Ontario’s Auto Insurance System Is Changing on July 1, 2026: What Every Driver Needs to Know About the New SABS Reforms

Ontario drivers are about to experience one of the biggest changes to automobile insurance in decades.

Beginning July 1, 2026, the province’s Statutory Accident Benefits Schedule (SABS) will move to a new “modular” or “à la carte” framework that fundamentally changes what is automatically included in your auto insurance policy. Under the reforms introduced through Ontario Regulation 383/24, only medical and rehabilitation benefits and attendant care benefits will remain mandatory in a standard auto insurance policy. Many other important protections, including income replacement benefits, caregiver benefits, housekeeping expenses, death benefits, and non-earner benefits, will become optional coverage that consumers must actively choose to purchase.

For many Ontarians, this change will quietly shift the burden of decision-making from insurers to consumers. And while the government has framed the reforms as a way to offer “more choice” and potentially lower premiums, critics warn that many people may unknowingly become severely underinsured after a serious accident.

This reform could directly affect protections when an auto insurance policy renewal takes place on or after July 1, 2026. Your insurance coverage following a collision, even if you are not at fault, can be left vulnerable.

This guide explains what is changing, why it matters, who is most at risk, and the questions every Ontario driver should ask before renewing their policy.

The Statutory Accident Benefits Schedule, commonly called SABS, is the part of Ontario auto insurance that provides no-fault accident benefits coverage after a motor vehicle collision. These benefits are paid by your own insurance company regardless of who caused the accident.

Historically, every standard Ontario automobile insurance contract automatically included benefits such as:

• Medical and rehabilitation coverage
• Attendant care
• Income replacement benefits
• Non-earner benefits
• Caregiver benefits
• Housekeeping and home maintenance
• Death and funeral benefits
• Lost educational expenses
• Visitor expenses

The system was designed to provide immediate financial support and medical support after a collision without requiring an injured person to wait years for a lawsuit to resolve.

That framework is now changing dramatically.

Starting July 1, 2026, Ontario will require insurers to include only three categories of mandatory accident benefits in a standard policy for private passenger vehicles:

• Medical benefits
• Rehabilitation benefits
• Attendant care benefits

All other benefits will become optional add-ons.

In practical terms, this means many drivers may soon carry significantly less protection unless they specifically opt in to additional coverage.

Benefits Becoming Optional

The following protections are expected to become optional under the new modular framework:

• Income replacement benefits (IRB)
• Non-earner benefits
• Caregiver benefits
• Housekeeping and home maintenance expenses
• Death and funeral benefits if the insured died because of the accident
• Lost educational expenses for someone attending school
• Visitor expenses
• Damage to clothing, glasses, educational materials, and personal items

Most people focus on collision coverage, liability limits, or comprehensive coverage when buying auto insurance. But statutory accident benefits coverage is often the most important part of the policy after a serious injury.

These benefits can determine:

• Whether you continue receiving income while unable to work
• Whether your family receives caregiving support
• Whether someone can help maintain your home
• Whether funeral expenses are covered
• Whether you can afford treatment during recovery

The concern among many insurance professionals and lawyers is not simply that benefits are becoming optional. It is that many consumers may decline specific benefits to save relatively small amounts of money without fully understanding the consequences. 

A catastrophic injury can create hundreds of thousands of dollars in lost income, medical expenses, and care needs over a lifetime.

For some families, declining optional benefits could become financially devastating.

One of the most significant reforms is the move of Income Replacement Benefits (IRBs) from mandatory to optional coverage.

Currently, IRBs help replace a portion of your income if you cannot work because of accident-related injuries.

Under the current system, eligible claimants can receive:

• 70% of gross weekly income
• Up to a maximum of $400 per week unless optional increased limits are purchased

Beginning July 2026, even the base IRB may no longer automatically exist in your policy unless you choose to buy it.

Many Ontarians assume:

• Their employer disability plan will cover them
• EI sickness benefits will be enough
• OHIP will handle everything
• They can sue if someone else caused the accident

Unfortunately, none of those assumptions are fully accurate in and of themselves.

