Um you have, you know, increased costs all across the board. And I don't need to be the one to tell people about that. And insurance is just one of those things that, hey, if I can maybe shave 20, 50 bucks a month off my insurance bill, that's a no-brainer. Right. But but what are we really giving up in exchange? And and a lot of those benefits that used to be mandatory are going to become optional.

SPEAKER_03 7:44

So that's really what's happening here, right? For a forever for a long time, these were mandatory parts of you. If you had auto insurance, you had to have these accident benefits that covered you under cases, cases of disability or time off work, things like that. But now some of that's becoming uh, you can choose it, you can select it if you want it. That's what's happening here, right? So what what exactly, just to be clear again, what exactly is coming off that's not gonna be mandatory, but you can opt in?

SPEAKER_01 8:08

So, like I mentioned, income replacement benefits, that's gonna become optional. Uh, housekeeping and home maintenance. So if you need help after an accident with housekeeping taking care of your property, taking care of snow removal, grass cutting, anything like that, that's gonna become optional. Um, caregiver benefits. So if anyone needs to take care of you while you know you're you're you're injured and you you need care, um, those are gonna become optional. There's also death and funeral benefits. So if if you know someone close to you passes away because of an accident, you're currently entitled to a mandatory death benefit and to be paid for funeral expenses. That's also gonna become optional. Um, there's also things like visitor expenses. If if someone's visiting you in the hospital and you know, they're staying overnight, maybe they're they're taking an Uber uh to see you every day, those are also going to become optional. So it's a big swath of things. What's staying mandatory is the medical rehabilitation and attendant care. So if you need any kind of help with medical expenses, that's going to remain mandatory.

SPEAKER_02 9:13

Tudor, the uh government calls this consumer choice, but realistically, how well do most people understand accident benefit coverage when they're buying insurance?

SPEAKER_01 9:24

I don't think people understand it very well. And I think that's the issue. There's nothing wrong with consumer choice, but people need to know what they're choosing, right? A lot of people already don't understand accident benefits, and that that might be for good reason because we have this mandatory system that we know across the board people will be covered in all these situations. Now we're increasing the complexity of that, saying people will have this choice. Well, fair enough. But how many people are gonna spend hours and hours on the phone, you know, with brokers or even on their own, negotiating between insurance companies to try to figure out um the right thing? I don't think that's very likely. I think people are just gonna go for, you know, what's the bare minimum so that I can shave some money off my insurance bill. It's also important that like if people's situation changes, like let's say right now, you know, maybe I'm I'm a single guy, I'm 24 years old, and you know, I have no interest in any of those benefits. But in a couple of years things change, maybe I have a kid and I suddenly have a dependent and I want to make sure they're also covered. Well, I would have to change those benefits. Well, if I'm if I have a young child, the last thing I want to do is hop on the phone with my insurance company and renegotiate my my coverage, right? So um I think that's gonna put a lot of people at risk, unfortunately.

SPEAKER_03 10:36

Yeah, that we're gonna get into that. And but just in terms of how what's the potential for how much someone could save if they go from what they have now with all the mandatory stuff to the to the lowest possible form of insurance?

SPEAKER_01 10:46

We haven't seen any concrete numbers. Um, I don't think it's gonna be much because as as it stands right now, if you were to go to your insurance company and try to increase your coverage, it doesn't cost that much to increase it. Um, so how much people are gonna save off their premiums, you know, that that remains to be seen. And it really depends on individual circumstances. It also is the type of thing where in the point of insurance is to pool risk among a large segment of the population, right? So I think over time, right, it it makes sense. I like I'm not an actuary, I'm not an you know, economist or anything. But if a bunch of people are foregoing coverage and claims increase as a result of that, then wouldn't that increase premiums over the long term? Right. So maybe there's gonna be some short-term decreases, but I think in the long term it's gonna it's gonna increase the cost overall, you know, speaking. Tudor, who's been pushing for this, these changes? Yeah, I think I'm not exactly sure when this came about, but um but I think it's just a government response to obviously the the concern from people that insurance premiums are increasing and have been increasing for a long time. So I think the the people are pushing it. And I think they're sick of seeing their premiums go up year after year, even though you know their the record is clean, but there's no reason why that should be happening. So I think I think we're just seeing this groundswell of support for that. And I don't blame people for for going there. I just think um you gotta you gotta make sure you know what you're actually giving up in exchange for not taking some of these benefits.

