Updated October 2026

When it comes to automobile insurance, not every driver needs exactly the same coverage. Your vehicle, driving habits, financial circumstances and personal preferences can all influence the type of protection that makes sense for you.

While Ontario requires drivers to carry certain mandatory automobile insurance coverages, there are also several optional coverages and deductible choices that allow you to customize your policy.

At L.D. Dermody Insurance Brokers, we believe the goal should be to find the right balance between affordable premiums and adequate protection.

Understanding Ontario's Mandatory Automobile Insurance Coverage

Every automobile insurance policy in Ontario must include certain basic coverages.

Third-Party Liability

This coverage protects you if you are held legally responsible for injuries to another person or damage to someone else's property arising from an automobile accident.

Ontario requires a minimum of $200,000 in third-party liability coverage. However, this amount may be insufficient if you are involved in a serious accident.

Many drivers choose limits of $1 million or $2 million, and higher limits may be available.

Statutory Accident Benefits

Accident benefits provide certain benefits if you are injured in an automobile accident, regardless of who caused the accident.

Following changes introduced on July 1, 2026, medical, rehabilitation and attendant care benefits remain mandatory, while other accident benefits, such as income replacement, are optional for new policies.

Existing policyholders generally retain their previously selected benefits at renewal unless they agree in writing to make changes.

Uninsured Automobile Coverage

This coverage provides protection in certain situations involving uninsured or unidentified motorists, subject to the policy terms and applicable limits.

Direct Compensation – Property Damage (DCPD)

DCPD coverage generally pays for damage to your vehicle and certain related losses when another insured motorist is responsible for an accident occurring in Ontario, subject to the applicable conditions.

Ontario drivers can choose to opt out of DCPD coverage by signing the required agreement with their insurer.

However, declining this coverage can leave you responsible for certain losses that would otherwise have been covered, even when another driver caused the accident.

Collision Coverage: Protecting Your Own Vehicle

Collision coverage is optional and generally pays for damage to your vehicle resulting from a collision with another vehicle or object, or from an upset, subject to your deductible and policy conditions.

For example, if you lose control of your vehicle on an icy road and strike a guardrail, collision coverage may pay for the resulting damage.

Without collision coverage, you could be responsible for the repair costs yourself.

When deciding whether to carry collision coverage, consider the age and value of your vehicle, the cost of repairs and whether you could afford to replace it following a serious accident.

If your vehicle is financed or leased, your financing or leasing agreement may require this coverage.

Comprehensive Coverage: Protection Beyond Collisions

Comprehensive coverage generally protects against certain losses that do not involve a collision, including:

• Theft or attempted theft.

• Vandalism.

• Fire.

• Falling objects.

• Certain weather-related damage, including hail.

• Damage caused by specified natural events.

Coverage is subject to the policy's terms, exclusions and deductible.

Even an older vehicle may be worth protecting against theft or weather damage, particularly if replacing it would create a financial hardship.

Specified Perils and All Perils Coverage

Ontario insurers may also offer Specified Perils and All Perils coverage.

Specified Perils provides protection against particular causes of loss identified in the policy.

All Perils generally combines Collision and Comprehensive protection and may provide additional protection in certain circumstances, including some types of theft involving individuals who have access to your vehicle.

The coverages available and their cost will depend on your insurance company.

Choosing Your Deductible

A deductible is the amount you agree to pay toward an insured loss before your insurance company pays the remaining eligible amount.

For example, if your vehicle sustains $5,000 in covered collision damage and your deductible is $1,000, the insurer would generally pay $4,000, subject to the policy conditions.

Increasing your deductible may reduce your insurance premium.

However, it also means paying more out of pocket if you have a claim.

Before choosing a higher deductible, consider whether you could comfortably afford that amount following an unexpected loss.

Optional Accident Benefits: An Important Decision

One of the most significant changes to Ontario automobile insurance took effect on July 1, 2026.

Under the new rules, several accident benefits that were previously included in standard policies became optional for new policies.

These include:

• Income replacement benefits.

• Non-earner benefits.

• Caregiver benefits.

• Housekeeping and home maintenance benefits.

• Death and funeral benefits.

• Certain other accident-related benefits.

Although removing optional benefits may reduce your premium, it could also leave you with less financial protection if you are seriously injured.

For example, someone who cannot work for several months following an automobile accident may face substantial financial difficulties without income replacement coverage or other disability insurance.

Before removing any accident benefits, we recommend reviewing your financial obligations, employment benefits and personal circumstances.

Other Optional Automobile Insurance Coverages

Depending on your insurance company, several additional coverages may be available.

Loss of Use Coverage

If your vehicle is damaged in an insured loss, this coverage may help pay for alternative transportation, such as a rental vehicle, while your vehicle is being repaired or replaced, subject to policy limits.

Liability for Damage to Non-Owned Automobiles

This endorsement can extend certain physical damage coverage to eligible rental vehicles and other non-owned automobiles, subject to restrictions and policy conditions.

It is important to understand who is insured under the endorsement, where it applies and what vehicles qualify.

Accident Forgiveness

Some insurance companies offer accident forgiveness programs that may prevent your first qualifying at-fault accident from affecting your premium with that insurer.

Eligibility requirements and restrictions vary, and the protection generally does not prevent another insurer from considering the accident.

Waiver of Depreciation

For eligible newer vehicles, this endorsement may protect against depreciation when the vehicle is stolen or declared a total loss.

The eligibility period and settlement conditions vary by insurer.

Can You Reduce Your Premium Without Sacrificing Important Coverage?

There may be opportunities to reduce your automobile insurance costs without removing coverage that could be important following a serious loss.

Depending on your insurer, these may include:

• Combining your home and automobile insurance with the same company.

• Insuring multiple vehicles under one policy.

• Installing approved winter tires.

• Maintaining a conviction-free and claims-free driving record.

• Participating in an approved usage-based insurance program.

• Reviewing your annual driving distance and how your vehicle is used.

• Selecting deductibles that reflect your financial circumstances.

Not every discount is available from every insurance company, and eligibility requirements may vary.

The Cheapest Policy Is Not Always the Best Policy

It can be tempting to focus primarily on the cost of automobile insurance.

However, the real value of insurance becomes apparent when something goes wrong.

A policy with a lower premium may also have higher deductibles, reduced accident benefits or fewer optional protections.

The right policy should reflect both your budget and your ability to absorb a financial loss.

Let Your Insurance Broker Help

At L.D. Dermody Insurance Brokers, we work with a number of insurance companies and can help you review the coverage options available for your automobile.

Whether you are purchasing your first vehicle, replacing an older vehicle or simply reviewing your existing policy, we encourage you to speak with us before making significant coverage changes.

Our goal is to help you understand what you are purchasing so that you can make informed decisions about your insurance.

Saving money on your automobile insurance is important, but having the right protection when you need it matters even more.

Contact L.D. Dermody Insurance Brokers if you would like to review your automobile insurance coverage.

This article provides general information about Ontario automobile insurance as of October 2026. Coverage availability, limits, eligibility and exclusions vary by insurance company and are subject to the terms of the applicable insurance policy.