What Is No Fault Insurance in Ontario And How Does It Work?

As a car owner, it’s easy to confuse yourself with insurance linguistics. ‘No fault insurance’ is often mistaken for accident forgiveness. However, the latter is a completely different concept and is available as an add-on. No-fault insurance doesn’t mean that you won’t be considered to be at fault in an accident even if you caused an injury.

To bail you out of the dilemma, we have explained no-fault insurance in Ontario in this article. Car owners in Toronto, Ontario often reach out to reputed insurance brokers to understand the scope of this coverage. These professionals can also help you choose the right policy to ensure affordability and maximum coverage.

What is no-fault insurance and why was it introduced?

As a legal mandate, no-fault insurance is a system that determines how automobile insurers in Ontario are supposed to handle claims. The purpose of no-fault insurance in Ontario is to simplify the claim-processing mechanism after drivers are involved in accidents. Regardless of the party who is at fault, the insurer of the driver filing the claim should handle the case.

No-fault insurance was introduced to make sure that insurers pay claims to the driver without considering with whom the fault lies. It was in June 1990 that no-fault insurance came into being in Ontario. With increasing liability expenses, it was introduced as people filing an insurance claim had to place several claims following a mishap. The process proved to be inconvenient for charities, drivers, and small municipalities.

Over the years, different reforms have been made to the system to address problems like insurance fraud. Thanks to Ontario’s no-fault insurance, insurers can now determine faults after accidents.

All basic car insurance policies in Ontario come with no-fault insurance by default. So, when you purchase your car insurance, you need not request your insurer to add it to the scheme since it’s available automatically.

How does no fault insurance work?

Now, you might be wondering, “how does no-fault insurance work in Ontario?”. The process defines how each party should handle the claim. During an accident, you may be fully at fault or have no fault. At times, you might partially be at fault. The insurer is responsible to find out the share of each person’s fault. Accordingly, they decide how your premium would be affected.

The Fault Determination Rules guide how insurers should examine your case. They need to refer to the rules and investigate the case. Insurers have to determine the fault based on the circumstances during the incident.

Even if you are found to be at fault, your insurer cannot deny the claim provided your policy covers the damage.

How will your insurer determine fault?

As per the prevailing norms in Ontario, your insurer will follow the Fault Determination Rules to find who is at fault, and the percentage of your fault. Based on your share of fault, this can range from 0% to 100%.

Even after the Police carry out their investigation, your insurer might approach the incident in a different way. When it comes to insurance claims, insurers have the right to use their discretion to determine faults. So, even if the Police state that you are not at fault, the insurer might find you partially at fault. In these situations, you may have to pay a deductible and they would reimburse only a part of your claim.

Let’s take this instance to understand the concept better. Suppose, you were driving on a snow-covered road, and failed to stop your car. This resulted in a rear-end collision with the vehicle in front of you. The Police arrive and investigate the road conditions, delivering the verdict that none of the drivers were at fault. Accordingly, they wouldn’t lay charges on any of the parties.

However, your insurance company may see things through a different pair of lenses. They would adhere to the Fault Determination Rules. According to these norms, you should be at fault for rear-ending the other car. Considering the adverse road conditions, you should have been more vigilant with braking.

The deductible you need to pay also depends on your share of the fault. Even after processing your claim, your insurer is likely to raise your premiums when you renew your policy. Now, if you disagree with the way your insurance company investigated the accident, request your insurance broker to contact the Ombudsman Liaison Officer of the insurer.

What are the advantages of no-fault insurance?

The prime advantage of no-fault insurance is its ability to speed up the claim process. Let’s take a detailed look into the other advantages.

  • All the drivers involved in the incident have the right to get compensation for the injuries and damages.
  • Regardless of the party who is at fault, your insurer would immediately process your claim.
  • You need not waste time finding the insurer of the other driver if you aren’t at fault.
  • Drivers need not wait for the insurer to determine fault, so they get the compensation immediately.
  • Car owners remain free from legalities as they need not sue their insurance companies for compensation.
  • Only the driver at fault would have to pay a higher premium on renewing the policy.

Scope of coverages

Now that you already know “what is no fault insurance in Ontario?”, let’s check the scope of coverage for these policies.

  • Under accident benefits, you would receive compensation for rehabilitation expenses after the accident.
  • Under direct compensation property damage, you would get compensation for the loss of contents in your vehicle and its damage.
  • The policy also includes protection from uninsured drivers in case the other party at fault isn’t insured.

No fault insurance in Ontario — Endnote

For affordable car insurance policies in Ontario, reach out to one of the trusted brokers. These professionals can help you compare quotes from top insurers and recommend the right coverage for your car. You would also find their assistance valuable while filing claims. Take care to adequately cover your vehicle with dedicated assistance from insurance advisors.

Atif Mallo

Atif Mallo is a freelance blogger with huge interest in technology, science, life hacks and health. He loves coffee, cheesecake and chess. Drop a line in comments to leave feedback for him.

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