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Find out what you’re covered for with no-fault insurance, how it influences the premiums you pay, and what to do if you get into an accident.
No-fault insurance is more about the insurance claims process than dismissing blame. To put it simply, it’s designed to save you from dragging your feet to a lawyer’s office or provincial court to deal with a suit or claim after a car accident or collision. With no-fault insurance, you only ever work with your own insurance company, so you can get on with your life sooner.
No-fault insurance ensures that claim disputes are handled by insurance companies—not the court system. For example, if your car is damaged by a distracted driver, your insurance provider compensates you for repairs; it then requests a claim in the same amount from the accident-causing driver and their insurance company.
No-fault replaces an at-fault, or tort-based, system. The dominant type of insurance in Canada before the no-fault system kicked in back in 1989, tort allowed drivers to sue over a smashed-up vehicle, damaged property or bodily harm stemming from a collision. With a no-fault car accident claim, your insurer doles out coverage, regardless of who is at fault. There’s no need to get your lawyers involved.
No-fault insurance benefits consumers by eliminating some of the costs involved in settling claim disputes. This, in turn, helps lower your premiums.
The province of B.C. serves as an example of the savings that come from implementing a no-fault system. The Insurance Corporation of British Columbia (ICBC), which administers auto insurance in B.C, introduced no-fault insurance in May 2021. The province has held the position for having the most expensive auto insurance in Canada, but with the change to no-fault, B.C. drivers are expected to save 20% on average (or roughly $400 annually), on insurance premiums.
A tort-based system still exists in Saskatchewan and Alberta. Saskatchewan is mostly a no-fault insurance province; however, drivers can choose to purchase auto insurance with the option of tort, allowing them to sue for “pain and suffering” and financial losses beyond what’s included in their no-fault benefits. Similarly, in Alberta, drivers can sue for financial losses that exceed what’s included in their no-fault coverage.
Despite the benefits, no-fault insurance policies do have their limitations.
When your ride has been damaged by anything other than a collision—for example, a falling tree branch, theft or graffiti—you’ll need to have comprehensive coverage to be insured. Similarly, no-fault insurance doesn’t pitch in when you’re involved in a hit-and-run. This is when collision coverage works for you. Both types of coverage are optional and will cost you more in premiums, but they can save you from major and unexpected expenses down the road.
In Canada, it is legally mandated that you have a certain amount of auto insurance before you can drive. And since no-fault coverage is included in basic auto insurance policies in most Canadian provinces, it’s fair to say that it, too, is mandatory.
However, auto insurance rules vary from one province to another. For example, in Quebec, injury claims are processed through the province’s publicly-run insurance body, while car and property damage is managed by private insurers. Also, drivers in Alberta and Saskatchewan can still sue for damages in certain situations, even though no-fault insurance exists in those provinces.
For reference, the Insurance Bureau of Canada (IBC) has compiled a guide that includes a cross-country snapshot of mandatory auto insurance coverages.
While the ins and outs of no-fault insurance differ from one province to the next, the types of information used for fault-determination are pretty standard, no matter where you live. These include: police reports, files from insurance estimators and adjusters, and even past court decisions based on similar accidents.
For insurance claims, it’s important to note that insurance companies determine fault, not the court systems nor the police. What comes into play are driving regulations and fault-determination rules for your province—there are detailed playbooks covering nearly every conceivable accident scenario. And it’s possible to be considered 50% or even 25% at fault—say, if both drivers committed errors that led to the crash.
There are go-to steps to take whenever you are in an accident, whether it’s your fault, someone else’s fault or a hit-and-run. We recommend you keep a copy of the IBC’s accident report form handy in your glove compartment. It contains important advice, such as:
Once you’ve filed a claim, a claims adjuster—an insurance agent tasked with evaluating a claim—will step in and review your file. They will either meet with you in person, or handle the claims process over the phone an/or email. They may ask you to fill out a proof of loss form, which is a sworn statement verifying your claim. It will require you to log all of the details surrounding the damage, the expected cost to repair or replace your car and, if applicable, its contents and your property as well.
Remain patient after making a claim, because the process can take a while. The adjuster needs time to determine how much coverage you are entitled to based on your policy and who is at fault in an accident. Finally, don’t be afraid to ask questions, so you can clearly understand your rights and the benefits you are entitled to under your policy.
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The system we have is bad. My accident was 9.5 years ago. Not my fault. I still have no money.
The insurance companies now use a formula to calculate what they are prepared to pay. My case was estimated by 6 law firms at up to 2 million. I picked the wrong lawyer. He put in for 1.3 mill and the offer was 46,000. Less than my medical bills. I provided all of the research and documents. He forgot to put in for my loss income. 24,000 a month, and for many of my injuries including the more serious ones. Lawyers do the least amount of work for the most money to them. I had work injuries, but worked for 32 years after at my same job. I was given 209,000 immediately, with no lawyer. If insurance companies did not have to pay lawyers 35% plus costs which they make up, the victim could be paid a reasonable amount. Lawyers have killed their golden goose so I can not feel sorry for them. And which the other system was in place 9.5 years ago when I could have used it.