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What is No-fault Insurance and what does it mean?
No-fault insurance in Ontario
A car accident is a nerve-wracking experience and one that can potentially change your life forever. In some instances, it can leave you with serious or catastrophic bodily injuries. If you are involved in a car accident which results in injuries, your insurance company will provide medical/rehabilitation care to help you recover, financial assistance in the event you are not able to work.
Your Ontario automobile insurance also compensates you for property damage and provides financial protection if you hurt someone and they decide to sue. In the event that you sustain more serious injuries and suffer bodily injury past a certain threshold, you may be able to pursue legal action.
Contrary to what some people believe, no-fault insurance does not mean that no one will be found negligent after a car accident. No-fault insurance means that regardless of who the at-fault party is in a car accident, you will receive benefits from your insurance company, if injured.
A “pure no-fault” plan has been implemented in Manitoba and Quebec, to remove the right of any individual to take legal action against the at-fault party causing bodily injury or death. Regardless of who is found negligent, the injured party or their representative may claim compensation from their respective insurer.
In Ontario the opposite exists. A “threshold no fault” insurance plan has been implemented, which deters individuals from taking legal action against the at-fault party, unless a certain threshold has been exceeded. The threshold level may be determined monetarily or by the degree of injury sustained.
Personal injury claims are pursuant to a tort based system. Claimants who are gravely injured may pursue legal action and have the right to sue for pain and suffering if the monetary threshold has been met. Legal action is also permitted if the claimant dies, suffers disfigurement, or suffers impairment of important “physical, mental or psychological” function.
In addition to the ability to sue for general damages including pain and suffering under the tort system, individuals are also permitted to take legal action for economic losses, subject to fault. Under your Ontario automobile insurance policy, you may be compensated for income replacement if eligible, under your ‘accident benefits’ coverage.
In Ontario, under the tort system, individuals have the right to sue for pecuniary (economic) losses if they are not the at-fault party, for loss of income arising from bodily injuries or death, subject to certain limitations. The right to sue the negligent party in an automobile accident for loss of income arising from more serious injuries, can commence seven days after the accident up to and including the date of the trial. Speak to a My Insurance Broker Adviser about further compensatory benefits for income losses arising from bodily injury and death for the innocent party in an automobile accident.
In other instances, you can sue for medical benefits past a certain threshold, if bodily injury falls within the category of catastrophic impairment, as determined by a plaintiff or insurer, in the pretrial stage. Catastrophic impairment is usually defined as “paraplegia or quadriplegia; the total and permanent loss or use of both arms arising from amputation or other impairment; the total and permanent loss of use of both an arm and a leg caused by amputation or other impairment; total loss of vision in both eyes; and brain impairment among others.
Individuals are forbidden from taking legal action that results from serious disfigurement, impairment or death, if the vehicle was uninsured.
Although both parties to an automobile accident can claim for benefits from their own insurer, one needs to be cognizant of the rules surrounding legal action, in the event of a more serious accident that can cause permanent impairment and the benefits they can claim for.
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What Are Fault Determination Rules?
In Ontario, New Brunswick and Quebec, charts or rules are used to determine fault or responsibility for Direct Compensation – Property Damage claims, but not for injury claims in cases of car collisions. In some other jurisdictions, insurers use inter-company “settlement” charts for handling claims against each other; these are not legally binding on the policyholder, however.
The circumstances of a collision may show that more than one driver was negligent. Each driver’s insurance company may then become involved in the settlement based on the degree of responsibility attributed to each person. If there is a dispute about responsibility, court action may be required to resolve it.
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