• auto insurance coverage

Dealers Voice: A Look at Ontario’s Auto Insurance System

in Ontario known as no-fault insurance

Cliff Lafreniere By: Cliff Lafreniere March 11, 2020
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Many drivers don’t know the full details of their auto insurance coverage or how it works until they have an accident.

Today, I would like to provide an overview of the current insurance system in Ontario (known as no-fault). No-fault insurance has its supporters and detractors, and I am not advocating for either side.

In 1990, the provincial government introduced the no-fault insurance system for automobile collisions. This was to speed up the claims process and prevent injured people from suing motorists who caused their accidents.

The no-fault system was a more efficient method of dealing with the increasing number of auto accidents and the sharp increase in auto insurance premiums, prior to 1990.

Since then, various governments have introduced changes to no-fault insurance in an attempt to make it fairer for insurance providers and insured motorists.

The name “no-fault” insurance implies that nobody is at fault when an accident occurs. But that’s not true. The term means that when an accident happens, each party involved reports the accident to their own insurance company, regardless of who is at fault.

A motorist’s insurance company will pay for the damages and entitled benefits, even if the accident was the fault of the other driver. If you are entirely at fault, your insurance company will pay for your damages and entitled benefits, and you will likely be subjected to an increase in future premiums.

To determine who is at fault or responsible for the purposes of direct compensation and property damage, insurance companies will often refer to the Ontario Fault Determination Rules. These rules apply to most collision scenarios, regardless of weather conditions, point of impact on the vehicle or the involvement of pedestrians.

The circumstances of an accident could show that more than one driver was negligent. If so, each insurance company could get involved in the settlement, depending on the degree of responsibility attributed to each driver. In cases where a dispute arises about responsibility, the courts may be called upon to intervene.

Under the current insurance system, accident victims can still sue a driver who caused an accident. This is known as a “tort” action, and in certain situations, accident victims could sue for non-economic losses, in addition to any damages or benefits that their insurance provider paid out.

One of the big differences between the tort system and current insurance is that the latter does not cover non-economic losses, which include items such as pain and suffering, and emotional distress.

Unlike in the tort-based system prior to 1990, nobody except the most severely injured receives pain-and-suffering compensation under the current no-fault system.

For motorists involved in an automobile accident, it’s critical that they report the accident to their insurance company as soon as possible (and to the police if the damages exceed $2,000 for both vehicles). Failure to notify your insurance company could result in losing some benefits and any monetary damages that you are entitled to.

Anyone injured in an automobile accident in Ontario is entitled to benefits from their insurance company, regardless of who was at fault. The Ontario Insurance Act stipulates that accident benefits coverages are mandatory for all auto insurance policies.

Under the current insurance system, motorists involved in an auto accident may qualify for several types of accident benefits, regardless of who is at fault. These benefits are included in the following categories:

  • Medial / rehabilitative
  • Income replacement
  • Caregiver
  • Housekeeping / home maintenance
  • Attendant care
  • Funeral expenses and death benefits

Thirty years after it was introduced in Ontario, the current insurance system continues to evolve. For more information, visit the Insurance Bureau of Canada’s website (ibc.ca).

This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. Cliff Lafreniere is president of the Trillium Automobile Dealers Association and is president of Pinewood Park Motors (Ford) in Kirkland Lake. For information about automotive trends and careers, visit carsandjobs.com.

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