All provinces use some type of no-fault auto insurance system with regard to accident benefits. The details vary by province, but all follow the same basic structure. If you become involved in a collision, you would seek compensation for injuries and property damage (among other benefits) from your insurer. It does not matter whether you caused the accident or another driver was at fault. Also noteworthy, a balance is struck in each province between the amount of accident benefits awarded and the right to sue.
Although no-fault car insurance has been a reality in Canada for several years, many people remain baffled at the way it works. It’s simpler than it seems. Below, we’ll begin by explaining the advantages offered by this type of system. You’ll also learn about fault determination rules, and how your insurer uses them to assign blame for a collision. Lastly, we’ll explain how to seek a resolution in the event you disagree with your insurer’s decision.
Benefits Of A No-Fault Insurance System
The most significant advantage of a no-fault insurance system is that drivers can obtain the compensation they deserve (and need) more quickly than otherwise. Consider that claims are often complicated. In a traditional insurance environment, resolving them may require months. In such cases, the respective drivers’ insurance companies may disagree with regard to who actually caused the accident, and thus which company should pay compensation.
By contrast, in a no-fault environment, all drivers involved in a collision file claims with their own insurers. After the claims have been satisfied, the insurers discuss whether their clients are at fault based on the circumstances surrounding the event. They rely on fault determination rules established in the province.
Another benefit, arguably subtle, is that this type of insurance system helps to reduce the volume of litigation stemming from auto collisions. This in turn is supposed to result in lower premiums, on average, for everyone. As noted earlier, each province strikes a balance between the accident benefits paid by insurers to their clients and the clients’ right to sue other drivers and their insurers.
The Role Of Fault Determination Rules
Fault determination rules are set by the province, and acknowledged as the “final word” by every insurance company in the province. This eliminates uncertainty and inconsistency related to assigning blame for collisions.
One of the most confusing features of a no-fault auto insurance system is that someone is always at fault for an accident. The name “no-fault” should not be inferred to mean all drivers involved in a collision can file claims with their insurers without blame being assigned. Rather, it simply means that policyholders will receive compensation from their respective companies. The province’s fault determination rules are then used by insurers to help them determine which driver is to blame. Unless the at-fault person’s insurer offers accident forgiveness, his or her rates will rise – and likely substantially.
It’s also worth noting that fault can be shared by multiple drivers. The Ontario fault determination rules include several situations when this would the case.
Example Of A No-Fault Auto Insurance Situation
It may be difficult to envision how this type of insurance system works. We’ll use an example to demonstrate. Suppose three drivers – A, B, and C – are moving in the same direction in the order listed, and occupy the same lane. There are no vehicles between them. Further suppose that Driver A stops his car. Driver B (behind A) collides into the rear of his vehicle, and Driver C (behind B) collides into Driver B.
In Ontario, a no-fault province, all three drivers would file claims with their respective insurance companies. They would each receive compensation according to their policies. The insurers would then refer to Ontario’s fault determination rules to assign blame for the incident. The rules for this scenario state that Driver B deserves 50 percent of the blame for contact between the vehicles of Drivers A and B. Driver A is without fault. Further, Driver C is 100 percent to blame for contact between the vehicles of Drivers B and C. Driver B is without fault for this collision.
The insurance companies would consider these rules, along with their assignment of fault, and reevaluate their policyholders’ rates accordingly. Driver A would see no change in his premiums; Drivers B and C likely would.
When Your Insurance Company’s Decision Is Wrong
If you are involved in a collision, and believe your insurer has assigned fault to you improperly, contact them. Such disagreements can often be resolved by asking your insurance company to cite the specific rule used in its decision. If the circumstances illustrated by the referenced rule vary from the actual event, clarify the differences. Your insurer may overturn its previous decision. If they refuse to do so, you can file a lawsuit to prove your case.
It’s important to understand how no-fault car insurance works, and how your rates can be affected. Also, keep in mind that every insurer handles things differently. For this reason, request quotes from several auto insurers to find the lowest rates.