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.
In no-fault provinces, you're automatically enrolled 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 the 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.
What is no-fault insurance?
No-fault insurance describes a type of insurance system where drivers are compensated by their respective insurance companies. Drivers involved in an accident are required to file a claim for their own bodily injury and medical expenses, even if they're not the ones who caused the accident.
Negligent drivers are held accountable under a no-fault system. If you're found to be responsible for causing an accident, the ruling goes on your record, and your insurer will likely raise your premium.
No-fault insurance varies from province to province, so it’s important to be aware of the rules where you live. In provinces like Ontario, drivers have the right to sue another driver for loss of income, out-of-pocket expenses, pain and suffering, and more. But there are restrictions around who can sue and for how much. In other no-fault systems, drivers don't have the right to sue at all (Quebec, for example).
The opposite of no-fault is full-tort. Under a tort system, you must file a civil suit for damages. The court determines if there is negligence (fault) and awards the appropriate judgment.
How does no-fault car insurance work?
In a pure no-fault system, your insurance company fixes your car, and the other party’s insurance fixes theirs. Each person’s respective insurance company handles their claim.
No-fault insurance aims to reduce lawsuits, which can slow down the reimbursement process.
Using the no-fault insurance system doesn’t mean you can’t be found at fault for an accident. In the vast majority of collisions, all parties involved are found to be partially at fault, which means they share at least 50% of the blame with the other driver. Your insurer uses fault determination rules to decide who is responsible for an accident.
If you’re found at fault, the verdict goes on your record and your premiums could go up.
If you weren’t at fault, your rates will not increase (but if even they do, it won’t be as much as if you were at fault) and your insurance company will pay for your car’s damage.
Is no-fault insurance the same across all provinces?
Only one province in Canada — Quebec — has a pure no-fault car insurance system. Ontario, Manitoba, Saskatchewan, and B.C. have partial no-fault insurance regimes, and there are variations in how each one implements it.
If you were to plot insurance systems on a spectrum, no-fault would be on one end, and tort-based ones would be on the opposite end. In no-fault systems, insurance companies pay benefits to the policyholder, regardless of whether they caused the accident. Drivers with no-fault insurance are not allowed to sue for damages, either. With tort insurance, drivers must sue each other for compensation.
Alberta, the Atlantic and Maritime provinces, and the territories are not historically considered no-fault regions as they have many aspects of a tort system.
In legal terms, a tort is a civil wrong that you can be held accountable in civil court. For auto insurance, this means an injured person has a lot of latitude to sue the person responsible for damages in excess of their standard auto insurance policy.
However, Alberta and Newfoundland and Labrador have recently adopted one aspect that’s traditionally associated with no-fault systems: direct compensation property damage (DCPD). With this coverage, your insurance company pays to repair or replace your car when you aren’t at-fault for an accident (or even partially not at-fault). In a tort system, the injured party has to sue the at-fault driver for compensation. However, this coverage is now part of all standard auto insurance policies in no-fault provinces, and now in Alberta and Newfoundland as well.
It is expected to help lower the cost of insurance for drivers in these provinces.
How does no-fault insurance work in Ontario?
When you report an accident to your insurer, they’re required to use the Ontario government’s fault determination rules to figure out who caused the accident. These rules outline more than 40 common accident scenarios, using diagrams to depict almost every possible road collision situation. Each accident scenario corresponds with a liability percentage, which is assigned to each driver. The insurance company for each party investigates the circumstances of the accident and determines the degree of fault to be assigned to each driver. This determines which property damage coverages apply.
If you’re found more than 25% at fault for the accident, it’s likely your premium will go up on renewal. Ontario’s no-fault system covers damage to vehicles, injuries and even death. In more severe cases (which include negligence, impaired driving and drag racing), drivers can sue each other for damages.
How does no-fault insurance work in Quebec?
No-fault insurance in Quebec is unique because the public insurance plan, Société de l’assurance automobile du Québec (SAAQ), only applies to bodily injury. SAAQ compensates anyone injured in a car accident in Quebec, whether you’re responsible for the accident or not. Third-party liability insurance covers property damage and can be purchased from private insurance companies. If you’re at fault, damage to your vehicle will only be covered if your policy includes collision coverage, and you will have to pay the deductible. If you’re not at fault, damage to your vehicle will be covered, and you won’t have to pay the deductible.
