No-fault insurance

12 minute read Published on Nov 20, 2023 by BrokerLink Communications

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Let’s clear something up right off the bat: No-fault insurance does not mean that no one is at fault for a car accident or that you won’t be found at fault for a collision. Rather, it is the name given to Ontario’s car insurance system and all it means is that if you get into a car accident, your insurance provider deals with your claim instead of the other driver’s insurance company or the court system. We explain no-fault insurance and how fault is determined in auto accidents below.

No-fault car insurance in Ontario

When you buy Toronto car insurance, you are purchasing a type of no-fault insurance, since the entire province of Ontario utilizes a no-fault insurance system. This unique insurance system, which is now shared by many other Canadian provinces, was first implemented in 1990. It was proposed as a solution to the lengthy and complex insurance process that previously existed, which often saw drivers having to handle their insurance claims through the court or via the other driver’s insurance company. Thus, the no-fault system was introduced to simplify this complicated process.

How no-fault insurance works

As mentioned above, no-fault insurance in Ontario and other provinces relates to how each policyholder handles their claim - namely, that the claim will be handled via their own insurance company versus the court or another driver's insurance company. The name has nothing to do with who was at fault for the accident. Therefore, someone is still responsible for determining this, and this must be determined for the claims process to proceed. In Ontario, each driver is assigned a percentage of the fault through the Fault Determination Rules. We dive into these below.

At-fault accidents

So you got into an at-fault accident. Knowing what to do if you are in a car accident is the first step, but after that, it’s important to understand how the no-fault system comes into play. Regardless of whether you are ultimately deemed more at fault for the accident than the other driver, the entire claims process will use Ontario’s no-fault system, meaning it will be handled directly by your owninsurance company. However, this determination will still have other effects, namely whether you will be compensated by the other driver for the damage or you will have to compensate them.

In Ontario, assuming we’re talking about a collision that involved two vehicles, a motorist is considered to be liable for an accident if they are found to be over 50% at fault for the accident. This percentage may be lower for accidents involving three or more cars. Please note that fault needs to be determined for all types of collisions, including common car accidents, like fender benders, broadside accidents, and head-on collisions:

Determining fault after an accident: who determines fault

As mentioned above, after a car accident has occurred, the fault must be determined, no matter whether it was major or minor. Typically, determining fault is not up to one single person or entity but a team of people.

While the people assigned this task vary, it generally consists of the insurance companies of the parties involved in the accident, specifically their adjusters and appraisers, the police officers to who the accident was reported, the attorneys hired by the party injured in the accident if there were injuries, as well as the jury that rules on the lawsuit if the claim goes to court.

It is important to note that although determining fault comes down to a team of people, insurance companies and their adjusters and appraisers generally play the largest role in assigning fault.

Determining fault after an accident: how fault is determined

Just because you know who is responsible for determining fault doesn’t mean that you know how fault is determined. In this section, we outline which pieces of information and evidence are examined by the people tasked with assigning fault following a car accident:

Police report

The police report is one of the first pieces of evidence that the insurance company will look to when determining a fault. A police report is written after reporting a car accident to the authorities. Please note that there may not be a police report for every car accident in Ontario, as not all accidents require you to call the authorities.

That said, there are certain situations when you have to report a car accident in Ontario, so for these accidents, there will definitely be a police report that can be assessed; it is important to report an accident as if you don’t report a car accident, you could face a serious fine. A police report is a lengthy document that outlines various details about the accident, such as the date and location of the accident, the names of all parties involved, as well as their vehicle registration, driver’s licence numbers, and their insurance details, witness statements, driver statements, details about any damage or injuries sustained in the accident, and other pertinent information, like the weather or road conditions on the date of the accident. For instance, if one driver was speeding at the time of the accident or ran a red light, this will be noted in the police report.

Given the multitude of information included in police reports, you can see how they would be an excellent resource when fault needs to be determined.

The insurance adjuster’s conclusion

Anytime there is a car accident claim in Ontario, each party’s insurance company has a duty to investigate the claim and assign fault. This is required as stated in the Fault Determination Rules published in Ontario’s Insurance Act.

Under this act, after a policyholder files an accident claim, the insurance company must investigate the accident in order to make a fault determination using Ontario’s Fault Determination Rules. Therefore, even if you don’t think it’s necessary, you should always call your insurance company after a minor car accident.

