Your Guide to No-Fault Insurance in Ontario

Posted on May 25, 2021

Did you know that despite pandemic limits, Ontario traffic fatalities hit record highs in 2020?

What does no-fault insurance in Ontario mean? No matter who’s at fault, each driver can file claims to their insurer. But there’s more to it!

What is No-Fault Insurance in Ontario?

There's a lot of misunderstanding over Ontario's no-fault auto insurance. That is understandable: the word "no-fault" implies that no one is at fault in the case of a car crash.

Let's look at the scenario in the 1980s, before no-fault insurance existed. If two cars were in a collision, the respective insurance providers would fight it out and decide who was at fault and who had to settle the bill. This took time.

No-fault car insurance does not imply that you are not at fault; it simply means that you can negotiate only with your own insurer.

No-fault insurance is where your insurer pays for any damages caused by an insured risk, not the other person's insurer. It expedites the claims process. It also pays out to affected parties without administrative bottlenecks or rising court expenses.

There existed a tort insurance scheme before the no-fault system. The tort system was where the at-fault driver in an accident was completely liable. The other driver had the right to sue for vehicle damage, medical expenses, and even lost wages.

For Ontarians, the tort system was expensive. For drivers who just needed their claim paid, it was frustrating. Imagine you receive a whiplash injury that needed medical treatment during an accident. And, your insurance provider was still months away from paying out?

It is sometimes confused with accident forgiveness. There is special voluntary auto insurance coverage for drivers with a clean driving record.

No-fault protection is a legal requirement that insurance providers to pay claims timely on all policies, if applicable.

Is No-Fault Insurance In All Canadian Territories?

Yes, no-fault insurance is all across Canada. However, while no-fault insurance is in all provinces and territories, its procedure can differ.

In Saskatchewan, for example, no-fault insurance is the norm, but drivers can elect to choose tort insurance instead. As a result, their insurance premiums and future claim amounts are greatly reduced.

In Quebec, all injury benefits claims must go through the public insurance system. However, it would be best to have private insurance to cover your vehicle from an accident and comprehensive damages.

Additionally, there are many provincial variations in the amount of injury insurance payouts. These being:

  • for medical
  • loss of income
  • death benefits

In certain provinces, if you do not agree with the size of the settlement, you can sue for more. But, there are limitations. 

Is No-Fault Insurance Beneficial for Drivers?

A no-fault insurance scheme is composed of up to four parts. Each offers protection for a variety of different sets of circumstances and requirements. Here are the coverages under no-fault insurance:

Third-Party Liability

What does third-party auto insurance entail? Third-party insurance is the minimum legal insurance needed for driving a vehicle.

Third-party insurance includes damage to the other person's vehicle or belongings. It can also include hospital treatment, and, in the worst-case situation, their funeral if you cause a fatal accident.

Accident Benefits Coverage

The accident benefits plan assists you in recovering from injuries sustained in an accident. It can also provide financial help to your family in the event of your death. Accident benefits cover the following items, but exact policy specifics differ by province:

  • expenses on medical and recovery that aren't protected by any medical Health plan
  • compensation for lost wages if you are unable to work due to your injury
  • expenses for your funeral if should you die
  • If you die, you may be entitled to compensation for your family members

You could be entitled to increase your general accident benefits package limit depending on where you live. Depending on the province, coverage limits will differ through the following:

  • specific coverages
  • regulations
  • optional add-ons

If you are not sure about your coverage, you should consult with your insurance provider. They will give you the best insurance advice tailored to your needs.

Direct Compensation Property Damage Coverage

In an accident, direct compensation property damage immediately covers the repair costs of your property or vehicle. However, it is only in place in certain provinces such as Nova Scotia, Ontario, Quebec, New Brunswick, and Prince Edward Island.

Benefits of No-Fault Insurance

For the last three decades, the no-fault coverage system has received mixed opinions. Benefits of a no-fault system include:

  • rapid payment of claims by avoiding expensive and time-consuming liability lawsuits
  • accident claimants are no longer required to pay attorneys' legal bills
  • Insurance rates would be lower as a result of the reduction of non-economic loss compensation
  • reduced litigation and reduction of lawsuit fees
  • there is no need to subsidize uninsured motorists; the insurer will pay for your medical expenses
  • reduced premiums mean that car insurance is more affordable for those with fewer financial resources

This means that if you and another driver are involved in a collision, you and the other driver will file loss and liability claims with your own insurance companies. This expedites and simplifies the process, which helps everyone involved in an accident. 

Laws For Determining Fault In Collisions

Someone is always at fault; that is the bottom line. Accidents are not really just accidental; they are collisions, and someone causes them.

Insurance companies do not rely solely on the police to find out who is at fault in an accident. It is not even the insurance adjuster's decision. There are defined standards for determining fault. These standards are essentially standardized.

The insurance adjuster has to decide what type of collision happened. This is not a simple feat, since collisions often occur due to a unique series of incidents. A variety of factors trigger these incidents, such as impaired driving and poor road conditions.

The laws detail over 40 different crash situations. Each of these situations has a simply drawn diagram. Each crash situation gives a proportion of fault to each driver. An insurance provider uses these rules to decide who is responsible for an accident. Otherwise known as fault percentages.

The Problem With Fault Percentage 

Insurance companies use fault percentages to expeditiously and effectively manage direct compensation requests. They are often applied, however, due to inadequate or insufficient collision details.

Oftentimes, accidents are considered a case of shared responsibility. That is where differing accounts of how the crash happened exist. To the driver who saw the incident firsthand, the insurance adjuster's determination of blame can seem unreasonable and unjust.

How Fault Affects Your Contribution Towards Payout

If the insurance company decides that you contributed to the accident, you will need to pay a portion of the whole deductible. That is to cover the damage to your vehicle. The deductible amount you incur is frequently proportional to your degree of blame in the crash.

Additionally, there is the issue of your automobile insurance premium. Unless the policy includes an endorsement for injury forgiveness, an at-fault accident can be an expensive error. It takes approximately six years for an accident to be removed from the insurance premium calculation.

If you disagree with the insurance company's assessment of the crash, you may file an appeal and request reconsideration.

Don't Learn Safety by Having Accidents!

No-fault insurance in Ontario is more concerned with the insurance claims process than with absolving someone of liability.

To summarize, this type of policy came into being to cut the need to drag yourself to an attorney's office or court to resolve an accident claim. Instead, the insurance policy will pay costs for damages or injuries immediately, allowing you to get back to living your life faster.

Damages, collisions, flat tires, and other unforeseen events occur. Do not allow this to happen to you. Contact us today to get a quote for all your insurance needs. 

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