Starting July 1^st, 2026, Ontario drivers will see significant changes to their auto insurance policies. Certain accident benefits that have traditionally been included as mandatory coverage will become optional for policyholders.

While the changes are intended to provide more flexibility and potentially lower premiums, they could also leave drivers and accident victims with less financial protection following a serious collision.

Before making any decisions about your coverage, it is important to understand what is changing and how it could affect you and your family.

What Benefits Are Becoming Optional?

Under the new rules, several accident benefits that were previously included in standard auto insurance policies may no longer be automatically provided. These include:

Income Replacement Benefits

If an injury prevents you from working, income replacement benefits help replace a portion of your lost income while you recover.

Death and Funeral Benefits

These benefits help provide financial support to surviving family members and assist with funeral expenses following a fatal accident.

Medical, Rehabilitation and Attendant Care Benefits

These cover expenses related to treatment, rehabilitation, and personal care services needed after an accident.

Caregiver and Non-Earner Benefits

These benefits can provide financial assistance if an injured person is unable to perform caregiving responsibilities or suffers a loss of normal life activities despite not being employed.

Who Should Consider Keeping These Benefits?

These optional coverages are designed to protect people in different life situations. Before opting out, consider whether any of the following apply to you:

• Do you rely on your income and don’t have disability coverage through work?
  You may want to keep Income Replacement Benefits, which help replace a portion of your income if you’re unable to work following an accident.
• Are you a student, retired, or currently not working?
  Consider keeping Non-Earner Benefits, which provide financial assistance if your injuries prevent you from carrying on your normal daily activities.
• Are you the primary caregiver for children, an aging parent, or another dependent?
  Caregiver Benefits can help cover the cost of replacing the care you normally provide while you recover.
• Are you enrolled in school full- or part-time?
  Lost Educational Expense Benefits may help reimburse certain education-related costs if an accident interrupts your studies.
• Would family members need to travel to be with you after a serious accident?
  Visitor Expense Benefits can help cover reasonable travel and accommodation expenses for immediate family.
• Who would maintain your home if you couldn’t?
  Housekeeping and Home Maintenance Benefits can help pay for services such as cleaning, yard work, and snow removal while you recover.
• Do you wear prescription glasses, hearing aids, prosthetics, or use mobility devices?
  Damage to Personal Items Benefits can help pay to repair or replace essential items damaged in an accident.
• Do you have dependants who rely on your income or don’t have life insurance in place?
  Enhanced Death and Funeral Benefits can provide additional financial support to your loved ones following a fatal accident.

The savings from removing these benefits may seem appealing, but it’s important to compare those savings against the financial protection you could lose after a serious accident. Your Merit Insurance broker can help you determine which optional benefits are worth keeping based on your lifestyle, family, and financial situation.

What This Means for Pedestrians and Cyclists

One of the most significant changes affects pedestrians and cyclists who are injured by a vehicle.

Currently, if a pedestrian or cyclist does not have their own auto insurance policy, they may be able to access accident benefits through the insurance policy of the driver involved in the collision.

Beginning July 1, that access will become much more limited.

Pedestrians and cyclists without their own auto insurance coverage will generally only be eligible for standard medical, rehabilitation, and attendant care benefits. They will no longer automatically have access to optional benefits such as income replacement, caregiver benefits, or death and funeral benefits.

For many accident victims, this could create a significant financial gap during recovery.

Could These Changes Lead to More Lawsuits?

Many legal professionals believe these changes may result in an increase in lawsuits against at-fault drivers.

When accident victims are unable to access benefits through insurance coverage, they may have little choice but to pursue compensation through the courts. However, legal action can take years to resolve, leaving injured individuals without immediate financial support during a difficult time.

Ontario drivers are required to carry a minimum of $200,000 in third-party liability coverage, but serious injuries can result in damages that exceed that amount. This is one reason many insurance companies continue to recommend higher liability limits.

Should You Opt Out of These Benefits?

While removing optional benefits may reduce your premium, it is important to carefully consider the potential consequences.

