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Fault Still Exists With No-Fault Car Insurance

By Kade Phillips

Republish: EasyPublish™ Published: 25Apr2011 Word count: 691 Viewed: 188 time(s) Get Free Content For Your Site

Suppose you are involved in a minor collision, and it is unclear who is to blame. The police officer who arrives on the scene declares that neither driver is at fault. Does this mean both drivers can simply leave the scene, and treat the event as if it never happened? Can they contact their respective auto insurers, and expect compensation without being concerned that their rates might increase?

These are common questions in a no-fault insurance environment. Many people remain confused about how the system works, how fault is assigned, and how compensation is handled. We'll cover these and other issues below.

Fundamentals Of No-Fault Auto Insurance

This form of insurance system is improperly named. Whenever an auto accident occurs, insurers assign fault, even in cases where a single driver is involved (e.g. driving into a ditch). Fault is usually assigned as a percentage, and may be split among several parties. Given this, what does "no-fault" actually mean?

Rather than the involved parties seeking compensation for injuries and property damage from the at-fault driver's insurance company, they do so through their own insurers. This is believed to be a more efficient process. Each driver gains quicker access to accident benefits, which can be used to pay for medical treatment and rehabilitation as well as auto repairs.

As noted earlier, this does not imply that all drivers involved in the accident are free of blame. Nor does it suggest each driver's car insurance rates will remain at the same level. These details are addressed by the province's fault determination rules.

Fault Determination Rules And Their Effect On Your Rates

In provinces that maintain a no-fault insurance system, there are clearly-defined rules that dictate where culpability lies. Each auto insurer in a given province adheres to the same set of rules, making fault determination simpler. These rules account for the most common scenarios, including circumstances surrounding each event.

For example, Ontario's fault determination rules describe a scenario in which two cars are traveling in the same direction, and in the same lane. One vehicle is struck from behind by the other. Here, the rules specify that if the first car is moving forward or stopped, the driver of the second car is 100 percent at fault. This conclusion may seem intuitive, but many situations are less clear. Fault determination rules spell out scenarios in order to eliminate ambiguity.

This helps insurance companies adjust at-fault motorists' rates. If you are involved in an accident caused by another driver, your rates should remain at their present level. The other driver's rates would likely increase to reflect the accident. If you're involved in an accident for which you and another driver share fault equally, both premiums would increase.

Filing A Lawsuit In A No-Fault Environment

Given how no-fault car insurance works, there seems to be no reason to sue at-fault parties for compensation for injuries and property damage. After all, drivers have quick access to accident benefits through their own insurers. The problem is, costs related to medical care, rehabilitation, and car and property repairs may exceed the accident benefits of the at-fault driver's coverage. When this is the case, filing a lawsuit may be warranted.

Not all provinces give drivers the right to sue, and when the right to do so is available, limits usually apply. Manitoba and Quebec each maintain a "pure" no-fault insurance environment, and thus do not allow drivers to sue for additional accident benefits. By contrast, British Columbia and Nunavut do allow it. Other provinces maintain limited no-fault systems, and allow motorists to sue as long as certain conditions are met.

The discussion thus far may appear to suggest that auto insurers work by the same rules, and therefore extend the same rates to all policyholders. In reality, premiums continue to vary across a wide range. For this reason, take the time to compare quotes from several insurers. Only then should you choose a company from which to purchase coverage.

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