Under Quebec’s no-fault insurance system, you cannot sue the at-fault driver responsible for an accident. However, at-fault drivers can face charges in the criminal system.
How does no-fault insurance work in Manitoba?
Manitoba operates under a pure no-fault system. Manitoba Public Insurance (MPI) pays for the accident benefit claims of those injured in collisions, regardless of who's at fault in the accident.
Mandatory third-party liability coverage protects an insured Manitoba driver in the event someone is killed, injured or suffers property damage because of the driver’s negligence resulting in a collision. Like Quebec, victims in Manitoba don’t have the right to sue for pain and suffering and financial losses that exceed the no-fault benefits provided by MPI.
How does no-fault insurance work in Saskatchewan?
Saskatchewan is an outlier because it has dual insurance systems. Drivers here can opt into either the no-fault stream or the tort stream.
Under the no-fault scheme, you get broad coverage, but you agree to allow your ability to sue for damages to be limited.
Drivers are enrolled into the no-fault scheme automatically unless they fill out a declaration form that says they choose the tort option. With tort coverage, you get less comprehensive accident benefits, but you can sue for additional damages only if you’re not responsible for the collision.
Regardless of which stream you choose, drivers must carry a minimum of $200,000 worth of third-party liability insurance.
How does no-fault insurance work in British Columbia?
B.C. operates under a hybrid of the tort and no-fault systems. Under the current insurance system, drivers can take legal action against the at-fault party to recover damages. However, the accident benefits portion of the claim follows the no-fault structure. This means the injured person can receive coverage from their insurance policy (the basic plan required by law), regardless of who's at fault.
As of May 2021, the new system — Enhanced Care Coverage — will see claimants deal directly with the Insurance Corporation of British Columbia (ICBC).
Drivers will receive compensation, benefits and medical treatment reimbursement directly from ICBC. This cuts out lawyers, legal costs and expensive judgements from the system. Like Ontario, certain cases involving dangerous drivers could still end up in court.
How fault is determined in a no-fault system
Insurance providers rely on fault determination rules, which are documented under the respective province’s Insurance Act (every province and territory has one of these).
The fault rules outline numerous different collision scenarios. The scenarios assign fault percentages to each driver involved. Fault can be shared among multiple parties, which is why you can be found 0%, 45%, 50%, 75%, or 100% at fault.
If you’re found to be 50-100% at fault, it will affect your insurance premium (i.e., it will go up at renewal).
If you’re 100% not responsible for causing an accident and you live in a province that has mandatory direct compensation property damage (DCPD) insurance, your insurance company will cover 100% of the cost to repair or replace your car.
DCPD coverage is meant to help drivers who were not at fault for causing an accident and is a feature of standard car insurance policies in most no-fault provinces (it is known as Basic Vehicle Damage in B.C.). However, there are many scenarios in which blame is shared among multiple parties. Even then, you’ll still be able to access some of your DCPD benefits.
Say you’re at fault for more than 50%, but less than 100%, of a collision. In that case, DCPD will help with the portion for which you’re not at fault.
Therefore, you will receive 50% of your DCPD benefit, less any deductible, for being 50% at fault.
As for the remainder? If you don’t have collision insurance, you’ll have to pay for the rest out of pocket. (Manitoba is the exception, as collision insurance is included in a standard policy.)
Claims adjusters from each driver’s insurance company are tasked with gathering facts and evidence about the collision, interpreting the fault rules, and evaluating and settling claims.
Accepted forms of evidence include collision centre reports, accounts from police, drivers, and independent witnesses, and dashcams. In Ontario, insurance adjusters don’t have to take weather or road conditions, visibility, or the actions of pedestrians into consideration to determine fault.
If a collision doesn’t fit one of the scenarios covered in the Act, then insurance providers rely on car accident case law to determine fault (but this rarely happens).
If you were at fault for an accident because you were driving while impaired, your insurance company may sue you to recover the amount they paid you. With some policies, being drunk or high at the time of a collision voids your coverage.
What to do immediately after an accident
First, stay at the scene of the collision and call the police. Depending on the location and severity of the incident, police will either come to the scene or direct you to the nearest collision reporting centre to file a report and start insurance paperwork. Regardless of who is at fault, you should report any collision that involves injury or property damage to your insurance company within seven days.
Before moving your car, take photos of your vehicle to pass on to your insurer. You should also take note of details such as the date and time, weather and road conditions, how fast you were driving and the details of how the accident occurred while your memory is fresh.
