What is & What Does No-Fault Insurance Cover?

  • no-fault-accident

When you are dealing with car insurance claims, you may have come across the term ‘no-fault’ insurance. The insurance regulations in Ontario and many other provinces are based on this system. No fault simply means that in the event of an accident, the claim will be processed by your car insurer. The same process will be followed by the other party’s car insurance too.

All the insurers have to comply with the rules laid down for determining fault by the regulations by Insurance Act. This works as a benchmark for insurance companies. It helps in dealing with complicated claims procedure. It also ensures fairness in claim settlements. This is also vital to decide the type of property damage coverage applicable to each claim. As per the outcome of fault assessed, the insurance rates of the at-fault party may be changed to reflect the collision risk on the policy.

How Does No-fault Based Insurance Work

The insurance company needs to assess who is at fault as per the accident reports and claim. Sometimes two or more vehicles or drivers may be involved. The claims adjuster investigates and decides the fault percentage of each party involved in the accident. Either of the parties could be at fault wholly or partially. Based on the extent of how much each party was negligent, they will be assessed a fault percentage.

If one party is found wholly or more than 25% at fault, they may expect an increase in their car insurance premiums at renewal time. If both parties are equally found faulty they are assessed at 50% fault each. Both parties may expect their insurance premiums to go up.

How Do Insurance Companies Assess Fault Percentage

An accident is most commonly caused by someone’s negligence and does not occur suddenly.  When you file a claim, the insurance company tries to know the situation on the road at the time of the collision. The insurance claims adjuster is pretty experienced in recreating scenarios to imagine what could have been the cause of the collision. This investigation will lead to finding fault of one or both the parties and will be assigned a fault percentage.

If the collision circumstances were totally confusing and not practical then the lack of due diligence of each party will be assessed. If there are more than 2 parties involved in the collision, then the fault percentage could also have that many allocations. This may involve many insurance companies who assess the fault and each driver would be assessed a fault percentage.

What Are The Features Of No-Fault Based Insurance

The main advantage of no-fault insurance system is that when you are a victim of an accident, you do not have to pursue the other driver for a claim. Based on the information you provide and other evidence or witnesses, your insurer’s loss adjuster assess the fault percentage.

Advantages of No-fault Insurance

Deal with your own car insurer

You directly deal with your insurance company to claim for any damages to your car or injuries to you. The hassle of following up with a third party is avoided in this tort system. You could also stop worrying about how to convince the other insurer about your claim or even fight with them for your losses.

Simple claims process

In a no-fault insurance system, it does not matter who is the faulty person, you could still claim for the damages. It is a simple method and saves a lot of time.

Minimize lawsuits

The need to go through stressful and expensive lawsuits to recover for damages is minimal. There could be a lot of time and money saved by avoiding lawsuits. In some cases, there could be a lawsuit filed to claim compensation for non-economic damages such as suffering and pain.

Quicker claims settlement

The replacement of parts or repair of your vehicle will be done much quicker as your claim will be taken care of by your insurance provider. It is easier to deal with your insurer than some body’s insurer.

Apart from the many advantages, there is a negative aspect for this type of insurance system. It fosters irresponsible driving. There are many who agree that in no-fault insurance the at-fault party could become complacent. The effect of the accident claim on the faulty driver is reduced to an extent by the no-fault insurance system. This could foster a sense of negligence by the at fault party since they know that the injured victim’s insurance company will settle the claim.

What Can You Do If You Disagree With Claims Decision

Your insurance company studies all the aspects of the accident to determine fault when you file your claim. your claim is settled as per the outcome. It may be possible that you are not happy with the claims payout. You may feel that you deserve a better claim decision. The insurance companies based in Ontario have to follow a complaints protocol that could vary.

The following steps will help you to know what to do when not happy with the claims.

  1. Contact your insurance company: It is important to let your insurance company know that you are not happy with their decision and would like to file a formal complaint.
  2. Inform the Consumer Complaint Officer: If you don’t get any support from your insurer regarding the complaints protocol then you may contact the consumer complaint officer. This officer works for your insurance company and is responsible for managing your complaint. You may find a compiled list of these officers of various insurers on the FSCO website.
  3. Contact CEO or FSCO : If both the above steps have not helped you in your complaints process, you may directly contact FSCO. Or you may also inform the CEO of your insurance company about your complaint.
  4. Ombudsman: If none of the above steps have resolved your complaint you may follow this step. You may ask for the insurance company ‘s final decision in writing through the consumer complaint officer. That letter will guide you to an independent Ombudsman service to review your complaint and respond to your situation.

Resources:

https://www.ontario.ca/laws/regulation/900668

https://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_claims.aspx#benefit