How Ontario’s No-Fault Insurance System Works
What is no-fault insurance?
No-fault car insurance is a system that allows drivers who sustain injuries or damage to their vehicle due to a collision to file claims directly with their own insurance provider regardless of fault.
No-fault insurance can also refer to two specific types of auto insurance coverage:
- Accident benefits: This no-fault coverage covers medical expenses, rehabilitation costs, attendant care expenses, and some other costs for an insured and their household after a crash, regardless of fault. It is mandatory in Ontario.
- Direct compensation property damage (DCPD): This no-fault coverage pays to repair or replace an insured vehicle after a crash in which the insured was not at fault. It is a standard component of all auto insurance policies in Ontario, but can be declined in writing.
No-fault auto insurance systems eliminate or limit drivers’ ability to sue each other for pain and suffering, which reduces strain on the legal system.
All provinces and territories in Canada operate on some form of a no-fault system, especially regarding bodily injury claims. The only province that allows drivers to opt out of no-fault insurance is Saskatchewan.
How no-fault insurance works in Ontario
Under Ontario’s no-fault insurance system (the Ontario Motorist Protection Plan), all drivers have the option to file a claim directly with their own insurance company for medical expenses, rehabilitation costs, lost income, and other expenses associated with injuries sustained in a car accident—regardless of who’s at fault.
By giving each injured person the ability to file injury claims with their own insurer, Ontario’s no-fault benefits drastically reduce the frequency of lawsuits and streamline the claims process. This means that:
- All parties are entitled to compensation
- Medical claims get paid more quickly because they don’t depend on a fault determination
- Most insurance claims stay out of the courtroom, reducing out-of-pocket legal costs and burdens on the legal system
However, the “no-fault” system still involves fault determinations for property damage. In Ontario, you can only use DCPD coverage to file a claim for damage you’re not responsible for. All other damage claims must go through your collision coverage (if you have it).
Ontario also permits drivers to sue for damages in cases of serious injuries that result in major, permanent impairment of your physical or mental functions. That’s why third-party liability benefits for bodily injury are still required—to cover the cost of lawsuits and pay out additional damages to accident victims on top of their statutory accident benefits.
How fault is determined in Ontario’s no-fault system
Despite the name, fault is still assigned to drivers under a no-fault insurance system. Insurance companies use fault to determine:
- How property claims will be handled (e.g., through DCPD or collision coverage)
- Whether you can sue the other driver
- Whether your insurance premiums will change after the accident
Insurance companies in Ontario follow a complex set of fault determination rules to assign fault after a motor vehicle collision. Each driver can be found 0%, 25%, 50%, 75%, or 100% at fault for the incident.
How no-fault insurance works when it’s not your fault
If you’re found 0% at fault for a motor vehicle accident, you can file an accident benefits claim directly with your own insurance company for your medical bills, rehabilitation expenses, and attendant care (if necessary). If your accident benefits cover income replacement, caregiver benefits, or other benefits, you may also be able to file additional claims.
You can also file a DCPD claim with your insurer for vehicle repairs, unless you declined that coverage.
If you sustained serious permanent injuries that interfere significantly with your physical or mental functioning (e.g., a brain injury or spinal cord injury), you may be able to supplement your insurance payout by suing the at-fault driver. Their liability coverage will help to cover any costs not covered by your statutory accident benefits.
Your insurance rates may go up after an accident in a no‑fault system if you are found to be at fault—for example, because you lose a claims‑free discount or now have an at‑fault claim on your record. If you are found not at fault, insurers typically either do not increase your premium at all or increase it much less than they would for an at‑fault crash.
How no-fault insurance works when you’re at fault
If you’re determined to be at fault for a motor vehicle accident, you can still file an accident benefits claim with your insurer for any medical expenses and other benefits covered under your policy; however, you can’t sue the other driver if they were 0% at fault for the collision.
If you’re 100% at fault, you can’t use your DCPD coverage to file a claim for physical damage; however, if you have collision coverage, you can submit a damage claim to your own insurer through that part of your policy.
If you’re found less than 100% at fault, you may still have the option to sue the other driver for additional compensation if you sustained catastrophic injuries that meet the threshold for a personal injury lawsuit. Consult with a lawyer to determine your options.
You may also have the option to file a DCPD claim if you’re only partially at fault for an accident. Your claim will be limited to the percentage of your total repair costs that matches the other driver’s percentage of fault. For example, if you’re found 25% at fault for an accident and the other driver is 75% at fault, you can file a DCPD claim for 75% of the total cost of repairs. You can file a collision claim for the other 25%.
Finally, you’re likely to see a significant increase in your auto insurance premiums after an at-fault accident.
Is no-fault insurance mandatory in Ontario?
Yes, no-fault insurance is mandatory in Ontario.
All auto insurance policies in Ontario include no-fault coverage—including accident benefits, DCPD coverage, and uninsured automobile coverage—by default. Although you can now decline DCPD in writing, it’s built into Ontario’s insurance system for all drivers.
Why Ontario uses a no-fault system
Ontario (along with other provinces) uses a no-fault insurance system to make sure that all drivers can receive prompt coverage for medical costs after a car accident.
Under a tort system, where drivers can only get coverage for motor vehicle injuries through third-party liability claims or personal injury lawsuits, getting coverage for injuries takes a long time. Injured people have to wait for insurance companies to determine fault or for courts to schedule hearings before they can receive reimbursement for their medical expenses.
With healthcare costs on the rise, a tort system puts an increasing burden on individuals and courts.
No-fault insurance streamlines the insurance claims process, especially in the critical area of bodily injury claims, to make sure that every driver can be made whole with a minimum of cost and delays.
FAQ: No fault insurance
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.