The cost savings may seem attractive today, but the financial impact of a serious accident can be substantial. Income replacement, rehabilitation expenses, caregiver support, and other accident benefits can play a critical role in helping individuals and families recover after a life-changing event.

Every driver’s situation is different, which is why reviewing your coverage with a licensed insurance broker is more important than ever.

Talk to Your Merit Insurance Broker

The upcoming changes give Ontario drivers more choices, but they also place greater responsibility on policyholders to understand the protection they are purchasing.

Before renewing your policy or making any coverage changes, take the time to review your options and discuss them with your Merit Insurance broker. We can help you understand what coverage you currently have, what is changing, and whether maintaining certain benefits makes sense for your personal situation.

The right coverage decision is not always about finding the lowest premium. It is about ensuring you have the protection you need when it matters most.

When water damage happens, one of the most important questions your insurer will ask is simple: Where did the water come from?

That answer matters because not all water damage is treated the same under a home insurance policy. Two of the most commonly misunderstood coverages are overland flooding and sewer backup. They may sound similar, but they protect against very different risks.

Understanding the difference can help you avoid costly surprises when it matters most.

What Is Overland Flooding?

Overland flooding happens when water enters your home from the outside, above ground.

This usually occurs when heavy rainfall, rapid snowmelt, or overflowing rivers and lakes cause water to collect on land and move toward your home. If that water enters through doors, windows, or foundation openings, it is generally considered overland flooding.

In Ontario, this type of loss is becoming more common as weather patterns shift and storms become more severe. Many homeowners assume this is automatically covered under standard home insurance, but that is often not the case.

Overland flood coverage is typically added as an optional endorsement to help cover things like:

• Water entering through basement windows or doors
• Damage to flooring, drywall, and personal belongings
• Cleanup and repairs after water enters from outside
• Additional living expenses if your home becomes temporarily uninhabitable

Without this endorsement, damage caused by water entering from outside your home may not be covered.

What Is Sewer Backup?

Sewer backup is different. This type of loss happens when water or sewage backs up into your home through drains, toilets, sinks, or sump systems.

Instead of water coming in from above ground, sewer backup happens when drainage or sewer systems become overwhelmed or blocked. Heavy rainfall, snowmelt, aging infrastructure, and clogged municipal systems can all contribute to this type of damage.

It’s important to note that sewer backup coverage isn’t just for homes connected to municipal sewer systems. Many country homes rely on private septic systems, and this endorsement can help cover damage if a septic system backs up into the home. A common misconception among rural homeowners is that because they don’t have a municipal sewer connection, sewer backup coverage isn’t necessary. In reality, septic systems can become overwhelmed, blocked, or fail, resulting in the same type of costly water and sewage damage.

Sewer backup coverage is also usually optional and can help cover:

● Cleanup and sanitation
● Damaged flooring, walls, and finishes
● Replacement of personal belongings
● Repairs caused by sewage or drain backup
● Additional living expenses if the property becomes uninhabitable after an insured loss

Because sewer backup claims often involve contaminated water, they can be especially disruptive and expensive to repair.

Why the Difference Matters

While both involve water damage, insurance policies treat these losses differently because the source of the water is different.

That means two homeowners with similar damage may have very different claim outcomes depending on how the water entered the home and what endorsements are on the policy.

For example:

• Water enters through a basement window after heavy rain = likely overland flooding
• Water backs up through a basement floor drain = likely sewer backup

The damage may look similar, but the coverage is not.

What About Condo Owners and Renters?

This distinction matters for condo owners and renters too.

Many assume sewer backup is only a concern for basement homes, but that is not the case. In multi-unit buildings, sewer and drainage issues can affect units on multiple floors, especially during major weather events or infrastructure failures.

Condo corporation insurance typically covers common areas and shared systems, not personal belongings, unit improvements, or temporary living expenses. If a sewer backup affects your unit or makes the building uninhabitable, your own policy may be what protects you.

Why It’s Worth Reviewing

Water losses are among the most common and expensive home insurance claims in Ontario, and they are rarely as straightforward as they seem.

