Ontario drivers who trim their car insurance to shave premiums could be exposing their families to large out-of-pocket costs after a fatal crash, estate-planning experts say.
What changed on July 1
Provincial reforms that took effect on July 1 turned several previously automatic accident benefits into optional coverages. Among those now optional are income replacement, caregiver support and funeral and death benefits.
Erin Bury, co-founder and CEO of Willful, an online estate-planning platform, warned that the narrow monthly savings many drivers gain from removing the benefits could leave families facing a far larger financial shortfall in the event of a death.
"To me, I have a huge concern that people won't understand how meaningful this could be and how many costs there are when someone passes away," Bury said.
How much the benefits can be worth
The death benefit package in a typical policy can provide immediate cash to survivors:
- $25,000 to a surviving spouse or common-law partner
- $10,000 for each dependent child
- Up to $6,000 toward funeral costs
Putting those figures together, a family with two children could receive about $51,000 from an auto policy in the aftermath of a fatal collision.
| Recipient | Amount |
|---|---|
| Surviving spouse | $25,000 |
| Each dependent child | $10,000 |
| Funeral costs | Up to $6,000 |
Why this matters now
Bury said the reform has an unintended benefit: many Ontarians are learning for the first time what their auto policy actually covers. But awareness without action can be dangerous. She cautioned that people without workplace or private life insurance may be left with no immediate funds to cover the costs that arise the moment a loved one dies — costs such as cremation or burial, memorial services, lost household income and legal steps like probate.
"There's usually a cash outlay that loved ones have to pay for immediately," Bury said. "Anything that could help close that gap when someone passes away is crucial."
Who should think twice before dropping coverage
Experts recommend drivers consider the following before removing optional accident benefits:
- Whether the household has private life insurance or workplace death benefits that would cover immediate expenses.
- Existing savings available for funeral and short-term living costs.
- The potential premium savings compared with the worst-case financial exposure for dependents.
For households without other forms of life insurance or adequate savings, the money available through an auto policy may be the only immediate source of funds.
Practical steps for Ontarians
While every family's situation is different, Bury and other advisors commonly suggest pairing insurance decisions with basic end-of-life planning: a will, powers of attorney and a clear record of assets. Those documents do not replace insurance proceeds, but they help survivors access funds and manage affairs more quickly.
Drivers who are unsure about the impact of dropping optional accident benefits should:
- Check their current policy documents to confirm what benefits are included.
- Speak with an insurance broker or company representative about the specific amounts and conditions of death benefits.
- Compare the annual or monthly premium savings with the potential lump-sum exposure to decide whether removing coverage is prudent.
The provincial reform has prompted conversations about transparency and consumer understanding of auto policies. For many Ontarians, the decision will come down to a calculation of short-term savings against the risk of immediate, substantial expenses at the worst possible moment for a family.
As the debate continues, those who lack other life insurance or savings are being urged to think twice before cancelling benefits that could help bridge a sudden financial gap.
