Learn more about no-fault auto insurance
No-fault car insurance isn't an insurance product you choose to buy. It’s a term that describes the regulatory regime around auto insurance in your province.
In no-fault provinces, you're automatically enrolled into a no-fault policy. You can’t opt-out.
Under a no-fault car insurance system, drivers get compensation from their insurance company regardless of whether they caused the car accident.
If you live in one of the provinces that currently operates under a no-fault car insurance system, the quotes you see on our site will automatically factor that into the displayed prices.
That said, some provinces, like Saskatchewan, let you opt-out of the no-fault system and allow drivers to buy at-fault insurance, which gives you enhanced abilities to sue for damages.
Read on to learn more about no-fault auto insurance.
The pros and cons of no-fault insurance
The system was designed to help make insurance more affordable and simplify the insurance claims process for car accidents. Other pros include:
- Faster processing of claims. You deal directly with your insurance company for claims and insurance payouts happen immediately through your insurer. You also don’t have to wait for a fault determination to be made in order to get compensated. It also saves insures money, too.
- Accident benefits. All parties involved in an accident are entitled to compensation for injuries, even if you are entirely at fault for an accident.
- Less hassle. With no-fault insurance, you don’t have to chase the other driver or their insurance company for compensation.
- Savings. Pure no-fault systems cut out the costs associated with taking at-fault drivers to court for damages. Partial no-fault regimes have thresholds that you must pass before you can sue for excess damages, which helps reduce costs for consumers and providers.
Some of the cons of the no-fault system include:
- Limited right to sue. A pure no-fault system essentially takes away an individual's right to sue at-fault drivers if they are convicted of a criminal offence linked to the accident, such as impaired driving cases. There may also be limits to the amount of compensation paid out to accident victims.
- Perceived injustice. Some believe that no-fault insurance protects bad drivers, seeing as some provinces have banned legal action against negligent drivers. Another contested aspect of the no-fault system is that the insurance company of the injured party still pays out a claim, rather than the at-fault party’s insurance company taking full responsibility.
- Fraud. Fraudulent auto insurance activity, such as staged collisions, are a big concern — not only for insurance companies, but for drivers as well. Insurers say fraudulent claims have played a significant role in the increase of auto insurance prices over the last decade.
Your questions about no-fault car insurance, answered.
Who pays the deductible with a no-fault insurance policy?
A deductible is an amount that the policyholder is responsible for paying toward a loss.
Is no-fault insurance more expensive than other auto insurance policies?
It depends. In a full-tort regime, car insurance can be more expensive because you’re paying for legal costs, which can run high due to lengthy court battles.
This can also be true for provinces with hybrid systems that still allow you to sue the other party — it’s not cheap to get lawyers involved.
Since prohibiting the ability to sue for damages, Quebec and B.C. have drastically reduced auto insurance costs for the average driver. Meanwhile, Ontario drivers retain the right to sue but now also have the highest premiums in the country.
Do all insurance providers offer no-fault insurance quotes?
If you live in a province with a no-fault insurance system, all car insurance quotes are automatically no-fault quotes.
About the Author
Alexandra Bosanac is the Core Content Manager for LowestRates.ca. Her reporting has appeared in Canadian Business, the Toronto Star, the National Post, and the CBC.