The name "no-fault" insurance often confuses consumers. No-fault insurance does not mean that drivers are never at fault in accidents. Someone is always found to be "at-fault" in a car accident, whether partly or fully.
What no-fault actually means is if you are injured in an accident or your vehicle is damaged, then you deal with your own insurance company when making a claim, regardless of who is at-fault for causing the accident. By going through your own insurer, you get the financial help you need right away - whether it's for injuries you sustained or for fixing your damaged vehicle - instead of waiting for your insurer and the other drivers' insurers to decide who was to blame for the incident before paying out benefits.
In provinces with no-fault insurance, insurance companies assign the percentage of fault for each of the drivers involved in the accident. If you are involved in an accident and it is determined that you are at-fault - either completely or partially - it will go on your insurance record and you'll likely have to pay more for your coverage.
The good news is that the rules for assigning fault in an accident are the same for all insurance companies within a province. While the criteria for determining fault may vary between provinces, within a province insurers must use the same set of rules.
Here's an example
Say you are an Ontario resident and were unable to stop your car on an icy road near your home. You rear-ended another car and the police officer told you that "no one was at-fault".
This usually means that no police charges will be laid. It does not mean that the insurance companies involved will not consider who was at-fault. In this case, the insurance company would apply Ontario's Fault Determination Rules which states that a car that rear-ends another car is at-fault (since drivers are required to take road conditions into consideration).
Your percentage of fault will not only determine the amount of deductible you have to pay but if you're fully or partially at fault in an accident, your insurance company will likely increase your premiums at your next renewal date as well.
Is suing an option with no-fault insurance?
Well, the answer is that it depends on which province you live in. The funny thing is that even though not all provinces have what is commonly known as a 'no-fault' insurance, all provinces have some degree of no-fault Accident Benefits coverage.
First - a refresher of what Accident Benefits are - Accident Benefits coverage provides compensation for you, your passengers or pedestrians who are injured or killed in an auto accident for medical and rehabilitation treatments, funeral expenses, loss of income due to disability, and death.
The differences between the provinces comes down to the balance established by the province between a person's right to sue and the no-fault (access to accident benefits) system. For example, in Alberta the model is skewed to the right to sue. As a result, drivers injured in accidents receive only modest accident benefits unless they are able to sue an at-fault party to recover damages for economic loss or pain and suffering. In Quebec, the opposite is true; you do not have the right to sue, but you will have access to substantial accident benefits. Ontario on the other hand, blends the two.
The following is a summary of a person's ability to sue by province or territory according to the Insurance Bureau of Canada.
- British Columbia: You can sue for pain and suffering, and for economic loss.
- Alberta: You can sue for pain and suffering (with limits), and for economic loss.
- Saskatchewan - If the Personal Injury Protect Plan (PIPP) no-fault system is chosen: You cannot sue for pain and suffering but can for economic loss.
- Saskatchewan - If the Tort option is chosen: You can sue for pain and suffering (there is a deductible) and can sue for economic loss.
- Manitoba - You cannot sue for pain and suffering or for economic loss.
- Ontario - You can sue for pain and suffering and for economic loss but there are conditions.
- Quebec - You cannot sue for pain and suffering or for economic loss.
- New Brunswick - You can sue for pain and suffering (with limits), and for economic loss.
- Newfoundland and Labrador - You can sue for pain and suffering (there is a deductible), and for economic loss.
- Nova Scotia - You can sue for pain and suffering (with limits), and for economic loss.
- PEI - You can sue for pain and suffering (with limits), and for economic loss.
- Yukon - You can sue for pain and suffering, and for economic loss.
- Northwest Territories - You can sue for pain and suffering, and for economic loss.
- Nunavut - You can sue for pain and suffering, and for economic loss.
Auto insurance quickguides
- Introduction to auto insurance in Canada
- Common insurance coverages and endorsements
- Accident Benefits in Ontario
- What is no-fault insurance?
- How premiums are calculated
- How to reduce your auto insurance costs
- Insurance discounts
- Special situations