The key difference between overland flooding and sewer backup comes down to one thing: how the water got in.

That small detail can determine what is covered, what is excluded, and how much you may have to pay out of pocket.

At Merit Insurance, we help clients understand exactly what their policy includes, where the gaps may be, and what should be reviewed before the next storm hits.

Insurance billing usually feels straightforward until something changes mid-policy and your payment suddenly looks different than expected. Maybe you added a vehicle, removed coverage, changed your address, or cancelled a policy early and expected a larger refund.

That’s where pro-rated billing comes in.

What Is Pro-Rated Billing?

Pro-rated billing means your premium is adjusted based on how long a policy change was actually in effect. Instead of recalculating your full annual premium, your insurer adjusts only the portion of the policy term affected by the change.

In simple terms, you are only charged or credited for the number of days the revised coverage applies.

This is one of the most common reasons clients have questions about why their monthly payment changed, why a refund was smaller than expected, or why an update made today is not showing on the next invoice.

What Can Trigger a Pro-Rated Change?

Any mid-term policy adjustment can affect billing.

For auto insurance, this often includes:

• Adding or removing a vehicle
• Adding a driver
• Changing your address
• Adjusting coverage
• Updating annual mileage or vehicle usage

For home insurance, it may include:

• Changing occupancy
• Updating coverage limits
• Removing a property

Any of these changes can result in an additional premium, a credit, or a revised payment schedule.

Why Your Monthly Payment Changed

Even if the policy change was simple, the billing impact may not be.

For example, if a policy change increases your premium halfway through the term, the additional cost is spread across the remaining payments. Because there are fewer instalments left, the increase may appear larger than expected.

In some cases, changes made close to a billing date may not appear on the next invoice. Depending on the insurer’s processing timelines and billing cycle, adjustments may show up on a future statement instead.

Why Your Refund Was Smaller Than Expected

If you cancel a policy early, many people assume they will receive back the full unused portion of their premium. Sometimes that happens, but not always.

Refunds can depend on:

• How much of the policy term has already passed
• Whether there is any outstanding premium owing
• Whether cancellation fees apply
• Whether the insurer uses a pro-rata or short-rate calculation

A pro-rata cancellation means you pay only for the days coverage was active.

A short-rate cancellation means the insurer applies a penalty for ending the policy before the renewal date, which reduces the refund amount. This is common when the policyholder chooses to cancel coverage mid-term.

Understanding Policy Cancellations

Cancellation rules vary by policy type and insurer.

For property insurance, policyholders can generally cancel coverage at any time by providing written notice. Insurers may also cancel a policy by providing advance notice, with timelines that vary depending on the reason for cancellation.

For auto insurance, Ontario regulations provide specific requirements around cancellations, including notice periods and acceptable reasons for cancellation after a policy has been in force for a certain period of time.

If a policy is cancelled due to non-payment, insurers are required to provide written notice before coverage ends. Missing payments can also affect future insurance options and premiums, making it important to address billing concerns as soon as possible.

Why the Change Didn’t Show Up Right Away

Another common surprise is when a policy change is made, but the invoice does not reflect it immediately.

This is usually a billing timing issue, not a missed update. Changes made close to your billing date may not appear until the following statement, depending on the insurer’s processing timeline and billing cycle.

Pro-rated billing is simply how insurers adjust premiums fairly when a policy changes mid-term.

While the calculation itself is straightforward, the billing result often is not. That’s why your payment may shift, your refund may be smaller than expected, or your change may not appear right away.

If something on your bill does not look right, your Merit broker can walk you through exactly how the adjustment was calculated and explain the options available to you.

Rising Rates Explained: The Factors Behind Rising Home Insurance Rates in Ontario

At Merit Insurance, we are committed to keeping our valued clients informed about the evolving landscape of home insurance. Over the past few years, residents of Ontario have witnessed a steady increase in home insurance rates, leaving many homeowners questioning the reasons behind this upward trend. In this blog, we shed light on the four key factors contributing to the rising home insurance rates.

