No-Fault Insurance And How It Works In Ontario

No-fault insurance (also known as the Ontario Motorist Protection Plan) is a system that outlines how insurers handle claims and simplifies the 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.

Ontario has a no-fault system to help determine fault in automobile accidents. If you are injured or your vehicle is damaged, you will deal directly with your provider regardless of who is at fault. With the latest changes to DCPD, it’s important to understand how your insurer and the other driver involved will come to a settlement.

In a no-fault system, your insurance company provides full medical and rehabilitation benefits (SABS), as well as income replacement and other benefits based on the severity of your injuries. This model eliminates financial compensation for pain and suffering.

The main advantages of driving under a no-fault system are that your claim is usually resolved more quickly, resulting in receiving compensation sooner, and you only communicate with one insurance company: your own.

The term applies to the process of how each person will handle their claim. Someone will always be fully or partially to blame, and it is the insurer’s responsibility to determine each person’s risk to determine how policies will be impacted.

This happens when each driver takes a percentage of the fault – known as Fault Determination Rules. Insurers will use these guidelines when examining a scenario by referencing the rules and fault to each party involved with the factual circumstances of the event.

Let’s say you were involved in an accident with a distracted driver – your coverage compensates you for the repairs, then requests a claim in the same amount from the driver who caused the accident.

If the policy covers damage caused by the accident, the fault will not affect the eventual payout of the claim, and depending on who is at-fault, their insurance may increase.

This system did not exist prior to 1989. It was introduced to offset the issue of growing liability costs—those making an insurance claim often had to file multiple claims from an accident. This caused issues with drivers, small municipalities, and charities.

In September 1989, following extensive research and consultation, the government announced its intention to introduce no-fault insurance, which came into effect on June 22, 1990. Over the years, various system reforms have been introduced to address new issues, such as insurance fraud.

No-fault benefits drivers mainly because it simplifies and speeds up the process of submitting claims. Here are some of the other 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 insurance company.
• Claims: The process is quick. You don’t have to wait for a fault determination to be made 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 next car insurance quote.

Despite the system's benefits, some drivers oppose no-fault, claiming that it protects hazardous drivers because the injured person’s insurer must pay for repairs even though the driver was not accountable.

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.
• Protection from uninsured drivers: You receive compensation when involved in an accident with an uninsured motorist.

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

If you are deemed to be at fault and you have collision coverage, you’ll have to pay the deductible to repair damage to your automobile before your provider pays. Your insurance will likely increase unless you have extra protection, such as accident forgiveness. It will also stay on your driving record for up to six years. If you are not at fault, you will likely not see any increase in your policy cost.