If you’re a Canadian driver, chances are you’re driving with some form of no-fault auto insurance. Most Canadian provinces have adopted no-fault auto insurance plans, though the models vary from province to province.
But what is ‘no-fault,’ and how could it affect you in the aftermath of an accident?
No-fault auto insurance means that drivers are reimbursed by their own insurance companies, regardless of who is at fault. Unlike the traditional tort system, which holds the at-fault party responsible for all damages, no-fault insurance means providers pay out to their own clients.
For insurance companies, the benefits of the no-fault model are twofold. They’re able to save on resources, avoiding costly and time-consuming legal proceedings to determine fault. They can also pass these savings along to the consumer with lower and more competitive premiums.
For drivers, the greatest benefit of no-fault insurance is expediency. Insurance companies don’t need to wait for fault determinations to process claims so that drivers will see almost immediate payouts. This will surely be of great comfort to those facing costly medical bills and property damage in the wake of an accident.
By law, insurance companies must still investigate and assign fault after every accident. At-fault drivers are likely to face higher premiums from insurers upon renewal and higher rates from future insurers.
Depending on the province, fault determinations may also provide grounds for further legal recourse for victims. At-fault drivers may be sued for financial losses and expenses not reimbursed by the insurer as well as for pain and suffering, future health costs, and loss of enjoyment of life.
To understand how an at-fault determination may impact at-fault drivers, consumers should familiarise themselves with the no-fault plan at play in their respective province. A pure no-fault model, like that used in Manitoba and Quebec, removes any legal recourse for victims to sue after an accident.
Conversely, Alberta and British Columbia do allow for victims to sue under certain circumstances, for pain and suffering and financial loss despite having no-fault plans.
Ontario offers its drivers a hybrid no-fault model that covers medical expenses but not property damage. In cases of property damage, insurance companies will rely on fault determinations to decide who is liable. As in Alberta and British Columbia, Ontario victims may also sue for pain and suffering, loss of enjoyment of life, future health costs and any financial losses not reimbursed by the insurer.
An informed driver is a prepared driver. Drivers should be familiar with their respective province’s insurance plans and should contact insurers with any questions about individual policies and no-fault auto insurance.
Having this information on hand after an accident will be invaluable to any driver. If you’re unclear about your own policy, contact your broker.