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Automobile accidents: "No-Fault" insurance

Article Number: 475
Region: Ontario

"No fault" insurance means that your insurance company will always pay your benefits under your policy regardless of whether you or the other driver was responsible for causing the accident. Ontario's "no fault" automobile insurance system only applies to compensation for bodily injury, and not to compensation for property damage.

Benefit of "no fault" insurance

The benefit of a "no fault" system for bodily injury is that you will receive compensation for your injury much more quickly than under an at- fault system, where you would have to wait for a decision about who was at fault. If you are injured in an accident, you deal with your own insurance company, regardless of who caused the accident. In other words, you don’t have to go after the at-fault driver for such things as health care and income replacement benefits to which you are entitled.

 

How do insurance companies determine "fault"?

While your benefits will be paid regardless of  who is at-fault in an accident, insurance companies always determine the degree of fault to be assigned to each driver. This is done so that the at-fault driver’s premiums are adjusted appropriately. In Ontario, Fault Determination Rules are set out in the Insurance Act. The Act contains examples of common types of collisions and describes how fault is assigned for insurance purposes. After an accident is reported to the insurance company, they will investigate the circumstances of the accident and then make a decision as to who was at fault based on these rules.

Fault can be assigned anywhere between 0 to 100% fault, meaning fault can in fact be shared in a accident and in some cases shared equally. Any driver who is more than 0% at fault will subsequently have an "at-fault" accident on their insurance record and their automobile insurance premiums may increase. If you were not at fault, your premiums will not be affected. In either case, you will still receive compensation for your injuries.

 

No fault insurance does not apply to claims for property damage

Unlike claims for bodily injury, insurance claims involving property damage are still based on fault. If you are at-fault for an automobile accident involving property damage, you will only be covered if you have purchased additional coverage such as "all perils" or "collision." These types of coverage are not mandatory in Ontario. If you have purchased this extra coverage, your claim will be paid, regardless of fault, but your insurance premiums may increase.

If the other driver is at-fault in an accident resulting in property damage, you will usually be covered under either your Direct Compensation - Property Damage coverage, or your uninsured automobile coverage. Both types of insurance are mandatory for drivers in Ontario. Your claim will be paid by your insurance company. Depending on your particular insurance policy, you may have to pay a deductible. However, because the other driver was at-fault, your insurance premiums will not increase as a result of making the claim.

If the other driver cannot be identified, you will only be covered if you have purchased optional 'collision' or 'all perils' coverage. 

For more information, you can contact the Insurance Bureau of Canada, at www.ibc.ca, or the Financial Services Commission of Ontario at www.fsco.gov.on.ca.

For legal advice, contact a lawyer.

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