What is No Fault Car Insurance?

No Fault Car Insurance Definition

A type of automobile insurance that requires your insurance company to pay your claim regardless of whether you or another driver is found partially or completely responsible for an accident. No fault car insurance makes it faster and easier to recover from an accident because you don’t have to wait to receive compensation for an accident while the insurance companies determine who is liable, nor do you have to wait to receive compensation from another driver’s insurance company if another driver caused your accident.

The insurance companies will then work together to resolve responsibility for claims payments after they determine which insurance company bears financial responsibility based on which driver caused the accident. Currently, no fault car insurance applies in Ontario, New Brunswick and Nova Scotia.

Example

One night while driving home from a party, after a traffic light turns green, Mike is driving the first car to enter the intersection. Suddenly, he is slammed into by a car running a red light through the cross street. Since Mike lives in Ontario, he has no fault insurance. Even though another driver caused the accident, Mike can file a claim with his auto insurer right away. He is able to get his car repaired immediately; he doesn’t have to file a claim with the other driver’s insurance company, which is a good thing since the driver fled the scene and hasn’t yet been identified.

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Tips From First Foundation (That's Us)

Even if you have no-fault insurance, you can still be held responsible for an accident by the police and/or your insurance company. Insurance companies follow predetermined guidelines or regulations to decide who is at fault in an accident and who will bear the increase in insurance premiums that accompanies being found at fault (unless your insurance company offers forgiveness for a first accident or after six years without an accident). Your insurer could consider you not at fault, totally at fault or partially at fault. Certain rules apply across the board for common accident situations, and insurers follow these rules without regard to road conditions, weather conditions, visibility, point of vehicle impact or pedestrian activity. For example, if you rear end another car, your insurance company will most likely consider you at fault.

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Last updated Oct 29, 2018