How does no-fault insurance work in Ontario?

Don’t shy away from the claims process if you’ve never had to file one before. Understanding no-fault insurance in Ontario goes a long way toward explaining all of it. Claims are a big part of owning a car insurance policy in Ontario, after all.

Part of this fear comes from confusion around at-fault accident insurance increases in Ontario. One cause of much confusion is the fact that Ontario operates under a no-fault insurance system, and most drivers don’t understand exactly what that means.

Here’s what you need to know.


What is no-fault insurance?

There’s a great deal of confusion surrounding Ontario’s no-fault car insurance, and it’s no wonder: the term “no-fault” would seem to imply that in the event of a car accident, nobody is at fault. It sounds like a special add-on, but that’s not the case. It gets confused with accident forgiveness, which is actually a separate kind of optional car insurance coverage reserved for drivers with clean records. No-fault insurance is a legal mandate for insurance companies to pay out claims on time for any and all policies, where it’s appropriate.

Back in the 1980s, before no-fault insurance, when two vehicles were in an accident, the respective insurance companies would battle it out to determine who was at fault and who had to pay the claim. This was costly for Ontarians, and it  was aggravating for drivers who just wanted their claim paid. Imagine discovering that sore neck after a car accident needed full-blown medical rehabilitation only to hear that your insurance company was still unable to pay out several months later.



No-fault insurance changed all that. Now your insurance company will always take responsibility and pay for any covered damage and injuries to you, your car, and your passengers.  There is no question about who will pay the claim, allowing your insurance company to focus at the task at hand: getting you and your vehicle back on the road.

Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting.

The same applies to any injured passengers with accident benefits coverage: they go through their own insurance for coverage. In the case where a passenger doesn’t have insurance, he or she can use the insurance company of the driver involved. This is handy for secondary drivers, or if young drivers are in their mom’s car during a collision.


How insurance companies determine fault

Despite the misleading name of no-fault insurance in Ontario, insurance companies will always investigate after a collision to determine who was responsible and to what extent. To do this, all insurance companies use the Fault Determination Rules, which are regulations laid out by the province’s Insurance Act.

A driver involved in an accident can be found anywhere from zero to 100 percent at fault (responsible) for the accident. Just because another driver was involved in the accident doesn’t mean they will automatically be assigned responsibility.


Understanding at-fault accident insurance increases in Ontario

Insurance companies base their rates on the driving record and experience of vehicles’ drivers. Put simply, safe drivers get the lowest rates. If you’re found to be responsible for an accident, that hurts your driving record and may increase your rates.



An insurance company determines who is at-fault in an accident by using what’s called the Fault Determination Rules that are set out by the Province in the Insurance Act. These rules outline who is considered to be at-fault in almost every possible scenario.

Fault is very important from an insurance standpoint because it can impact your claim and your future rates. That’s how car insurance works in Ontario. For instance, if your insurance company deems you to be at fault for an accident, then you’ll likely have to pay the collision deductible. Rates may go up in proportion to the level of fault, especially if this isn’t your first at-fault accident.

If it is determined that you are not at-fault, then your base insurance rates will not increase (you might lose a “claims-free discount” if your insurer offered it, though). However, no matter who’s deemed at-fault, all insured parties are still eligible for compensation from their insurers.


The bottom line for no-fault and at-fault insurance increases

The system of no-fault insurance in Ontario doesn’t mean that you can’t be found responsible for a car accident, nor does it mean the police won’t charge those who have been found in violation of the law. However, what it does mean is that any time you’re involved in an accident, you and the other drivers will always process damage and injury claims through your own respective insurance providers.

That makes the process faster and easier and benefits everybody involved in a collision.

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