What You Need to Know About No-Fault Insurance

Learn the basics of no-fault insurance and how it can affect your car insurance premiums.

No-fault insurance systems are the norm in several provinces across Canada, including Ontario, Quebec, Nova Scotia, New Brunswick, and Prince Edward Island. The no-fault process can be a little counterintuitive, but once you learn the basics, you'll have no cause for concern. Learn how the no-fault insurance system works and how it affects your car insurance.

What Does No-Fault Insurance Mean?

Despite its name, no-fault insurance doesn't mean that insurance companies don't investigate and determine who is at fault following a collision. In fact, provinces such as Ontario have laws explicitly requiring insurance companies to assign responsibility to each motorist involved in the accident—each driver receives a percentage of the blame.

The no-fault insurance system just means that your car insurance company will process your claim and pay for repairs to your vehicle, regardless of who was at fault for the accident. The same goes for other drivers involved in the collision.

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Determining Fault in the No-Fault System

After an incident, insurance companies use government-legislated fault determination rules to determine who was responsible for the collision. These detailed guidelines outline who should receive blame in a wide variety of possible collision scenarios.

If your insurance company determines that you were at fault, you can appeal their decision. First, file a complaint with your car insurance provider and ask for a re-examination. If your insurance company declines, you can refer your situation to your insurance company’s ombudsperson.

Is No-Fault Insurance Good for Drivers?

Without no-fault insurance, insurance companies could argue for long periods to determine who was at fault in the accident. This drawn-out process leaves drivers with damaged vehicles, sometimes unable to drive. On the other hand, no-fault insurance pays insureds immediately, getting them back on the road.

Plus, no-fault insurance helps keep overall insurance premiums down by discouraging costly legal battles. As a result, insurance companies save money, passing on those savings to customers.

Despite the system's advantages, some individuals oppose no-fault insurance, claiming it protects risky drivers. The injured party's insurance company must pay for the repairs even if their driver was not responsible for the accident.

How Does No-Fault Insurance Affect Your Premiums?

If your insurance company determines you're at fault and you have collision coverage, you'll likely need to pay the deductible to repair the damage to your car. Plus, your insurance provider will take the accident in consideration and may raise your premiums at renewal. A fault determination will also go on your driving record, so future insurers will likely quote you higher premiums if you change insurance companies.

If you want to keep your car insurance premiums low, drive safely and avoid risky behaviour. Save money by shopping around for the best car insurance in Ontario at least once year.

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