SPEAKER_02 12:23

Tudor, from your perspective, uh is it fair to say that Ontarians uh are trading substantial protection uh for what uh we might call relatively modest premium reductions?

SPEAKER_01 12:33

I think that's possible. I think that and that's the risk. And that's I think why it's important to, you know, and again, difficult for people to do so these days if you if you don't have the time, but but just understand your coverage, understand your specific situation and what's right for you and what type of coverage you need, and make a decision based on that, as opposed to just immediately going for the cheapest possible option. Right.

SPEAKER_03 12:59

From where you said, Tudor, what's kind of the worst case scenario that you're worried about seeing once this takes effect?

SPEAKER_01 13:05

Yeah, I think unfortunately, um something that that a lot of people don't know about these optional changes is it's not going to cover certain segments of the population that are currently covered. So um what's gonna happen is these optional benefits are not gonna be available to people who aren't the named insured, so the person on the policy, their spouse or their dependents. And then also uh other people named as as drivers in the policy. So anyone who's kind of at more arm's length is not gonna be covered by auction optional benefits, even if the holder of the benefits has the most Cadillac plan you can think of. Um, someone like a pedestrian or a cyclist with no benefits who's involved in an accident, that that's the absolute worst case scenario. Because they're they're they're gonna be able to benefit from those mandatory benefits, but they won't get anything from the optional benefits at all unless they have their own car insurance.

SPEAKER_02 13:59

Tudor, bottom line here, when Ontarians uh get that renewal notice uh in the mail this summer, uh what should they absolutely be asking their insurance company before signing anything?

SPEAKER_01 14:11

I think they should be asking, first of all, what is changing with my policy? The answer should be nothing, right? Um, and second of all, should be asking, what are the off the options on offer? Right? What are the options for me? Um, and and if you have a broker to reach out to the broker and see, you know, are there maybe some better options out there for my where my life is currently at? So those are some of the biggest questions I would ask.

SPEAKER_03 14:41

Have you taken a look at your own personal insurance about these changes coming down the pipe?

SPEAKER_01 14:46

I haven't, not yet. But no, I've gotten some I've gotten some emails recently, which again, we're we're you know, just over a month out from these changes. And uh so yeah, I think I think my my my policies renewing in December, so I still have some time to think about it.

SPEAKER_03 15:01

Yeah, absolutely. But you you talked about the top two. Just with the cost of living pressure that so many of us are facing, people all across the province are are just feeling the pinch everywhere they go. We were talking about this before you came on. Um there is that there is that appetite for people to be finding savings wherever they can. That's your worry here, too, right? That they're gonna not look closely at the fine print and they're gonna say, well, I can save 15 or 20 bucks a month.

SPEAKER_01 15:24

Yeah, absolutely. And it and it's again, it's understandable. And I'm not faulting anyone for for thinking that it's the pinches everywhere you go. It's just, you know, insurance is one of those things that like no one wants to use their insurance, right? No, no one wants to be involved in an accident and hopes to make you know get a benefit from all these things. It's just that when that happens, right, you really have to sit down and ask yourself if I were in an accident where I couldn't work for six months or a year, um, would I be able to sustain that? And if not, maybe I need to think about my coverage. You know, maybe, maybe I do have a uh you know, a job that has a great long-term disability policy or short-term disability policy. And then I don't have to worry about any of that stuff. But, you know, as usually happens with these things, unfortunately, the people who are going to select these lower cost options are probably the people who are least able to absorb the cost of, yeah, six or six months or a year of not working. So um that's the big risk, I think.

