Blog No-Fault Insurance And How It Works In Ontario

Dec 30, 2020

What You Need To Know About No-Fault Insurance

Car accident in parking lot

The no-fault insurance system has been adopted in Ontario and many provinces across Canada to help simplify the claims process. It does not mean you won’t be found at-fault accident if you are in an accident.

Since you deal solely with your insurer, the claims process is quicker and you are paid out for losses almost immediately. There is also no need to go to court and sue the at-fault drivers for compensation, saving you time and the hassle of court proceedings.

Read on to learn how the no-fault system works for Ontario auto insurance and common questions drivers ask.

What Is No-Fault Insurance?

No-fault insurance in Ontario is a system outlining how claims are handled for car insurance by insurers, and simplifies the claims process for drivers involved in a collision. No-fault means that, regardless of who is at-fault for an accident, each driver’s insurer will handle their claim.

Prior to 1989, this was not the case. The system was introduced to offset the issue of growing liability costs - those making a claim often had to place multiple claims from an accident. 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 issues, such as fraud.

Common Misconceptions About No-Fault Insurance

Damaged rear bumper of a car on smartphone

Many Ontario drivers misunderstand what the term “no-fault” means and how it impacts their policy.

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

Misconception 2 : No one is to blame 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. Despite the misleading name, insurers will always investigate a claim to determine who was responsible according to the Fault Determination Rules. You may be found to be fully, partially, or share fault with the other driver.

As part of no-fault, your insurer will handle all aspects of the claim and reparations. They will :

  • Handle your claim : You only deal with your provider.
  • 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.

What Are The Benefits Of No-Fault Insurance?

Here are some of the main benefits of the no-fault system for Ontario drivers :

  • Compensation : All parties involved in an accident are entitled to compensation for damages and injuries.
  • Payment : Payouts happen immediately through your insurer.
  • Process : You deal directly with your coverage provider 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 on their premium.

What Is Covered Under No-Fault Insurance?

Driver making a phone call after an accident

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

  • Accident benefits : You receive health care and rehabilitation expenses 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.

Whether you are found to be at-fault or not for an accident, your insurer will pay out the claim. You deal directly with your provider for all accident claim payments.


No-Fault Insurance FAQs

Here are some more questions and with answers related no-fault coverage :

No-fault means you deal with your insurer for claims matters if you have been involved in a car accident.

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

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 policy.
All drivers in Ontario, regardless of the insurer or policy are subject to the same no-fault rules.

Other than Ontario, there are four additional provinces that have a the system in place, including :

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

Alberta uses a variation of the no-fault system. Drivers get compensation from their own insurers, but only moderate amounts. Other provinces in Canada have some form of no-fault, but how works varies by each province.

Here Are Some Other Articles You May Be Interested In

Average Car Insurance In Ontario By Month, Age And Gender
How Are Ontario Car Insurance Rates Determined?
Car Accident Reporting And What Do After You've Been In An Accident
A Guide To The Ontario Graduated Driver's Licensing System
What Are The Cheapest Cars To Insure?

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