Have you ever heard the term no fault used when it comes to insurance? Our province uses a no fault system for car insurance, but it is a bit of a confusing term. So let’s clear it up…

Definition of no fault insurance

It does not mean that no one is at fault when an accident happens in Ontario. Instead it refers to the fact that your insurance company will cover your benefits, regardless of who was at fault in the accident.

It is important to note that in Ontario, the no fault system only applies to compensation that you would receive in the event of bodily harm or injury or compensation for damage to your vehicle in the collision. It does not apply to any property damage that results from the accident.

Why use a no fault system?

It allows for quicker resolution and for individuals to receive the insurance benefits they are entitled to much faster and more consistently than with an at fault system. Rather than waiting for a decision to be made about who actually caused the accident, everyone involved receives their benefits in a timely matter. So if the accident was not because of anything you did, you don’t have to go after the other driver to get compensation or wait for their insurance company to process the claim and determine responsibility. You deal directly with your insurance provider.

Eventually, the insurance companies will come to an agreement about responsibility for the accident and with this decision in hand, adjustments to insurance premiums will be made. Insurance companies use the Ontario Insurance Act and the specific Fault Determination Rules (want all the legalese? Click here to get access to the full documentation of these rules), when determining who is at fault for the accident.

Degree of fault

As we know, all car accidents are not cut and dry situations where one personal is completely responsible for what happened. Insurance companies will use degree of fault when evaluating accidents. So you may be only partially responsible, or perhaps equally responsible. Fault is assigned as a percentage, from 0% to 100%. Note that if you do share a degree of responsibility for an accident, your car insurance premiums may be affected. As the Financial Services Commission of Ontario (FSCO) states,  if you’re more than 25% at fault for an accident, your premiums should be adjusted appropriately. It’s always best to discuss specifics of your plan with your broker.

Click here to see further details about the no fault system from the Insurance Bureau of Canada. Check out this resource if you’d like more information about the legal side of the system in Ontario.

If you’re looking for more information in regards to car insurance and how our no fault system affects rates and premiums, get in touch with us today. Or zip over here if you’d like to get a quote for the best car insurance rates.

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