Risk Re-Allocated: A Comparative Look at Ontario’s SABS Optionality and Alberta’s Care-First Model

Two provinces, two directions

Canada's auto insurance landscape is at a defining crossroads. In the span of just twelve months, two of the country's largest provinces will fundamentally reshape how accident victims are compensated, how risk is allocated and how brokers serve their clients. Yet despite sharing the same goal of modernizing outdated systems, Ontario and Alberta are heading in remarkably different directions.

Ontario is moving away from its established no-fault benefits framework toward a more litigious a-la-carte model

Effective July 1, 2026, amendments to the Statutory Accident Benefits Schedule (SABS) under Ontario Regulation 383/24 will shift most accident benefits (including income replacement, caregiver, non-earner, housekeeping, death and funeral benefits) from mandatory inclusions to optional add-ons.¹ Only medical, rehabilitation, and attendant care benefits will remain mandatory. While framed as consumer choice, the practical consequence is a significant transfer of financial risk to individuals. As fewer policyholders carry these protections, uncovered losses will increasingly be pursued through the tort system, driving more litigation.² Consumers are being asked to make complex risk-transfer decisions for savings that may amount to only a few dollars per month, while exposing themselves to potentially devastating out-of-pocket costs.

This stands in contrast to the direction taken by Alberta

Under Bill 47 and the new Automobile Insurance Act, Alberta is replacing its fault-based tort system with a comprehensive no-fault "Care-First" model, effective January 1, 2027.³ Alberta's approach eliminates most lawsuits, dramatically enhances statutory benefits (unlimited medical and rehabilitation expenses, 90% income replacement up to $125,000 gross annual income, and lump-sum permanent impairment payments up to nearly $300,000), and channels disputes through a new Automobile Care-First Tribunal, all with the stated goal of prioritizing recovery over litigation.⁴

Ontario's reform, by contrast, is shifting financial risk back onto individuals and families. By making critical benefits optional, the province is asking consumers to make complex risk-transfer decisions, often for savings of only a few dollars per month, while exposing those who opt out to potentially devastating out-of-pocket costs.⁵ For brokers and risk advisors, this divergence represents both a challenge and an opportunity: the need for expert guidance has never been greater, and the consequences of getting it wrong have never been more serious.

This article examines both reform models, explores what Ontario had, what it is moving to, and how Alberta's Care-First approach offers a contrasting vision for the future of auto insurance in Canada.

Ontario's auto insurance: What we had

For decades, Ontario has operated a hybrid auto insurance system that combined no-fault statutory accident benefits with a limited right to sue, available only where the Insurance Act "verbal threshold" is met (death, permanent serious disfigurement, or permanent serious impairment of an important physical, mental or psychological function) and, in most cases, only for non-pecuniary (pain and suffering) damages. Under this model, every auto insurance policy automatically included a comprehensive package of benefits, regardless of fault:

• Medical, rehabilitation, and attendant care benefits for accident-related treatment
• Income replacement benefits (IRB) for those unable to work due to auto injuries
• Non-earner benefits for students, retirees and stay-at-home parents
• Caregiver and dependant-care benefits
• Housekeeping benefits
• Death and funeral benefits

This structure served as a financial safety net. Whether you were a named insured, a passenger, a pedestrian, or a cyclist struck by a vehicle, you had access to a baseline of protection. Private health plans often acted as a secondary layer, with auto insurers stepping in once those were exhausted.⁶

While not without its flaws (benefit limits were reduced in both the 2010 and 2016 SABS overhauls, and disputes at the Licence Appeal Tribunal (LAT) were common) the system nonetheless provided a predictable, standardized foundation that covered all parties involved in an accident.⁷

Ontario's SABS reform: What we're moving to

Effective July 1, 2026, Ontario's SABS will transition from a comprehensive, standardized package to an optional model. The changes are outlined under Ontario Regulation 383/24 and represent one of the most significant restructurings of the province's auto insurance system in decades.¹

What remains mandatory

Mandatory coverages form the baseline accident benefits that remain included in every Ontario auto policy. In practical terms, they fund reasonable and necessary treatment and supports after an auto accident - such as health care services, rehabilitation and recovery assistance, and personal care support when an injured person cannot complete essential daily activities - subject to the minimum limits set in the SABS (with higher limits available for more serious injuries and/or by purchasing optional increased limits).

