two cars in an accident

What you need to know about No-fault Car Insurance.

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Contrary to its name, no-fault insurance does not mean that “no one is at fault” when you get into an accident. While the name might imply it’s about which driver is (or isn’t) at fault for an accident, the no-fault insurance system is about how a car insurance claim is paid out. This is a pretty common misconception. So, we thought it would be helpful to shed light on the topic of no-fault insurance and what it means to you and your car insurance policy.

What is no-fault insurance?

No-fault insurance is part of your insurance policy so that insurance companies, instead of the court system, battle it out with each other to settle claims. This means if your car was damaged in an accident, your insurance provider would directly give you coverage. Then it will request a claim in the same amount from the accident-causing driver and their insurance provider. With no-fault insurance, your insurance provider handles your claim instead of going through the lengthy and costly process of the court system and dealing with the other person’s insurance company. This is true regardless if the accident was your fault or someone else’s.

What is covered by no-fault insurance?

Four key components make up a no-fault insurance policy, and each offers coverage for various situations and needs.

  • When you cause an accident, third-party liability insurance covers the damage to a person’s car or property. It also covers any medical care, and funeral costs in the event of death.
  • When an uninsured or hit-and-run driver causes an accident, an uninsured motorist covers the damage to your car or property, medical care, and your funeral in the event of death.
  • Accident benefits coverage pays the medical bills, not provided by your provincial healthcare system, such as physiotherapy or an at-home care worker.
  • Direct compensation property damage (DCPD) automatically covers your repair bills after an accident. While not provided in all provinces, it is in Nova Scotia.

What is NOT covered by no-fault insurance?

No-fault insurance coverage does have some limitations. When your vehicle has been damaged by anything other than a collision, you’ll need protection with comprehensive coverage. This is helpful for damages such as a falling tree branch, theft or vandalism.

Similarly, no-fault insurance does not pitch in when you’ve had an accident with a hit-and-run driver. This is when collision coverage provides protection.  However, that along with comprehensive coverage, both are optional and will you cost more in premiums.

An insurance advisor can help you determine what mix of insurance coverages is right for you. For example, if you’re driving an old, low-value car, the cost and benefits of comprehensive coverage may not make sense.

How do I get no-fault insurance?

No-fault insurance is built into your regular insurance coverage in most provinces, including Nova Scotia. If you’re insured in a province that has adopted this system, you don’t need to speak to your insurance provider to add it to your policy. It automatically works this way. However, it is not the law in every province. Nova Scotia, Newfoundland, New Brunswick, Prince Edward Island, Ontario, and Quebec use a no-fault insurance system.

What are the benefits of no-fault insurance?

No-fault car insurance means lower administrative costs and a simplified claims process. With it, your claim can be typically resolved faster, and you’ll receive your payout. Plus, you only have to worry about claiming with your own insurance company to receive your payout, and they’ll take care of the rest.

If you’re wondering how your policy will protect you in the event of an accident or collision, connect with one of our insurance advisors. While you’re at it, why not ask if you qualify for any of these typical car insurance discounts. Speak with one of our Bauld Insurance Advisors today, or visit our car insurance page for answers to other frequently asked questions and to request a car insurance quote.