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No-fault Insurance: What’s it All About?

It does matter who caused the accident.

You certainly can't be blamed for being confused about the term "no-fault" insurance – it’s a commonly misunderstood term. No-fault insurance doesn't mean the insurance company lets you off the hook if you cause an accident. Despite the misleading name, it does matter who caused the accident. If you are found to be at fault, either completely or partially, it will go on your insurance record and you will have to pay the penalty. That means you may experience an increase in future premiums.

You deal with your own insurance company.

No-fault coverage pays for some or all of the insured person’s loss regardless of who caused that loss. With no-fault insurance, you would look to your insurance company to pay your claim, even if the other driver caused the accident.

No-fault insurance really means that if you are injured or your car is damaged in an accident, you deal with your own insurance company, regardless of who is at fault. You don’t have to go after the at-fault driver for vehicle damage reports and for the health care and income replacement benefits to which you are entitled.

For example, if you were injured in a car collision, you would be able to access any medical benefits offered under your policy immediately from your company, even if you were to blame for the accident. You can get the help you need right away, instead of having to wait for the insurance companies to decide who was at fault before paying out any benefits.

How does your insurance company assess fault?

Someone is always determined to be “at fault” in an automobile accident, whether partially or completely. Insurance companies must determine the degree of fault to be assigned to each driver to ensure the at-fault driver’s premiums are adjusted appropriately.

In Quebec and Ontario, charts or rules are used to determine fault or responsibility for Direct Compensation – Property Damage claims, but not for injury claims. In Ontario, the fault determination rules are set out in government regulation. The regulations contain examples of common types of collisions and describe how fault is assigned for insurance purposes. These regulations help insurance companies provide consumers with prompt claims handling and fair, consistent treatment. After you report an accident to your insurer, the company will investigate the circumstances of the accident and then make a fault decision based on these rules.

The fault determination rules:

  • cover more than 40 accident situations, using diagrams to illustrate specific scenarios;
  • can be applied to almost every possible road collision scenario; and
  • apply regardless of road or weather conditions, visibility, point of impact on the vehicles, or the actions of pedestrians.

The circumstances of a collision may show that more than one driver was negligent. Each driver's insurance company may then become involved in the settlement based on the degree of responsibility attributed to each person. If there is a dispute about responsibility, court action may be required to resolve it.

How do police charges or convictions affect your insurance company’s decision?

If police don’t file charges, it doesn’t necessarily mean the insurance companies investigating the circumstances of the accident will not find one or more of the drivers involved at fault.

For example, if a vehicle was unable to stop on an icy road and rear-ended another, a police officer may say that neither of the drivers was “at fault.” Such a comment applies to the laying of charges and should not be taken as an opinion about how fault applies to an auto insurance claim. In a case like this, the insurer would apply the rule stating that a vehicle that rear-ends another is at fault.

Can fault in an automobile accident be shared?

Yes. The circumstances of an accident may show more than one driver was partially at fault for insurance purposes. Fault is allocated to each driver based on which accident scenario most closely resembles the accident. If the accident is not described by any of the scenarios, then fault is allocated according to the rules of negligence law.

How does an at-fault accident affect me?

You can be anywhere from 100% to 0% at fault. Any driver who is more than 0% at fault will have an “at-fault” accident on his or her insurance record.

If you are found at fault for any percentage of the accident, your premium may go up on renewal. However, some companies allow you to maintain your driving record or premium after your first at-fault accident. To confirm your company’s approach and how your rates will be affected, check with your insurance representative.

In many cases, if you have your first at-fault accident after six or more years of claims-free and conviction-free driving, your premium may not change or may increase by a relatively small amount. Most companies will change your driving record to reflect the accident and then increase your premium by a small amount. You will then need six years of accident-free driving before you go back to a clean slate.

If this is your second at-fault accident in the last five years, you can expect your premiums to increase quite significantly.

If you have any convictions or cancellations of a policy in addition to an at-fault accident, or are an inexperienced driver with an at-fault accident, you may be considered to be a high-risk driver and be placed with an insurer specializing in these types of risks.

When you are shopping for insurance, you should always ask the insurance representative how your premiums will be affected after an at-fault accident.

Also, remember that when you lend your car to someone, you’re also lending him or her your insurance. If the person who borrowed your car has an at-fault accident while using your car, the accident will go on your insurance record, and your insurance premium could go up.

What can you do if you disagree with your insurance company’s assessment of fault?

If you’re dissatisfied with your insurance company’s decision on fault and believe the decision does not accurately reflect the circumstances of the accident, speak to the claims adjuster handling your file. Ask him or her what fault determination rule has been applied in your case.

Bring any new information to the attention of your insurance company. Generally, an insurance company will revise or reconsider its decision on fault only if additional, relevant information is provided. For example, if an accident occurred in which each driver stated that the other had gone through a red light, an insurance company would have little choice but to assign fifty-fifty fault. However, if an eyewitness confirmed which driver went through the red light, an insurance company could review its decision. If your insurance company refuses to revise its decision and you still disagree, contact your company’s complaint officer. He or she will guide you through the company’s complaint-handling procedures. If you continue to disagree, you may choose to pursue the matter in the courts.

In conclusion… don't think "no fault" means no blame. Your best bet is to drive safely, no matter what the insurance system. No one can find fault with that!

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