• Medical benefits for reasonable and necessary treatment (e.g., assessments and regulated health‑care services), subject to SABS minimum limits
• Rehabilitation benefits for recovery services (e.g., physical/occupational rehabilitation and related supports), subject to SABS minimum limits
• Attendant care benefits for daily living assistance (personal care support when an injured person requires help with routine activities), subject to SABS minimum limits

What becomes optional in the SABS reform?

All other accident benefits will become optional on July 1, 2026, meaning clients can choose whether to include them and pay premium accordingly. These options are designed to replace income and reimburse out-of-pocket expenses that are not addressed by the mandatory medical/rehabilitation/attendant care benefits, and they can be especially important for clients without robust workplace disability or family support.

Renewals vs. new business

Policies that renew on or after July 1, 2026, will carry forward (or automatically renew with the pre‑July 1/26 accident benefit package unless the client opts out or changes selections. By contrast, new policies written on or after July 1, 2026, will default to the mandatory benefits only, unless the client actively opts in to the optional benefits.

Key structural changes to the SABS reform

First-payor rule

Auto insurers become the primary payer for mandatory medical and rehabilitation benefits, ahead of workplace health plans. This is a welcome simplification that eliminates the bureaucratic complexity of exhausting private benefits first.⁹

Narrowed eligibility

Optional benefits are limited to the named insured, their spouse, dependants, and listed drivers, meaning coverage decisions made on one policy may not follow the injured person in real-world scenarios. Pedestrians and cyclists struck by a vehicle, passengers who do not have their own auto policy, and unlisted drivers may have no access to optional income replacement, caregiver, housekeeping, or similar benefits unless they qualify under another household policy. This creates unpredictable gaps (especially for multi-vehicle or blended households), increases friction at claim time over "whose policy applies," and can shift otherwise-insured losses into tort claims and out-of-pocket hardship for injured parties.²

OPCF 47R endorsement

A new endorsement records each policyholder's benefit selections and establishes priority-of-payment rules, replacing the previous OPCF 47.⁷

Renewal protection

Existing policies renewing on or after July 1, 2026, will retain the pre‑reform accident benefit package unless the insured opts out in writing. On the surface, this creates continuity for renewing clients, but it also shifts the practical onus onto brokers: each renewal becomes an advice-and-documentation exercise where optional benefits must be explained clearly (what they cover, who qualifies, and what a decline means in dollars after an injury), and the client's selections must be recorded and retained for their files. In a market where many clients are highly premium-conscious, there will be strong pressure to "trim" optional benefits for modest savings; brokers will need to translate those savings into the corresponding loss of protection (income replacement, caregiver/dependant care, housekeeping, death/funeral, etc.) and ensure the client is making an informed choice, not a default one.

The operational impact is significant: longer renewal conversations, more follow-up, and higher E&O exposure if benefits are not offered, understood, and properly declined. New policies written on or after July 1, 2026, however, will include only mandatory minimums by default unless the client actively opts in. Accordingly, ensuring the client has a comprehensive understanding of the available coverage elections is critical, as gaps in disclosure, documentation, or informed consent may increase the risk of complaints, E&O allegations, and negligence or misrepresentation claims following a loss.⁵

Alberta's Care-First model: A contrasting vision

While Ontario moves toward greater optionality and consumer-directed coverage, Alberta is taking the opposite path. Under the Automobile Insurance Act (Bill 47), Alberta will replace its existing fault-based tort system with a comprehensive, privately delivered no-fault model called "Care-First." The new regime takes effect on January 1, 2027.³

Alberta's auto insurance: What we had

Alberta's existing system relies on a fault-based tort framework supplemented by modest Section B benefits: medical coverage capped at $50,000 (typically for two years), weekly income replacement capped at $600 for up to 104 weeks, and limited survivor benefits (approximately $10,000 for a spouse). Meaningful additional recovery, including non-pecuniary damages, generally remains available only through litigation.¹⁰

What Alberta is moving toward under the Care-First model

Care-First represents a dramatic expansion of statutory benefits, with coverage levels benchmarked to Manitoba's no-fault system. Key enhancements include:

