Understanding no fault insurance

When it comes to insurance, what does ‘no fault’ really mean? For consumers, it means confusion and misunderstanding. The insurance industry’s adoption of this term was a big blunder. It’s misleading, since ‘no fault’ is not the same as ‘without fault’.

If you are injured or your car is damaged in an accident, you will deal with your own insurer regardless of who’s at fault for the accident. So if party A was at fault, you, party B, don’t have to go after party A’s insurance company for compensation. You will deal with your own insurer, who will pay you for the loss or damage.

That’s all ‘no fault’ means. However, the term ‘no fault’ has had a regrettable effect. Some consumers believe that any notion of ‘fault’ in an accident has been eliminated. Nothing could be further from the truth.

Let’s take this issue to the next stage. You have been injured in an accident in which you were the driver. Who pays your accident benefits? Does it matter who was at fault?

Law requires fault
You will receive accident benefits from your own insurer regardless of whether you were at fault or not. Your auto insurer will pay benefits to you as the drir, as well as to anyone injured while in your vehicle-regardless of whether or not they have their own automobile policy.

But someone must still be judged at fault, either completely or partially. The law requires it. There are ‘fault determination’ rules incorporated in the provincial Insurance Acts. These rules are intended to help insurance companies deal with accident claims expeditiously.

The extent of your ‘fault’ according to these regulations will determine the amount of the deductible you will have to pay. So, if you’re 50 per cent at fault, you’ll pay 50 per cent of the deductible on whichever policy pays for the damages.

And your ‘fault’, even if it is only 20 per cent, will almost certainly result in an increase in your premiums come your next renewal.