Employer Disability Plans Often Have Gaps

Some long-term disability plans:

• Exclude motor vehicle accident losses
• Reduce payments because of other insurance
• Cover only limited time periods
• Apply stricter disability definitions
• Have EI Sickness Benefits that are limited
• Require proof that you cannot perform essential employment tasks

A private benefits plan can also contain exclusions, coordination clauses, and caps that affect what is actually paid.

Employment Insurance sickness benefits:

Employment Insurance sickness benefits under the federal employment insurance act:

• Provide only partial income replacement
• Are time-limited
• Require qualifying hours
• May not adequately support higher-income earners

Someone who is already receiving benefits from another source may also need to consider how those payments interact with accident benefits.

Lawsuits Take Years

Even when another driver is clearly at fault, lawsuits can take years to resolve and involve substantial legal thresholds.

Accident benefits exist specifically to provide immediate support while recovery and litigation unfold. A lawsuit may eventually provide compensation, but it is not a substitute for near-term protection after an auto accident.

Some groups may face disproportionate risk under the new system.

1. Self-Employed Individuals

A self employed person often lacks robust disability coverage and may rely heavily on accident benefits after a crash.

2. Gig Economy Workers

Uber drivers, delivery drivers, freelancers, and contractors may discover too late that they lack sufficient income protection.

3. Stay-at-Home Parents and Caregivers

Caregiver and housekeeping benefits can become critically important after serious injuries. These benefits may no longer exist unless specifically purchased.

4. Young Drivers

Young drivers frequently choose lower premiums over broader coverage and may unknowingly eliminate essential protections.

5. Pedestrians, Cyclists, and Passengers

This is one of the least discussed but potentially most significant consequences of the reforms.

Optional accident benefits will generally apply only to the following persons:

• The named insured
• Their spouse
• Dependants
• Listed drivers on the policy

This may create serious coverage gaps for:

• Passengers
• Occasional drivers
• Adult children not listed on policies
• Cyclists
• Pedestrians without access to a household auto policy

This issue has already become a major concern within legal and insurance circles.

That remains unclear.

The government’s position is that giving consumers more flexibility could reduce premiums for drivers who choose less coverage.

However, many insurance professionals remain skeptical that the savings will be substantial. Some industry discussions suggest many consumers may save only modest amounts annually while taking on significantly greater financial risk.

There is also concern that reduced accident benefits may eventually increase:

• Lawsuits
• Tort claims
• Pressure on public healthcare and disability systems
• Liability insurance costs

In other words, consumers may trade meaningful protection for relatively limited short-term savings.

A less publicized but important shift involves how medical and rehabilitation expenses are coordinated.

Historically, many claimants had to first exhaust workplace or private health benefits before auto insurance paid accident-related treatment costs.

Industry commentary suggests the 2026 reforms may reverse this structure, making auto insurers the primary payor for accident-related treatment. Potential implications include:

• Faster access to treatment approvals
• Reduced depletion of workplace health plans
• Faster exhaustion of SABS limits
• Increased administrative complexity

This aspect of the reforms deserves far more public attention than it has received so far.

Ontario’s July 1, 2026 SABS reforms represent a historic shift in auto insurance responsibility.

For decades, Ontario drivers benefited from a broad package of mandatory no-fault accident protections. Under the new modular system, many of those protections will depend on consumers actively choosing, and paying for, additional coverage.

Supporters argue this gives drivers more flexibility and control over costs.

Critics argue it creates a dangerous risk of widespread underinsurance in a province where many consumers already struggle to fully understand auto insurance policies.

The reality likely lies somewhere in between.

What is certain is this, after July 1, 2026, failing to review your accident benefits could become one of the costliest financial mistakes an Ontario driver can make.

The days of assuming “standard coverage” automatically protects you are ending.

And for many Ontarians, that realization may come only after a serious accident.

Speak With DWA Law About Your Rights After an Ontario Auto Accident

The new SABS reforms will change available accident benefits and coverage options after a collision. Understanding your rights and current coverage can be challenging, especially when accident benefits, disability plans, and insurance policies overlap. Questions often arise about rehabilitation and attendant care, attendant care benefits, reasonable and necessary expenses, other coverage, and certain benefits that may apply depending on the circumstances at the time of the accident.

DWA Law helps injured Ontarians with accident benefits claims, insurance disputes, and personal injury matters. If you have been injured in a collision or have questions about how these changes may affect you, contact DWA Law.