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.
When you buy car insurance in most provinces, you've automatically opted 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 a 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.
Your questions about no-fault car insurance, answered.
What are the pros of no-fault auto insurance?
The system was designed to help make insurance more affordable and simplify the insurance claims process for car accidents. Other pros include:
- Lowered costs. Pure no-fault systems cut out the costs associated with taking at-fault drivers to court for damages.
- Less hassle. With no-fault insurance, you don’t have to chase the other driver or their insurance company for compensation.
- Faster processing. 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.
- Accident benefits. All parties involved in an accident are entitled to compensation for injuries, even if you are entirely at fault for an accident.
What are the cons of no-fault auto insurance?
Some of the downsides 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 regulatory system is the fact that the insurance company of the injured party still has to pay 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.
Which provinces offer no-fault insurance?
The following provinces have a no-fault insurance system in place: Ontario, Quebec, Manitoba, Alberta, Nova Scotia, Saskatchewan and Prince Edward Island.
British Columbia currently follows a tort system but is transitioning to a no-fault model by May 2021.
Manitoba and Quebec are the only provinces to operate under a pure no-fault system. That means drivers are never allowed to sue for pain and suffering or for financial losses.
Who pays the deductible with a no-fault insurance policy?
A deductible is the amount of money that you must pay out of pocket before your insurance company will pay your benefit.
Different rules apply depending on how fault is allocated.
If it’s determined you are 100% not at-fault, you do not have to pay the deductible.
If you’re found 100% at fault, you will have to pay your insurance policy’s deductible.
But more frequently, the fault is shared. If you are deemed 50% at fault, you are only responsible for paying 50% of your deductible.
If you’re the victim of a hit and run collision and you can’t identify the driver, you are responsible for paying for the damage — assuming you don’t have uninsured driver insurance, which will cover you in this instance.
If you are able to identify the driver, the Direct Compensation Property Damage portion of your insurance policy will likely cover the damage and won’t require you to pay a deductible.
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.
In Ontario for example, the Accident Benefits coverage is quite extensive and complicated. The extensive coverage brings additional cost, the complexity brings the lawyers back into play — and that is never cheap.
Do all insurance providers offer no-fault insurance quotes?
Insurance providers don’t provide quotes for no-fault insurance as it’s a system based on provincial regulations. The rules vary depending on which province you register your vehicle in. If you live in a province that operates under no-fault rules, it's automatically taken into account in the quotes you receive on LowestRates.ca.
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.