Bill 30 – Implications For Quebec Automotive Dealers Selling Creditor And Replacement Insurance

Quebec’s Bill 30, An Act mainly to improve transparency in insurance and assistance markets in matters of credit¹introduces two significant changes affecting automotive dealers and their financing arms operating in Quebec.

Change 1 — Creditor Insurance: The End of the Single Premium (In Force July 1, 2026)

The rule. Under Quebec’s Act respecting the distribution of financial products and services (the “Distribution Act“)², certain businesses whose principal activity is not insurance are permitted to offer specific insurance products directly to customers as an accessory to the goods they sell, without routing the transaction through a licensed insurance representative. This is an exception to the general rule that insurance must be sold through a licensed representative. Businesses operating under this dedicated regime — known as “distributors”, like dealers — may offer certain enumerated products, including creditor insurance, directly at the point of sale.

Bill 30 introduced new section 442.1 of the Distribution Act, which applies exclusively to this distributor model. It requires that all debtor life, health, or employment insurance contracts with a term exceeding one year — when sold by a distributor — provide that the premium is payable at least once per year for each year of the contract. In other words, it prohibits capitalising a multi-year creditor insurance premium into a vehicle loan or lease as a single lump sum.

Background. As summarised during the legislative debates on Bill 30, the single-premium model created structural problems for consumers³. The cost of single-premium insurance products was generally included in the vehicle financing, with the result that the premium payment attracted a supplementary interest charge, effectively increasing the true cost of coverage. Moreover, it was difficult for consumers to reconsider coverage during the life of the vehicle, given their limited visibility on their insurance-specific obligations. Section 442.1 addresses these concerns by requiring that the premium be billed at least annually, making the cost transparent, the decision recurring, and cancellation more accessible.

Why it matters. Rolling a lump-sum insurance premium into the financed amount at the outset of a contract is no longer permitted – and premiums must now be billed at least annually (or more frequently). This is a significant change for dealers accustomed to operating on the single-premium model in their financing agreements with consumers.

Section 442.1 does not in express terms require the premium to be billed separately from the vehicle payment stream. But embedding a single, annual premium within periodic financing payments creates a practical conflict with the Consumer Protection Act, which requires that all periodic payments under a credit contract or long-term lease be equal throughout the term, save only that the final payment may be lower⁴.

Requiring payment of an embedded premium at the same frequency as the financing instalments is technically compliant, but operationally more complex.

Separate billing of the premium, outside the financing payment stream, avoids this conflict entirely and is therefore likely the preferred approach.

Key compliance points for Quebec dealers:

• Review all creditor insurance products currently offered alongside financing or leasing — if any use a capitalised single-premium structure, that structure must change immediately.
• Restructure or create new products to integrate a periodic billing model; annual, monthly, and bi-weekly billing all comply with section 442.1.

Change 2 — Replacement Insurance: Dealers Lose Distributor Rights (In Force January 1, 2027)

The rule. Bill 30 removes replacement insurance (Q.P.F. No. 5) from the list of products that automobile dealers could sell as “distributors” under the Distribution Act. The coming-into-force date for this change was recently deferred from July 1, 2026, to January 1, 2027⁵.

Background. Replacement insurance bridges the gap between the depreciated actual cash value that a primary insurer pays on a total loss and the true cost of replacing the vehicle. Its sale by dealers has historically been an established part of their business model. But as noted during the parliamentary debates on Bill 30, the Autorité des marchés financiers has repeatedly raised concerns about predatory practices, excessive and opaque dealer commissions and higher premiums in the distributor channel compared with similar replacement insurance products sold by licensed representatives⁶.

Why it matters. From January 1, 2027, dealers will no longer be permitted to offer Q.P.F. No. 5 replacement insurance directly to customers at the point of sale. Customers who want replacement insurance will need to obtain it through a licensed damage insurance representative or broker. This is a significant commercial change for dealers, many of whom generate material revenue from replacement insurance distribution.

Key compliance points for Quebec dealers:

• Replacement insurance sales through dealerships must cease by December 31, 2026.
• Review and unwind or amend existing distribution agreements with insurers that cover Q.P.F. No. 5 products.
• Develop a plan for directing customers to a licensed representative or broker for replacement insurance from January 1, 2027.

Footnotes

1 SQ 2024, c 15.

2 Act respecting the distribution of financial products and services, RLRQ c D-9.2. See Title VIII for the distributors’ regime.

3 Journal des débats (Hansard) of the Committee on Public Finance, 43rd Legislature, 1st Session, Wednesday, May 1, 2024 – Vol. 47 N° 45.

4 Consumer Protection Act, RLRQ c P-40.1, sections 87 and 150.7.

5 Bill 11, An Act to amend various provisions for the main purpose of reducing regulatory and administrative burden, assented to on June 11, 2026, section 8.4.
[6] Journal des débats (Hansard) of the Committee on Public Finance, 43rd Legislature, 1st Session, Wednesday, May 1, 2024 – Vol. 47 N° 45.