To investigate the claim, an insurance company will assign an in-house insurance adjuster or hire a third party adjuster to investigate the claim on their behalf. The insurance adjuster will consider a broad range of factors when assigning fault. These factors may include the speeds that each car was travelling at, the weather and road conditions on the day of, and whether either driver was engaging in illegal behaviour, such as texting and driving at the time of the accident.

The adjuster will also review the police report and all evidence provided, such as videos or photos. The insurance company for each party is required to conduct its own independent investigation, and the findings from both companies will be considered when the final fault determination is given.

An attorney’s advice

Finally, in some cases, fault may be determined by an attorney or multiple attorneys. However, this will only be the case if attorneys are hired by one or both parties. Attorneys usually only become involved if the parties do not agree with the fault determination given by the insurance adjusters. As such, the next step is to seek legal counsel.

In this scenario, the attorneys involved may not only provide their clients with legal advice but also help them challenge the determination issued by the insurance adjuster. They would do this by arguing that their client should be assigned less fault.

Is no-fault insurance mandatory in Ontario?

No-fault insurance is simply the type of car insurance system that the province of Ontario uses. So, yes, it is mandatory because it is a part of all car insurance policies in the province.

It is not something you specifically purchase or need to speak with an insurance company or broker about. Instead, it is an automatic part of your coverage when you purchase an insurance policy.

Misconceptions about no-fault insurance

There are a few misconceptions about no-fault insurance that many Ontario drivers have. We aim to clear these up below:

Misconception #1: You will not be found at fault if you get into a collision

This misconception couldn’t be further from the truth. As stated above, Ontario’s no-fault system has nothing to do with who is at fault for the car accident. This information is still extremely relevant and fault needs to be determined in order for the insurance company to issue a payout.

Rather, the meaning of no-fault insurance pertains to the fact that regardless of which party is found to be at fault for the accident, they will deal with their own insurance company and no one else.

Misconception #2: If no one is at fault for the collision, the insurance company will not determine who caused it

First, it’s impossible for no one to be at fault for the accident. Someone will always be at fault for the accident. Even if both parties were partially responsible, each will be assigned a fault determination percentage that will ultimately state which party is at fault.

Second, insurance companies have a legal obligation to investigate all car accident claims and determine who caused it. This is a requirement of the Fault Determination Rules published in Ontario’s Insurance Act.

Misconception #3: Following a collision, a no-fault accident will not affect your rates

Again, there is a misconception that a no-fault accident will not appear on your driving record or affect your rates. Remember that a no-fault accident does not necessarily mean that you were not at fault for the accident. It is simply the name for Ontario’s car insurance system. Thus, if you are deemed at fault for the collision, not only is your premium likely to increase but it will also appear on your driving record.

Depending on the province and the severity of the accident, the at-fault accident could remain on your driving record for anywhere from five to ten years. During this time, you would likely face increased car insurance premiums. If, however, you are deemed not at fault for the accident, then your rates would likely remain unaffected and the collision may not appear on your driving record at all.

The advantages of no-fault insurance

Now that you know a little bit more about no-fault insurance and how it works, let’s consider the benefits of this unique system. As mentioned at the beginning, the no-fault system was createdas a response to the previously drawn-out insurance process that existed, with drivers often having to file multiple claims with different parties for the same accident. It was in 1990 that the government decided to officially put an end to this by introducing the no-fault system. Some of its main advantages include:

  • Insurance payouts: The payment process is much smoother and faster, with payouts being issued directly by your insurance company.
  • Simplified process: Each policyholder deals directly with their own insurance company in the event of a claim. No need to file a claim with the other driver’s insurance provider. This also results in a much faster claims process.
  • No court involvement: Policyholders don’t need to sue anyone else to receive compensation because it comes directly from their own insurance company.
  • Better compensation: All policyholders involved in the car accident can be compensated for the cost of damages and injuries.