1. Increased Frequency and Severity of Natural Disasters:

Climate change has become an undeniable reality, and its impact is felt worldwide, including Ontario. The province has experienced a significant increase in the frequency and intensity of natural disasters, such as floods, wildfires, and severe storms. These catastrophic events can lead to extensive property damage, massive insurance claims, and mounting financial losses for insurers.

To compensate for these rising claims, insurance companies have had to adjust their pricing strategies, resulting in higher premiums for homeowners. Moreover, areas that were once considered low-risk are now being re-evaluated, and insurance companies may impose stricter policies or higher rates for properties located in disaster-prone regions.

2. Rising Construction and Repair Costs:

The cost of construction materials and labour has been on a steady incline since the onset of COVID-19, which directly impacts the expense of rebuilding or repairing a home in the aftermath of damage. When a property is damaged or destroyed due to an insured event, the insurer is responsible for covering the cost of rebuilding or restoring the property to its pre-loss condition.

With the escalating costs of materials and labour, insurance companies must adjust their premiums accordingly to ensure they can meet the financial obligations of policyholders’ claims. As a result, homeowners are experiencing higher insurance rates to account for the increased expenses involved in restoring their homes.

3. Aging Infrastructure:

Many parts of Ontario boast beautiful, older homes with charm and character, but these properties often come with aging infrastructures. As homes and buildings age, they become more susceptible to wear and tear, leading to an increased likelihood of damages or failures.

Insurance providers must assess the potential risks associated with insuring older properties, which might include outdated electrical systems, plumbing, and roofing. To adequately cover these higher risks, insurers adjust their rates accordingly, impacting homeowners who reside in older properties.

4. Advances in Technology:

While technological advancements have certainly made our lives more comfortable and convenient, they have also led to an increase in high-value electronics, appliances, and other possessions in our homes. From state-of-the-art entertainment systems to smart home devices, the overall value of personal belongings in modern households has risen significantly.As the value of possessions in homes increases, the cost of replacing these items in the event of theft or damage also rises. This, in turn, raises the overall insurance claims, compelling insurance companies to adjust their rates to manage the increased financial burden.

Therefore, the rising home insurance rates in Ontario are influenced by a combination of factors that demand careful consideration and understanding. Increased natural disasters, rising construction costs, aging infrastructure, and advances in technology all play a significant role in shaping the current insurance landscape.

At Merit Insurance, our goal is to help our clients navigate these complex challenges by offering tailored insurance solutions that provide adequate coverage while keeping premiums reasonable. We encourage our clients to engage in proactive risk management, adopting safety measures to protect their properties, and discussing their specific needs with our team of experienced insurance professionals.

Remember, an informed homeowner is an empowered homeowner, and we are here to provide the knowledge and guidance you need to safeguard your most significant investments. If you have any questions or concerns about your home insurance, don’t hesitate to reach out to your Merit broker.

Prorated Billing – What happens if you need to end an insurance policy early?

Most people treat insurance as a safeguard that exists quietly in the background of their lives. It is a necessity we need, but something we hope never to use. Many Canadians are in a cycle of paying their monthly premiums and reviewing their renewals with their brokers. However, if you find yourself in a situation where your insurance needs change, have you ever considered how this affects your premium?

Did you know that nearly a quarter of Canadians admit to not having read their home or car insurance documents? We understand why, policies tend to be lengthy legal documents that are comprised of confusing jargon. The Merit difference is your broker is here to help you break down your insurance and explain what happens if a policy is not paid and how to calculate your payment if you need to cancel your existing coverage.

What Does Pro-Rata Insurance Mean?

Pro-rata is a way to determine the refund amount to the insured party if a policy is cancelled prior to the renewal date. This means the insured only ends up paying for the number of days the insurance contract is in effect. The Prorated Percentage is the number of days the policy has been in force, divided by the total number of days between the effective date and expiry date of the policy.

What Would Cause A Need For Prorated Premiums?

Whenever the policyholder decides to make a change to their active policy, the premium is prorated. For auto policies, this could include changing your car model, adding a new driver, a change in coverage need (such as a decrease in daily distance travelled) or even qualifying for different discounts could prompt the need to prorate your billing.

