No-Fault Insurance and Collisions: What It Really Means to You

  • No-fault insurance doesn’t mean nobody is to blame for a collision.
  • No-fault insurance is largely about how insurance claims are paid out.

Whoever came up with the name “no-fault insurance” really hasn’t done drivers any favours. It’s misleading to the majority of people who don’t work in the auto insurance industry.

One of the most common auto insurance myths is that no one is to blame for a collision under a no-fault insurance system. That couldn’t be further from the truth. Someone is always to blame for an accident.

No-fault doesn’t mean no one is at fault for a collision

The truth about no-fault insurance is that it’s about how a car insurance claim is paid out:

“[With no-fault insurance] you get compensation from your own insurance company in the event of an accident,” says Anne Marie Thomas, our resident insurance expert, in an interview with the Globe and Mail last year. “Before no-fault, [if I caused a collision] you would have to fight my insurance company to get your claim paid, and you, as an innocent driver, would be out of pocket while you were waiting for it all to get sorted.”

No-fault insurance is meant to make your claims process easier and quicker. It generally cuts out the high cost of lengthy legal battles that uses up time and resources. That said, some provinces with a no-fault system still allow lawsuits for pain and suffering to occur, as well as lawsuits for financial losses that exceed the upper limits of no-fault benefits.

Ontario, Quebec, Nova Scotia, New Brunswick, and PEI are examples of provinces with no-fault auto insurance, and Alberta is currently considering moving away from its tort-based model.

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Fault determination rules for collisions

Someone is always at fault. Accidents aren't really "accidents" they're collisions, and they don't just happen. Someone will be blamed, and sometimes there's more than enough blame to go around. Fault for a crash can be placed wholly on one driver or split up amongst several drivers, so the responsibility is shared.

From an insurance standpoint, determining fault for a collision isn’t in the hands of the police. It’s not even, really, in the hands of the insurance adjuster. There are rules in place that determine fault – that are basically universal -- so this part of the collision aftermath has already largely been looked after. All that really needs to be done (by the insurance adjuster) is to determine what type of collision happened.

For example, if you rear-ended another vehicle, the fault determination is clear: you are 100% at fault for causing the collision. It does not matter if the person ahead of you suddenly stopped or if the weather factored into your inability to stop in a safe and timely manner. It’s expected that your following distance from the vehicle in front of you will allow for enough space and time to brake safely to avoid a crash. If it doesn’t, and you rear-end the vehicle ahead of you, then you were either too close or not paying attention.

Ontario's at-fault rules (officially called Fault Determination Rules) detail more than 40 different collision scenarios -- with images -- to help ensure all drivers are treated the same. There are rules for vehicles travelling in the same direction, opposite direction, at intersections, parking lots, as well as other scenarios that are not easily grouped together.

If you don't agree with your insurance company's determination of the collision, you can file a complaint with your insurance company and ask for reconsideration. If you're still unsatisfied, you can take it a step further with the General Insurance OmbudService (GIO).

The GIO is an independent dispute resolution service whose “mission is to provide consumers of car, home and business insurance in Canada with a cost-free, independent and impartial process to resolve their complaints.” Legal action is also an option.

How fault affects what you pay

If your insurance company determines you had a hand in causing the crash, and you have collision coverage (which you may not because it’s optional), you may have to pay part or all of the deductible to repair damages to your automobile. The amount of deductible you pay will often mirror your degree of fault for the collision.

Then there’s the matter of your auto insurance premium. Unless your policy includes the accident forgiveness endorsement, an at-fault collision can be a costly mistake. It takes about six years for a collision to no longer factor into the premium you pay.

The truth about no-fault insurance, collisions, and your car insurance premium

No-fault insurance still means you can be found at fault for causing a collision, so drive safely and responsibly every time you get behind the wheel. Your driving record and insurance history factor heavily into the auto insurance rate you pay. If you’ve been involved in an at-fault collision, the good news is a collision won't follow you forever. Until the collision clears off your record, the best way to lower your auto insurance rates is to shop around. It’s the only way to know for certain that you have the lowest auto insurance rate possible.