SPEAKER_02 16:23

Uh, Tudor, before we let you go, uh anything else on this issue that we didn't uh cover?

SPEAKER_01 16:29

No, I think I think we pretty much covered everything. Again, the most important takeaway is just know what you're getting yourself into. If you're a new driver or young driver, try your best to understand uh these these coverage options. Again, there's absolutely nothing wrong with choice as long as you know what you're getting into and what you're giving up.

SPEAKER_02 16:46

And take the time to call your broker and and get her or him to explain it to you, right? 100%. All right, good stuff. From the law firm of Oatley Vigmond, uh there's a friend of the show, Tutor Gadget. Tutor, appreciate your time as always. Good to see you.

SPEAKER_01 17:00

Thanks so much, Scott and Mike. Have a great day.

SPEAKER_02 17:05

Love having a tutor on the program. He just he explains things in such a simplistic form. Yes, uh, that guys like you and I can understand. It's just it's always a wonderful conversation.

SPEAKER_03 17:17

That's right. And so we call this service journalism. We hope people will watch this and say, you know what? I need to do a little bit more reading about this. I need to understand, maybe I should call my insurance company. Um and that's the thing about insurance, which is so difficult. It's as you weigh risk reward, right? Because yeah, you're always like, Oh, I wish, I mean, I my house insurance could be a little lower, right? And I hate insurance renewal time. I know. Hate it. But you always think you do sleep better with that peace of mind knowing that you have the best possible insurance you can have. Because then and you drive by like we did the other day, there's a big house fire near us. Like if you see that, you're like, oh my goodness. Yeah. Yeah. You would hate to have a a a half-baked uh insurance policy on a time like that. Same with if you get hurt in a car accident, that'd be you would kill your you'd kick yourself for not having the right insurance. For sure. So you need an uh, you know, I get what he's saying too. Like if you're a younger person, you don't have any any beneficiaries, no kids you're worried about, maybe it's a different scenario. But you have to imagine with this that there's going to be so many Ontarians who had no idea the rules are changing, especially the newer drivers who are coming on, who, you know, when I do you think I looked at my insurance when I got my insurance for the first time? Okay, you need car insurance. Okay, here what kind of here we go sign. Like I didn't I mean you're in your 20s, you're not thinking about well, what's what's my pr like what's the what's my best explain my coverage. Yeah, you have I had no idea. But you knew that it was all mandatory. You had to have this, so you signed it, you you wanted to pay for it, so you get in the car and drive. Yeah. Uh now if you're a young driver, uh, you know, you you're gonna get insurance for the first time, you have these options and you have no concept of what these options are, right?

SPEAKER_02 18:44

And they when when renewal time comes around, and and for us it's uh it's every May, you get inundated with paperwork from the insurance. I mean, you know, you got home and auto, and the package is like this thick. I know. It's all written in legalese. I know. Can't understand most of it. Uh, and that's why, you know, communicating with with your local broker, if that's the case, uh, is key. Pick up the phone, call them. Uh, we're lucky, got a great guy that we can do that. He dumbs it down and explains it so that I understand it. Uh, but that's that's key. Take the time to make the call and make sure that you understand what you have and may not have. Great. Well, I hope we all learned something from Tutor. Thanks for having me. We certainly did. Closerlook at villagemedia.ca. Reach out and let us know uh your thoughts on this program or any other. And of course, sign-ups always welcome at closerlookpodcast.ca for Zach Trunzo, executive producer of the program, and pocket swearless Michael Friscolanti, our editor-in-chief here at Village Media. I'm Scott Sexmith. Thanks for your time. Enjoy what's left of your weekend. We'll see you next Sunday at eight, right here on Closer Look.

SPEAKER_00 19:44

Briscoe in Scott's wardrobe, provided in part by Morris Clothing for Menus.