Options for Pay Prorated Insurance Rates- Month To Month

There are two main options in terms of payment when it comes to prorated billing. The first being in one lump sum and the second is broken down into month to month payments.

For example, if you break a $1200 premium into $100/month, adding a second car for $1200 is going to make your monthly payment increase to $200/month. If you add the second car 3 months into your term, you are only required to pay for months 3 through 12.

If you add your second car right before, or after your invoice is generated, the change will not reflect until your next billing statement. This is because it takes about 21 days for a change to take effect. The additional premium to add the second car will be divided over the remaining instalments on the policy term.

What Are The Conditions With Cancelling?

A) Property policy

1. The Named Insured shown on the Policy Declarations page may cancel the policy by mailing or delivering advance written notice of cancellation. Cancellation will be processed on a Short Rate Cancellation Method. The Short Rate Penalty is based on the days the policy has been in force.
2. The Insurer may cancel the policy by mailing or delivering to the Named Insured written notice of cancellation at least:

(i) 5 days before the effective date of cancellation if notice of cancellation is personally delivered; or
(ii) 15 days before the effective date of cancellation if cancellation is for non-payment of premium; or
(iii) 30 days before the effective date of cancellation if cancellation is for any other reason.

Once a Property policy is cancelled the Insurer is under no obligation to offer reinstatement.

B) Automobile policy

The Named Insured shown on the Policy Declarations page may cancel the policy by mailing or delivering advance written notice of cancellation. Cancellation will be processed on a Short Rate Cancellation Method. The Short Rate Penalty is based on the days the policy has been in force.

Where your policy has been in effect for up to 60 days, the Insurer may only cancel your policy for a reason that the Insurer has filed with the Financial Services Commission of Ontario.

Where your policy has been in effect for more than 60 days, the Insurer may only cancel the policy for one of the following reasons:

• non-payment of premium
• you have given false particulars of the automobile to Insurer’s prejudice
• you have knowingly misrepresented or failed to disclose information that you were required to provide in the application for automobile insurance
• the risk has changed materially

Cancellation will be processed on a Pro Rata Cancellation Method. The Prorated Percentage is the number of days the policy has been in force, divided by the total number of days between the effective date and expiry date of the policy.

Automobile Cancellation Non-Payment

In the case of non-payment of premium, the Insurer may give you a notice in writing. An insurer must give you ten days notice if the insurer delivers the notice in person, or 30 days notice by sending the notice by registered mail to your last known address. The 30-day period starts on the day after the insurer mails the registered letter. The notice will inform you that you have until noon of the business day before the last day of the notice period to pay the arrears, plus an administration fee, failing which the policy will automatically be cancelled effective at 12:01 a.m. on the last day of the notice period. If you pay the arrears and the administration fee in time, then your policy will not be cancelled.

If Insurer has already given you two notices during the term of your policy. On the third notice Insurer only must give you five days notice if Insurer delivers the notice of cancellation in person, or 15 days notice by sending the notice of cancellation by registered mail to your last known address. Insurers are under no obligation to accept a late payment or to keep the policy in force after the effective date of cancellation.

Prorated billing and cancellation terms are unique and vary per provider. It is important to discuss with your broker if your insurance needs change or if you are considering leaving a policy term early. Call your Merit broker if you need more information on your policy, we are always here to help understand your options.

Frequently Asked Insurance Questions Answered By Our Merit Brokers

People understand that insurance is mandatory in Canada, but often don’t always understand the details of their policies. Some common confusion is around what is covered, why is it useful, and specifics that may leave them exposed in the event of an unforeseen incident.

To make life easier, our Merit Insurance brokers have compiled their top Frequently Asked Insurance Questions from their clients. Everything from business insurance, cyber, to even a home-based or online business- we’ve got you covered!

1. Does my online business need insurance?

Yes, even virtual businesses require insurance coverage. There are significant differences when it comes to virtual business compared to brick-and-mortar retail outlets in terms of insurance.

