What is No-fault Auto Insurance?

The Insurance Bureau of Canada (IBC) offers guidelines and information about no-fault auto insurance policies.

What is No-Fault Auto Insurance?
In Canada, no-fault auto insurance is indemnity coverage for losses by an insured’s insurance company. No-fault liability provides a policyholder with guaranteed reimbursement of expenses after an accident no matter the designation of liability. While such policies restrict insured rights to recuperation of damage to tort litigation, criminal charges and conviction may be referenced by the courts.

Terms and Conditions to No-Faulty Policies
Exemption from individual culpability for bodily injury liability in an automobile accident is a key feature of no-fault insurance provision. Insureds receive the benefit of bodily injury coverage regardless of responsible party. This deviates from standard common law tort rules, which generally assign strict liability to tortious violations of the law. With no-fault insurance, drivers are able to avoid the more expensive detriments sustained during litigation of an accident case. This fact make no-fault auto insurance in hot demand. Assured coverage of injury and property loss is critical immediately following a road or highway accident.

How does it Work?
No-fault auto insurance coverage pays for stated losses. This may include some or all of the insured’s loss in an auto accident. Drivers carrying no-fault insurance are paid by their own insurer. The rationale for selecting no-fault insurance is particularly strong in Canada, where road accidents are commonly caused by weather and other elemental forces outside of driver control. For insured this means that collateral damages and personal injury are covered by their own insurer, without exception to negligence or liability found during investigation of the case. Replacement of finances disbursed to pay for medical and auto repair bills is generally faster with no-fault policies. Insured should check the terms and conditions to their policy to determine the exact rules to coverage and compensatory recuperation of losses.

Negligence Calculus
Most liability lawsuits require application of the negligence calculus. Once someone is deemed at fault in an auto accident, the court will review if the cost or risk of prevention outweighed the cost or risk of taking alternate action. Omission to act on repairs is a good example of how drivers can be cited as negligent, and therefore culpable in an auto accident. In traditional tort lawsuits where there is an injured party, the establishment of the degree of fault narrows duty to a standard of reasonable car in road conduct, as well as defines proportionality monies owed. Quebec and Ontario take a positivist, or civil law approach to this calculus with application of charts and rule indices to measure fault and responsibility to plaintiffs in direct compensation of property damage. Injury claims fall outside of this calculus, and are afforded review for unlimited compensation.

If a collision evidences one or more than one driver was negligent in the incident, a number of insurance companies may become involved to settle the case. This can take additional time and money, costing insured far more than would otherwise be attributed to a policy in premium payment. Not surprising, no-fault insurance policies retain their popularity. Direct response to losses from an auto accident can be painful. No-fault puts you in the drivers seat without delay.

Establishing Fault in Joint and Several Liability Claims
Court discovery of evidentiary proceedings addresses the fact to a case. Enforceability of insurance liability law references the terms and conditions to indemnity contract in an auto accident. When a court establishes strict, or joint and several liability for a road or highway accident, Canada’s negligence law support proportional assignment of faulty, and obligation to compensatory remedies. Proportionality of liability by parties involved in an auto accident can range from 0% to 100% on a continuum of identified cause. Insurance premiums may be impacted by this risk calculus. Multiple claims or consecutive claims normally result in higher insured premiums.

Pros and Cons of No-Fault Insurance
Drivers preferring no-fault auto insurance policies support the argument that road accidents are inevitable. Canada’s extensive network of rural roads and climatic conditions increase the chance that an accident will take place. Taking on a no-fault insurance policy also assumes risk in spite of no record of recklessness or negligence on a driver’s record. This shows substantial responsibility to maintaining a safe vehicle, and commitment to practicing proper driving conduct while on the road.

Criticism of no-fault auto insurance policies suggest that by not assigning due risk to negligent or reckless drivers, that insurance companies are defeating the purpose of offering coverage at all. Raised premiums, argue then, are no a high enough cost for reckless driving. Basically protecting unknown parties from the risk of legal settlement or payment of damages on a liability case, no-fault insurance policies do not do enough to deter dangerous conduct of irresponsible drivers.