• Medical and rehabilitation. Unlimited for all reasonable and necessary expenses, potentially for life
• Income replacement. 90% of net income (up to $125,000 gross annual income), payable until age 65
• Permanent impairment. Lump sum payments up to approximately $298,520 for catastrophic injuries
• Death benefits. Up to $600,000 for a spouse (based on income)
• Right to sue. Significantly restricted as the model is designed to make lawsuits largely unnecessary by providing broader, care-focused no‑fault benefits and routing disputes through the Automobile Care‑First Tribunal rather than the courts. The right to sue is retained only in narrowly defined circumstances, such as serious Criminal Code offences or Traffic Safety Act offences, and for excess out‑of‑pocket economic losses not addressed by the statutory benefit scheme.⁴

Disputes are handled through a new Automobile Care-First Tribunal rather than the court system, and benefits apply to all parties regardless of fault, including at-fault drivers, passengers, pedestrians and cyclists.¹¹

Compare and contrast: Ontario vs. Alberta

The following table highlights the fundamental differences between Ontario's incoming SABS reform and Alberta's Care-First model:

The divergence is clear. Alberta is centralizing protection and expanding benefits while removing litigation. Ontario is decentralizing coverage, placing the burden of decision-making on consumers, and in doing so, creating conditions for increased tort activity. Both provinces claim to be acting in the interest of affordability and consumer choice, but the approaches could not be more different.¹²

The risk implications: What this means for stakeholders

From standard coverage to choice: A risk-allocation shift

Ontario's reform is not simply an insurance product update, it's a fundamental reallocation of risk. By making critical benefits optional, the province transfers financial exposure from insurers back to individuals and families. For those who opt out, the consequences of a serious accident could be financially devastating.

The populations most vulnerable to this shift include self-employed individuals, independent contractors, retirees, students, and stay-at-home parents - groups that often lack alternative workplace disability coverage. The assumption that employer benefits will fill the gap is, in many cases, a dangerous misconception.

The illusion of savings

Benchmark commentary suggests that opting out of accident benefits may reduce premiums only modestly, often by an amount that can feel incremental on a monthly bill. Yet the benefits foregone, particularly income replacement, can represent tens of thousands of dollars in lost support following a serious collision.⁵ Risk tolerance, not price, should guide coverage decisions.

When benefits become optional, litigation becomes inevitable

With fewer no-fault benefits available, losses that would have been absorbed by the SABS safety net will increasingly be pursued through the tort system. This has significant implications for employers, municipalities, fleet owners and anyone with driving exposure. Longer timelines, greater uncertainty and higher legal costs should be anticipated.²

Who falls through the cracks?

Under the new framework, optional benefits are limited to named insureds, their spouses, dependants and listed drivers. Pedestrians struck by a vehicle, passengers without their own policy, and cyclists may find themselves without access to critical income replacement, caregiver, and death and funeral benefits. This introduces a layer of risk inequity that did not exist under the previous standardized model.⁶

The boardroom conversation

For corporate audiences, the reform changes the interplay between auto insurance, group benefits, disability programs, and E&O coverage. Risk managers and HR leaders need to understand how SABS changes affect duty of care, benefits coordination, and governance, especially for organizations with significant driving exposure.

The new role of the broker

In an à-la-carte coverage world, the quality of broker advice matters more than ever. Documentation, education, and informed decision-making are now critical - not only for client protection but also for managing broker E&O exposure. This is especially true at renewal, where "continuity" can mask the need for an explicit, documented conversation about what benefits are being retained, what can be declined, and what that decision means in practical dollars after an injury. Brokers will also need to support more thorough intake and fact-finding (employment status, existing disability coverage, household drivers, and who is likely to be injured as a passenger, pedestrian or cyclist) so clients can make well-informed choices that reflect their risk profile and personal circumstances. The OPCF 47R endorsement formalizes the record of what was offered and what was accepted or declined, making thorough client conversations both a professional obligation and a risk management imperative.⁸

Navigating two reform paths

Canada's two largest auto insurance reforms in a generation are moving in opposing directions. Alberta is expanding mandatory protections and removing litigation from the equation. Ontario, conversely, is reducing mandatory protections and creating conditions that will likely drive more claims into the courts.

For brokers and risk advisors, the message is clear: the era of standardized, set-it-and-forget-it auto insurance is ending. Clients need proactive guidance to navigate the new coverage landscape, whether that means opting into the right benefits in Ontario or understanding enhanced entitlements under Alberta's Care-First system.

The time to act is now. Ontario's changes take effect July 1, 2026, and Alberta's follow on January 1, 2027. Review your coverage, engage your clients, and ensure that the choices being made today will stand up to the realities of tomorrow.