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What is no fault insurance?


You may have heard your kids scream out, “It wasn’t my fault!” after a fight or if they break something, but your parental instincts may have helped you figured it out on your own.

And while it may be easy to assign blame to settle family squabbles, determining who’s at fault in an auto accident might be a little different than you thought.  

No fault insurance in Ontario – how it works

In Ontario, and across Canada, it is illegal not to have car insurance. Prior to 1989, car insurance companies would determine who was at fault in accidents to assess claims. 

After no-fault insurance (otherwise known as the Ontario Motorist Protection Plan) was introduced the rule stated that regardless of who was at fault at the scene of a car accident, each driver’s insurance company would deal with claims and compensation individually. There would be no cross payment by insurance companies.

Even passengers within your vehicle that were injured, they too would go to their own car insurance companies (if they were insured) to help pay for medical bills or other economic losses (e.g. loss of income). 

But, make no mistake, “no-fault” insurance does not mean insurance companies do not assign fault determinations. In fact, the police, if they are called to the scene, will conduct an investigation, but they do not make any fault determinations. That is up to your auto insurance company. 

The law requires that your car insurance company assign a percentage of fault for each of the drivers involved in the accident by using Fault Determination Rules. To help car insurance companies make a determination, fault is assigned in an accident by comparing the real accident to one of 40 scenarios within the rules. A driver can be found anywhere from zero to 100% at fault for an accident.

What does that look like?

Let’s look at this in action. If you’re driving on an icy road in the dead of winter and you rear-end another car, the police may determine that “no one was at fault” given the inclement weather and your inability to control nature. 

However, under a no-fault insurance system, your car insurance company would apply the Fault Determination Rules, which state that a car that rear-ends another car is at fault. 

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The pros of the no fault insurance system

The good news for Ontario drivers is that things like accident benefits coverage is mandatory, so even if you are entirely at fault for an accident, you have coverage for expenses that may include medical bills, rehabilitation, accident care and caregiver services, for example. With this systemThe system is meant to give all drivers the coverage they may need creating an affordable car insurance rate environment.

Also, benefits claims are simplified and likely quicker for the driver since you’re only dealing with your car insurance company. That means there is no waiting for the other driver’s insurance company to process claims or payments. This may also negate the need to sue avoiding the legal or ‘tort’ system to receive any compensation. Other components of your Ontario insurance policy would include protection from third-party liability, direct compensation (for property damage) and protection from drivers who are uninsured or underinsured.

The cons of no fault insurance

Again, it’s important to remember that your car insurance company will (and must) provide fault determination in a particular accident. What this means is that if you are determined to be at fault, you’ll have to pay to repair your car (the deductible portion), and it will likely lead to increased Ontario car insurance quotes the next time you shop around for new rates.

Despite car insurance companies covering the claims of their own drivers, the other driver can sue you, regardless of fault. If the other driver suffered an injury, they could sue you for any charges over and above their own insurance policy will cover. The minimum third-party liability coverage in Ontario is $200,000. If the driver requires more, they may pursue you for the overages. 

How no fault affects your car insurance

Auto insurance quotes will vary from company to company. Also, car insurance companies will look at your driving history, driving record, age and many other factors when considering your fees. It is best to compare auto insurance quotes to find the best car insurance that suits your driving needs—because no-fault could still be your fault – regardless of your screams at the family dinner table. 



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