Many provinces, including Ontario, follow a “no-fault insurance” system. This is designed to streamline the claims process so that people who have sustained losses can quickly recover their damages from insurance companies.
Prior to no-fault insurance, if you were involved in an accident and someone else was at fault, you would be required to recoup your damages from their insurance company. This caused many issues and unnecessary delays for the innocent, not-at-fault party as they tried to recover their losses.
In an effort to find a way around this, many provinces adopted the no-fault insurance system.
In a no-fault insurance system, your own insurance company will always process your claim, regardless of who is at fault in an accident. This means even if someone else is at fault for an accident you were involved in, to ensure the quickest possible claims process, your insurance company will still pay for your damages. On the flipside, the other party’s insurance company will handle their file in exactly the same way.
At first glance, it almost seems as though this isn’t a fair system. Doesn’t the past system make more sense in which the company required to pay is the one that covers the person at fault? Here’s the problem: the person who suffers damages isn’t always the person at fault, and therefore, not the client of the insurance company they’re trying to recoup their losses from. Naturally, this caused a number of delays in the claims process. To solve the issue, the no-fault insurance system was created.
The new no-fault model dictates that every insurance company strictly deals with their own clients. Logically speaking, companies are able to respond faster and more diligently to the needs of their own clients.
Call it a bad name or a misleading label but a huge misconception surrounding no-fault insurance is the idea that this means insurance companies do not deem anyone to be at fault in an accident. This is not true. Someone is always determined to be at fault. In cases where partial fault is attributed, each driver shares the responsibility (i.e. 50/50, 70/30, 80/20).
If your insurance company deems you at fault for an accident, this can negatively impact your premiums and be included on your driving record. And if you also sustain damages to your car, because you were at-fault, your insurance company will not cover those damages unless you have that specific form of coverage (called physical damage coverage or collision/comprehensive coverage). In this case, you also need to pay a deductible for the insurance company to cover your damages.
No-fault insurance addresses passengers too. If you have passengers in your car who are injured during an accident and they also have insurance, they will claim their injuries and losses through their own insurance companies. On the other hand, if your passengers don’t have their own auto insurance, they will automatically be covered under your insurance.
Whose fault is it? In order to arrive at a solid conclusion of who is at fault in any given accident, insurance companies use a number of pre-set fault determination rules which cover almost all car accident scenarios. If it is unclear, they will look at each case individually, assess precisely what happened and evaluate the damages each party suffered.
While insurance companies must always deem a party at fault, police officers do not. Here’s an example. From an insurance perspective, if you rear-end someone, the person who rear-ended the other vehicle is automatically deemed at fault. From the perspective of the police, however, different aspects of the situation are analyzed. If the roads were icy, a police officer may choose not to deem anyone at fault, and as a result of the road conditions, let both drivers go without tickets. An insurance company on the other hand, ice or no ice, will always still specify the party who rear-ended as at-fault for the accident (for insurance purposes).
Here’s the ultimate bottom line.
If you find yourself in a situation where you must file a claim and you live in a province that follows the no-fault insurance system, you’ll benefit from the straightforward and expedited claims process. And you’ll be dealing with your own insurance company every step of the way.
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