Ontario Insurance Law — SABS, Auto Insurance, and the Insurance Act

The Insurance Act Framework

Insurance in Ontario is governed primarily by the Insurance Act RSO 1990 c I.8. The Act regulates insurance companies, brokers, and agents; establishes mandatory policy terms and conditions; and creates the framework for auto insurance in Ontario. The Financial Services Regulatory Authority of Ontario (FSRA) regulates insurance companies and licensed intermediaries in Ontario under the Insurance Act, the Registered Insurance Brokers Act RSO 1990 c R.19, and associated regulations.

Ontario operates a private automobile insurance system in which coverage is mandatory but provided by private insurers. The Insurance Act Part VI (Automobile Insurance) establishes the compulsory coverages, the standard automobile policy (OAP 1 — Owner's Policy), the standard opcf endorsement system, and the framework for accident benefits and tort liability. Ontario's auto insurance is no-fault in the sense that accident benefits are available regardless of fault, but the province retains a tort system for compensation of serious injuries.

Statutory Accident Benefits Schedule (SABS)

The Statutory Accident Benefits Schedule O.Reg. 34/10 (SABS) provides accident benefits to persons injured in automobile accidents in Ontario regardless of fault. SABS benefits are first-party benefits paid by the injured person's own insurer (or by another insurer in defined priority rules). Key SABS benefit categories include:

• Medical and Rehabilitation Benefits: For minor injuries (as defined under the Minor Injury Guideline — MIG), the medical and rehabilitation benefit is capped at $3,500 in total. For non-catastrophic injuries, the combined medical/rehabilitation and attendant care limit is $65,000 (enhanced optional coverage up to $130,000 or $1,000,000 available). For catastrophic impairment (as defined — 55%+ WPI whole person impairment; brain injury; paraplegia/ quadriplegia; blindness; loss of limb), the combined limit is $1,000,000 (enhanced optional: $2,000,000).
• Attendant Care Benefits: For non-catastrophic injuries, up to $3,000/month ($72,000 total). For catastrophic impairment, up to $6,000/month with no aggregate cap (limited by the combined $1,000,000 limit above).
• Income Replacement Benefits (IRB): 70% of gross income to a maximum of $400/week (standard); enhanced optional coverage up to $1,000/week. Available if the insured suffers a substantial inability to perform the essential tasks of their employment (the "employed" test for the first 104 weeks; thereafter the "complete inability" test of any employment for which the person is reasonably suited).
• Non-Earner Benefit: $185/week after a 26-week waiting period, for persons who did not have employment income and who suffer a complete inability to carry on a normal life. Not available to persons entitled to an IRB.
• Caregiver Benefit: Optional benefit; $250/week for first dependant + $50/week each additional, if the insured is the primary caregiver and suffers a catastrophic impairment or, for non-catastrophic, if the optional coverage is purchased.
• Death and Funeral Benefits: $25,000 to eligible survivors; $6,000 funeral benefit.

Minor Injury Guideline (MIG)

The Minor Injury Guideline (MIG) under SABS s.18 caps medical and rehabilitation benefits for "minor injuries" at $3,500. The MIG defines "minor injury" as a sprain, strain, whiplash-associated disorder, contusion, abrasion, laceration, or subluxation and any clinically associated sequelae. An injury falls outside the MIG if the insured has a pre-existing condition that would prevent maximal recovery under the MIG cap; or if the insured sustains a psychological condition arising from the accident as a primary condition, not secondary to the minor physical injury.

Disputes about whether an injury falls within or outside the MIG are among the most common SABS disputes resolved at the LAT. Medical evidence establishing that the injury is more than a "minor injury" — particularly psychological condition evidence — is critical to escaping the MIG cap.

Catastrophic Impairment Determination

Catastrophic impairment under SABS s.2 (definition) and the associated guidelines determines access to the significantly higher benefit limits ($1,000,000 combined medical/rehabilitation/attendant care vs $65,000 for non-catastrophic). The SABS Superintendent's Guideline for Determining Catastrophic Impairment (2012 and as updated) applies the AMA Guides to the Evaluation of Permanent Impairment 4th Edition (4th Ed. AMA Guides) for most impairment categories.

Catastrophic impairment categories include: paraplegia or tetraplegia; loss of vision in both eyes; loss of an arm or leg; brain impairment resulting in a score of 9 or less on the Glasgow Outcome Scale (GOS); brain impairment resulting in a specified GCS score sustained for 6 hours; 55% or greater whole person impairment (WPI) under the 4th Ed. AMA Guides (physical impairment categories); Class 4 or 5 mental behavioural impairment under the 4th Ed. AMA Guides (for accidents after September 1, 2010); or a combination of physical and mental/behavioural impairments that results in 55%+ WPI when combined using the Combined Values Chart.

LAT Dispute Resolution

Since April 1, 2016, disputes about accident benefits under the SABS (with limited exceptions) are resolved by the Licence Appeal Tribunal (LAT) under the Insurance Act s.280 et seq. and the Licence Appeal Tribunal Act 1999 SO 1999 c 12 Sch G. The LAT replaced the Financial Services Commission of Ontario (FSCO) mediation and arbitration process.

LAT proceedings are governed by the LAT's Common Rules of Practice and Procedure and the SPPA RSO 1990 c S.22. Key procedural points:

• Two-year limitation: An application to the LAT must be made within two years after the insurer's refusal, failure to pay, or dispute of entitlement. The limitation period can be complex in disputes about ongoing benefits.
• Case conference: The LAT schedules a mandatory case conference before a hearing to identify issues, explore settlement, and address procedural matters.
• Written decisions: LAT adjudicators issue written decisions with reasons. Decisions can be appealed to the Divisional Court on questions of law under the Insurance Act s.283.
• Costs: The LAT may award costs under the SPPA; special awards for unreasonable insurer conduct under Insurance Act s.282 (up to 50% of benefits withheld, plus interest) where the insurer withheld/delayed benefits without reasonable grounds.

The Tort System — Verbal Threshold

Ontario retains a tort system for automobile accident injuries, but access to general damages (pain and suffering) is restricted by the "verbal threshold" under Insurance Act s.267.5. A plaintiff in a tort claim arising from an automobile accident may only recover general damages for non-pecuniary loss if they have sustained a "permanent serious disfigurement" or a "permanent serious impairment of an important physical, mental, or psychological function."

Demme v Sprott 2007 ONCA 150 and Brak v Walsh 2008 ONCA 219 clarify the two-stage threshold test: (1) is the impairment of an important function (relevant to the plaintiff's particular activities)? and (2) is it both permanent and serious? The threshold is assessed at trial. Plaintiffs must also deduct the statutory deductible from general damage awards — the deductible amount is indexed annually (approximately $44,367 for 2025/2026) and applies unless the award exceeds the upper deductible threshold.

Direct Compensation — Property Damage

Under Insurance Act Part VII (ss.263-278), Ontario operates a direct compensation property damage (DCPD) system. A person whose automobile is damaged in an accident for which they are not at fault (or are partly at fault) claims their vehicle damage directly from their own insurer rather than from the at-fault driver's insurer. Fault is determined according to the Fault Determination Rules O.Reg. 668/90 (recently amended by O.Reg. 95/22). The amount payable is reduced proportionally to the claimant's degree of fault.