Your online business isn’t just a website. You also use social media, email, and other digital platforms to operate your company, leaving you open to potential risks.

Business insurance can help if:

A virtual business includes running a website, social media, or other digital platforms that can leave your company vulnerable. A hacker can get into your payment system and take a customer’s credit card information, a photographer can sue you for copyright infringement for use of photos or other breaches of contract. Many start-ups online do not think they need insurance because of the lack of physical liability, but leaving your online business exposed can result in costly claims.

Commercial general liability, professional liability, cyber insurance, and many more coverages are available for small business and virtual business owners. Talk to your Merit broker on the right type of coverage for your digital-based business.

2. What does my cyber insurance cover?

Cyber insurance goes beyond repairing databases, strengthening security processes, and replacing lost hardware. This coverage protects businesses against liability to others and covers costs for expenses related to a data breach. This can also include costs associated with legal counsel and defense, a digital forensics team, notification costs, crisis communications, setting up a call center, and credit monitoring for those affected by a hack.

Since the start of the pandemic, cyber-attacks are up 400% in Canada alone. For businesses large or small, having cyber coverage in place is essential.

3. What exclusions should I watch for in commercial property insurance?

Standard commercial property insurance protects commercial property from such perils as fire, theft, and natural disaster. However, there are some exclusions. Most commercial property policy exclusions apply to risks that fall into one of the categories described below:

• Catastrophic events like war, military actions, floods, and earthquakes are excluded from standard policy wordings. However, some catastrophic events can be insured by specialized coverage.
• Covered by another policy such as boiler and machinery. The fact that this is covered under another form of insurance, therefore, excludes it from standard property coverage.
• Maintenance issues developing from the wear and tear of commercial property are not covered as it is the owner’s responsibility to maintain. Risks that can be controlled through regular maintenance are rust, corrosion, and pest infestations are not included.

4. Is landlords’ insurance worth my money?

Owning a rental property comes with risks that you don’t have when you occupy your own property. Imagine if a tenant of yours gets hurt – you could be facing legal action, and if you’re sued, home insurance may not cover you.

In addition, if a tenant can’t stay in the property due to an insured event, such as fire or flood, a landlord policy can cover the rehousing cost. It can even cover the loss of rent for the time when your tenants can’t live in the property.

5. Do I Need To Insure My ‘Side Hustle’?

It’s a common misconception, but one that can be exorbitant – many entrepreneurs who operate a ‘side hustle’ from their home think their homeowners’ or renters’ policy will extend to their business. But this is not the case.

Check your homeowner’s insurance policy wordings. It’s more than likely your daily business activities are not covered under it. Even if you run your business out of your home, your home insurance won’t cover things like business equipment or damage to a client’s property.

You can be sued for just about anything – even if you do everything right. A client or customer can sue you if they’re unhappy with your work. Even if the suit carries no weight, it’s costly to defend in terms of both time and money.

Example: As a digital marketer, you’ve been employed to increase sales, but your strategy is not as successful as hoped and sales to your client decrease. This client could make a claim for failure to deliver the services promised. This is a scenario where professional liability insurance could protect you against claims of negligence even if a mistake hasn’t been made.

Stuff happens that is out of your control. A lot of side hustles are sole proprietorships, which can leave your personal assets exposed in the event of a lawsuit. Since you own the company, if a client successfully sues you, they can take what you own including your savings, your car, and other valuables. The proper business insurance can protect you and the things you own so that you can focus on the hustle.

Auto Insurance Rates Explained

Learn why factors such as car repair costs are causing an increase in insurance rates. With auto insurance rates on the rise across the country, it’s important to realize there are many elements that contribute to these increases. Whether you’re purchasing a new policy or renewing an existing one, understanding these factors will give you insights into how your rates are calculated.

Home Insurance Rates Explained

Learn about the physical factors that are driving up insurance rates for homes. With home insurance rates on the rise across the country, it’s important to realize there are many elements that contribute to these increases. Whether you’re purchasing a new policy or renewing an existing one, understanding these factors will give you insights into how your rates are calculated.