Basics Of No-Fault Car Insurance In Ontario
Basics Of No-Fault Car Insurance In Ontario
Imagine this scenario: While sitting at a traffic light, waiting for the right of way, another motorist rear-ends your vehicle. Clearly, she is at fault. Yet the police officer who arrives on the scene deems that "nobody is at fault." How is this possible? What does the officer mean? And more importantly, how can you seek compensation for damage to your vehicle and costs related to your injuries?
The answers to these and other questions about no-fault car insurance will become clearer below. Many consumers are understandably confused about this form of insurance, and how it affects their coverage. Further confusing the matter, each province handles it differently. For example, Saskatchewan allows drivers to choose between a full tort system and a no-fault system. Manitoba, on the other hand, maintains a tort-free system (i.e. you cannot sue for compensation). The following discussion will focus exclusively on the no-fault system used in Ontario.
What "No-Fault" Auto Insurance Really Means
To be clear, someone is always at fault for an auto accident. The term "no-fault" refers to the manner in which compensation is handled by each driver's insurer. It differs from a tort-based insurance system, where an at-fault driver's insurance company compensates all parties involved for damages and injuries up to the insured's coverage limits. In a "no-fault" system, each driver is indemnified by his or her own insurance company. If you are involved in a collision, you would thus seek compensation from your insurer, regardless of who caused the accident.
Even though each driver looks to his or her own insurer for accident benefits, fault is still assigned. Insurance companies rely on Fault Determination Rules to determine who is partially or entirely at fault for a collision. The same set of rules is used by all insurers within Ontario, as defined in Regulation 668 under the Insurance Act. This ensures that fault is justly assigned by each insurance company based on the same criteria.
Assigning Fault For A "No-Fault" Collision: An Example
An example will help illustrate how fault is determined by your insurer following a car accident. Suppose you are traveling on a two-lane street, and collide with another driver headed in the opposite direction. If both you and the other driver are on the lane divider at the time of the collision, fault is divided equally between you (i.e. each party is 50 percent at fault).
Now, suppose your vehicle is within your own lane, and the other driver's vehicle is on the lane divider when the cars make contact. Here, the other motorist is deemed 100 percent at fault.
This is a simplistic example, but still effective for explaining how all insurance companies in Ontario based their decisions on the same Fault Determination Rules. The circumstances vary, of course, but the rules have been designed to accommodate all of them.
How Injuries Sustained By Your Passengers Are Addressed
Suppose you are driving with a passenger, and this person is injured as the result of a collision. In this case, your passenger would first seek compensation for expenses related to hospitalization, medications, and rehabilitation from his or her own auto insurer. If he or she lacks coverage, your car insurance company would provide recompense.
How Your Auto Insurance Premiums Are Affected
It is important to emphasize that your auto insurance rates may not necessarily rise after a collision, even though your insurer is forced to pay compensation. Any increase in your premiums will be based on whether you are found responsible - partially or fully - for the accident. Fault can be assigned on a scale between 0 percent and 100 percent.
Also, the percentage increase in your rates will reflect your past driving record. That is, if you cause an accident, but have maintained a clean driving record for the past six years, your premiums may rise minimally. On the other hand, if your driving record is littered with tickets, traffic violations, and past at-fault collisions, expect a significant rate increase.
If you live in Ontario, you'll be able to pursue further compensation in court (given some restrictions) if you feel it is warranted. The important thing is to ask insurance companies to explain how they handle at-fault collisions before you establish a policy. You'll find that some insurers offer far better terms than others.
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