No Fault Insurance : How Does It Work In Ontario And Other Provinces?

Aug 6, 2018


What You Need To Know About No Fault Insurance In Ontario

No Fault Insurance

No fault insurance is one of the most misunderstood and confusing insurance terms, even though it isn’t a difficult concept. No fault insurance system has been adopted by many provinces across Canada to help simplify the claims process. Having no fault insurance doesn’t mean you won’t be found at fault if you are in an accident.

This blog post sets the record straight about no fault insurance. Here we’ll take a look at no fault insurance in Ontario, Alberta and other provinces, provide a no fault insurance definition, explain how it works and answer common questions drivers have about this often misunderstood insurance system.


What Is No Fault Insurance?

No fault car insurance is a system outlining how insurance claims are handled by insurance companies. No fault simply means that, regardless of who is at fault for an auto accident, each driver’s insurance company will handle their claim. You deal with your insurer, the other driver deals with their insurance company for all claims matters.

The Misconception About No Fault Insurance

What Is No Fault Insurance

There are misconceptions about no fault insurance. Many drivers misunderstand what the term “no fault” means and how it impacts their car insurance coverage and policy.

Misconception 1 : You will not be found to be at fault if you are involved in an accident.

Misconception 2 : No one is at fault for an accident and your insurer will not make a fault determination.

Misconception 3 : After an accident, a no fault accident will not go on your driving record.

These misconceptions are false. Fault will be determined in every accident situation where two drivers are involved. You may be found to be fully, partially, or share fault with the other driver. Learn about more about at fault accidents.


Is There No Fault Insurance In Ontario?

Yes. Ontario is one of a handful of provinces that use the no fault insurance system in Canada. The system was designed to help make insurance more affordable and simplify the insurance claims process after auto accidents.

Other provinces, such as Alberta and BC, have a form of at fault insurance.

When Did No Fault Insurance Start In Ontario?

No Fault Insurance Ontario

No fault insurance in Ontario started in 1989. The system was introduced to offset a growing liability insurance cost issue. The original name for the plan was the Ontario Motorist Protection Plan (OMPP). A variety of reforms to the system have been introduced over the years to address new insurance issues, such as fraud.


Do All Drivers Have No Fault Accident Insurance? Is it Mandatory?

Yes. No fault insurance applies to all insured drivers. The system applies to all insurance companies and policies. All drivers, regardless of insurer or policy are subject to the same no fault insurance rules. It is an embedded part of the Ontario auto insurance system.


How Does No Fault Insurance Work In Ontario?

Let’s say you are involved in an accident and you are at fault. How things would play out is different under a no fault system compared to a traditional insurance system.

What Happens In A Traditional Insurance System?

In a traditional insurance system, if you have an at fault accident, your insurer is responsible for pay for the damages to your vehicle. They are also responsible for paying for damages to the other driver’s vehicle.

What Happens In A No Fault Insurance System?

How Does No Fault Insurance Work

Under the at fault insurance system in Ontario, if you are at fault for an accident, your insurance company pays your damage claim. Since you are at fault, you will have to pay your collision deductible. Even if you are at fault, your insurance company still doesn’t have to pay for damages and medical bills for the other driver(s) included in the accident.

No Fault Insurance Coverage

As part of no fault insurance coverage, your insurance company will handle all aspects of the claim and reparations. They will :

  • Handle your claim : You only deal with your insurance company.
  • Pay out for damages to your vehicle : Your insurer will pay for all repairs to your vehicle.
  • Pay for medical bills : Your insurer will pay for some or all of your medical bills.

No Fault Insurance Policy Specifics

Under the no fault system, you will deal directly and be paid out by your insurer for all types of policy claims, including :

  • Accident benefits : You receive health care and rehabilitation expense coverage post-accident.
  • Direct compensation property damage (DCPD) : Under DCPD, you receive compensation for damage to your vehicle and loss of contents.
  • Uninsured motorist : You receive compensation when involved in an accident with an uninsured motorist or hit and run accident.

No Fault Insurance in Ontario - Who Pays?

Whether you are found to be at fault or not for an accident, your insurance company will pay out your insurance claim. You deal directly with your insurance provider for all accident claim matters.


Features Of The No Fault Insurance System

No Fault Insurance In Canadian Provinces

Here are some of the main features of the no fault insurance system :

  • Compensation : All parties involved in an accident are entitled to compensation for damages and injuries.
  • Payment : Insurance payouts happen immediately through your insurer.
  • Process : You deal directly with your insurance company for claims.
  • Claims : The claims process is quick – you don’t have to wait for a fault determination to be made in order to get compensation.
  • No court : No need to sue for compensation.
  • Limits : There are limits to the amount of compensation paid out to accident victims.
  • Rates : The at fault driver will likely see an increase in insurance rates – this is common in all insurance systems.

How Does No Fault Insurance Benefit Me?

No fault insurance simplifies the claims process for drivers involved in a collision. Since you deal solely with your own insurance company, the claims process is quicker and you are paid out for losses almost immediately.

You don’t have to wait for the other driver’s insurance company to work out the claim and payment terms. There is also no need to go to court and sue the at fault drivers insurance company for compensation, saving you time and the hassle of court proceedings.


Which Provinces Have No Fault Insurance?

Other than Ontario, there are 4 additional provinces that have a no fault insurance system in place. Here are the no fault insurance provinces :

  • Quebec
  • Nova Scotia
  • New Brunswick
  • Prince Edward Island

Other provinces in Canada have some form of no fault insurance. How it works varies from province to province.


Does Alberta Have No Fault Insurance?

Alberta uses a variation of the no fault coverage system. Drivers get compensation from their own insurers, but only moderate amounts. Victims are allowed to go after the at fault drivers insurance company to seek out additional compensation for damages and medical bills. You can sue for financial losses and pain and suffering. Strict compensation limits apply.


No Fault Insurance FAQs

No Fault Insurance Who Pays Deductible

Here are some of the most commonly asked questions about Ontario no fault insurance :

What Does No Fault Insurance Mean?

No fault insurance simply means you deal with your insurance company for claims matters if you have been involved in a car accident.

What Is The Purpose Of No Fault Insurance?

No fault insurance is meant to simplify the claims process and speed up the process of paying compensation to drivers involved in accidents.

Under The Ontario No Fault Insurance Who Pays The Deductible?

It depends on the circumstances of your auto accident. If you are the at fault driver, you will likely be required to pay your deductible. Your deductible amount varies based on the details of your insurance policy.

Will My Insurance Go Up After A No Fault Accident?

It depends. If you are partially or fully at fault for the accident, you will likely see an increase in your car insurance rates.

Can I Get Cheap No Fault Auto Insurance?

No fault insurance is the type of insurance system in Ontario. How much you pay for your insurance policy depends on your driving history, driving record and many other factors.


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