How The No-Fault Principle Vehicle Insurance Works

No-fault principle vehicle insurance refers to insurance contracts under which the insured is indemnified for loss by his or her company without establishing who was at fault first. The main aim of this insurance is to reduce the cost of premiums by eliminating the litigation process over the cause of the accident. By introducing an aspect of simplicity motorists can be assured of receiving quick payments for injuries.

As you will realize, this type of insurance does not promise the involved parties, absolute justice as would be the case if they were defendants and plaintiffs in a common law practice. It provides average justice for everyone in motor vehicle accidents. The speedy justice is advantageous especially if you consider the economical angle.

However, it should be noted that the no fault principle does not prevent the victims of vehicle accidents from seeking legal action in a bid to recover extra amounts from the defendant. The ability to sue is generally influenced by the province as well as other conditions. In order for such actions to be fruitful there are certain conditions regarding the case which must be fulfilled. Among other conditions, death, disfigurement and monetary thresholds are the main considerations. In some provinces, you can only sue for economic loss and not pain or suffering.

Although, it helps eliminate delays, when this principle was introduced in some parts of Canada such as Saskatchewan, it was not because of delays but the low percentage of vehicle owners who carried liability insurance covers at the time.

Before you go for this type of insurance cover, there are certain things you should have in mind. First, you should realize that the term no-fault does not mean that you will never be at fault when an accident occurs. Insurance companies have to find someone at-fault fully or partly whenever an accident occurs.

Another thing you should realize is that when you are found at-fault after the accident has occurred, it is added to your insurance record. The direct effect is increased policy costs as you are now considered a higher risk.

One good thing about no-fault principle vehicle insurance is that the rules are standard when it comes to assigning within a province hence all insurers have to abide by the set standards. The criteria however differ with different provinces. For instance a driver who rear-ends another car on an icy road in Ontario is at fault since Ontario fault determination rules require drivers to take road conditions into consideration.

Finally, the percentage of fault is used to determine the amount of deductible that you have to pay. It is also important to note that although not all provinces have no-fault principle vehicle insurance, all provinces have a degree of no-fault accident benefits coverage. This means compensation for the driver, passengers and pedestrians injured or killed in the accident. Such compensation covers rehabilitation and medical expenses, loss of income due to disability, funeral expenses and death. With this information in mind, you will not longer be confused by the principle behind this type of insurance.


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