How to keep premiums low following an at-fault car accident

So you get into a car accident and it is determined to be your fault - what now? The reality is that accidents affect car insurance rates everywhere in Canada. At-fault accidents, in particular, will lead to increased rates. Thankfully, there are a few ways that you can save money on car insurance, even if you recently added an at-fault accident to your driving record:

Sign up for professional driving instruction or a defensive driving course

The first way to lower your rates following an at-fault accident is to sign up for a professional driving course or a defensive driving course in your province. These courses teach students important driving skills and habits. If you can show proof that you completed this type of course, an insurance company will be far more likely to give you a discount on your policy.

Buy accident forgiveness coverage

The second way of lowering your rates following an at-fault accident ruling is to buy accident forgiveness coverage and add it to your policy. When your policy has accident forgiveness, your insurance company will not increase your premium following your first at-fault accident. This means that your rates won’t change after the first at-fault accident you get into once you’ve added accident forgiveness to your policy. Keep in mind that there are often conditions you must meet for accident forgiveness coverage to qualify.

For example, sometimes only minor accidents are eligible for coverage. Lastly, the best time to update your policy and add accident forgiveness coverage is when your plan is up for renewal. Simply contact your insurance company or a BrokerLink insurance advisor and let them know that you would like to add accident forgiveness to your policy. Your premium may initially be adjusted to include this coverage, but in the long run, it could have many benefits.

No-fault car insurance coverage

No-fault car insurance coverage in Canada looks a little bit different for everyone. This is due to the fact that each person’s car insurance policy is unique. While some people opt for basic no-fault insurance that only features the four mandatory coverage types, others opt for more comprehensive policies that feature additional coverage, like collision or accident forgiveness coverage. To give you a better idea of what no-fault car insurance coverage looks like, we lay out a few popular auto insurance coverages below:

Liability insurance

Drivers in Canada must have liability car insurance, though the amount varies depending on what province you live in. Liability insurance offers financial protection if you are found to be at fault for a car accident. Under this portion of your policy, your insurance company can issue a payout that covers the cost of any necessary repairs, medical expenses, or legal fees that arise from the accident.

Comprehensive coverage

Comprehensive car coverage is optional but can protect drivers from damage to their parked cars. In other words, if your car was parked in the driveway and someone stole it or a fire broke out and damaged it, it is the comprehensive coverage portion of your policy that would help pay to fix or replace it. Perils that comprehensive coverage may protect you against include wind, theft, vandalism, fire, water, falling objects, and more.

Collision coverage

Collision car coverage can help pay for your vehicle to be repaired if it suffers extensive damage in a collision. You can claim collision coverage no matter if you caused the accident or who it was with, whether it be another driver, an animal, or a ground object such as a lamppost.

Prior to your insurance company covering the damage you must first pay your deductible, your deductible is the amount you agreed to pay in the event of an incident at the inception of your policy.

Accident forgiveness coverage

Another type of optional car insurance coverage popular among drivers in Canada is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Note: coverage and eligibility varies by province.

Uninsured motorist coverage

Uninsured motorist coverage is mandatory in some Canadian provinces, and it comes into play if you are involved in an accident with a motorist who does not have car insurance or does not have enough insurance to pay for the damage they caused.

It also applies to anonymous drivers who flee the scene of the accident. In other words, uninsured automobile coverage protects drivers against hit and run accidents.

Accident benefits coverage

Accident benefits coverage is mandatory in many provinces and will pay for the cost of medical attention if someone is injured in the car accident. While basic healthcare in Canada will cover some expenses, others, such as prescription medication or rehabilitation, may not be covered, and that is where accident benefits come in. It can also pay for lost income or funeral fees if someone is unable to work temporarily or dies in an accident.

Loss of use coverage

Loss of use coverage is not mandatory in Canada, but will pay for the cost of taking alternate modes of transportation while your car is being repaired following a car accident. For example, loss of use coverage can pay for you to take the bus, hire a rental car, or use a taxi or ride-share service while your car is in the shop.

Reach out to BrokerLink to learn more about no-fault insurance in Ontario

Do you still have questions about Ontario’s no-fault insurance system, such as whether fault can be shared if you are eligible for insurance cover for towing. Contact BrokerLink today. We not only have the resources and expertise to answer all of your insurance-related questions, but we can also help you find a great policy, give you a free car insurance quote, or help with other tasks like renewing car insurance. Get started today by reaching out over the phone, by email, or in person at one of our 200+ insurance offices across Canada.

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