Sara Ali

Getting into a car accident is stressful enough, and the last thing you want is to spend weeks tracking down the other driver’s insurance or get caught in a legal back-and-forth simply to pay for your injuries or car repairs.

This is where no fault insurance comes in.

Even if you were not the one who caused the crash, your own insurance company pays some expenses in many parts of Canada following one. Basically, speeds up the claims process, cuts legal complications, and enables individuals to heal and move on.

But there’s a lot of confusion around what no-fault actually means — and even more questions about what’s covered, what’s not, and how it works in different provinces.

In this guide, we’ll break it all down:

• What no fault insurance really is
• What you’re covered for (and what you’re not)
• The benefits and downsides
• And how it plays out across provinces like Ontario, Alberta, Quebec, and beyond

Whether you’re a new driver or just want to better understand your policy, this is one of those things that’s really worth knowing. Let’s get into it.

1. What Is No Fault Insurance?

In simple terms, no fault insurance means you go through your own insurance company for help after a crash — even if the accident wasn’t your fault. So if someone rear-ends you at a stoplight, it’s your insurer, not theirs, that steps in to cover things like medical bills or lost income.

But don’t let the name fool you — fault still matters.

• Insurance companies still investigate and assign fault.
• If you’re found at fault, it could impact your future premiums.
• You just don’t have to wait for the other driver’s insurer to admit fault or cut a cheque — your provider handles the basics first.

That said, if your injuries are serious or your losses are big, you might still be able to sue the other driver — but only in specific situations, and with certain limits depending on where you live in Canada.

No fault insurance doesn’t mean no one’s responsible. It just means the process is more focused on helping you recover quickly than on pointing fingers right away.

2. What Does No Fault Insurance Cover?

While the exact coverage can vary depending on your province, no fault insurance typically includes a basic set of benefits designed to help you recover from an accident — without having to fight with another driver’s insurance company.

Here’s what’s usually covered:

1. Medical and Rehabilitation Expenses

If you’re injured in a car accident, your no-fault benefits kick in to cover treatment costs. This can include:

• Hospital stays
• Doctor visits
• Physiotherapy
• Chiropractic care
• Psychological therapy
• Prescription medications
• Assistive devices (like crutches or wheelchairs)
• Rehabilitation programs

The goal is to help you recover physically and mentally without worrying about paying out of pocket — especially if you don’t have private health insurance.

2. Income Replacement Benefits

If your injuries leave you unable to work, you may be eligible for partial wage replacement. The amount and duration depend on your province’s rules and your specific policy. These benefits usually cover a percentage of your income (often around 70–80%) up to a weekly or monthly maximum.

Some provinces offer different tiers based on whether you’re employed, self-employed, or a student at the time of the crash.

3. Funeral and Death Benefits

In the unfortunate event of a fatal collision, no fault insurance typically provides:

• Funeral expense coverage
• Lump-sum death benefits to a surviving spouse or dependents
• Survivor benefits to help support the family financially

These benefits vary by province and by policy, but they’re meant to ease the financial burden during a very difficult time.

4. Damage to Your Vehicle (Optional)

No fault insurance doesn’t automatically pay for repairs to your car. That’s where optional coverages come in, such as:

• Collision coverage: Pays for damage to your car after an accident, regardless of fault
• All-perils or comprehensive coverage: Covers damage from things like theft, fire, vandalism, or weather-related incidents

If you don’t have these optional coverages, you may have to cover your repair or replacement costs out of pocket — even under a no-fault system.

5. Loss of Quality of Life (Some Provinces)

In some provinces, there are limited benefits available if your injuries result in a reduced ability to enjoy life, even after treatment. This could apply to things like chronic pain, loss of mobility, or mental health struggles after an accident.

However, these benefits are often capped or restricted, and in many cases, you can only claim them if the injury meets certain severity thresholds.

3. What No Fault Insurance Doesn’t Cover

No fault insurance helps speed up the claims process, but that doesn’t mean it covers everything. A lot of people assume they’re fully protected after an accident — until they try to make a claim and realize there are limits.

Here are some of the most common gaps where no fault insurance won’t step in:

1. Damage to Your Vehicle (Unless You Have Optional Coverage)

If your car is damaged in an accident, no fault insurance won’t automatically pay for repairs. To get help with the cost of fixing or replacing your vehicle, you need to have:

• Collision coverage – Pays for damage caused by a crash, even if you’re at fault
• All-perils or comprehensive coverage – Covers non-crash-related damage like theft, vandalism, or natural disasters

If you didn’t purchase these optional coverages, you’re on the hook for the repair bill — even under a no-fault system.

2. Pain and Suffering (Except in Serious Injury Cases)

No fault insurance is mostly focused on basic recovery — like medical bills and lost income — not emotional distress or physical discomfort.

If you want compensation for pain and suffering, it usually has to meet strict legal thresholds:

• The injury must be considered “serious and permanent”
• You often need medical proof and legal help
• Some provinces apply monetary caps or deductibles to these claims

So yes, it’s possible to sue in some provinces, but only in more severe or long-lasting injury cases.

3. Full Replacement Value of Your Car

Even if your car is declared a total loss, your standard no-fault policy likely only covers the actual cash value — not the full price you paid for it. That means depreciation is factored in, and you may get much less than expected.

To protect against this, you’d need to add:

• Replacement cost coverage or
• Depreciation waiver (offered in some provinces and policies)

These add-ons ensure you’re not left paying out of pocket to replace a newer vehicle.

4. Losses Caused by Negligence After the Accident

No fault insurance covers the initial damage from a crash — but not what happens afterward if you fail to take reasonable care.

For example:

• If your car is damaged in a storm and you don’t cover the broken sunroof, which can lead to water damage, your claim could be reduced or denied.
• Leaving your vehicle unsecured after a collision might also affect your payout.

Insurers expect you to prevent further damage

Other Situations Where No-Fault May Not Cover You

Driving Without a Valid License or While Impaired

If you were driving illegally — whether that’s without a valid license, under the influence, or during criminal activity — your insurer can deny your claim altogether, no matter how minor the accident.

Using Your Vehicle for Business Without Declaring It

Using your car for work (e.g., Uber, DoorDash, deliveries) without letting your insurer know? That’s a big red flag. Most personal auto policies exclude commercial use, and if you’re in a crash while working, your claim could be denied.

Out-of-province or U.S. Accidents (With Limited Coverage)

Your coverage may still apply if you’re in another province or the U.S., but benefits could be reduced or capped. It depends on your policy and where you’re from. Some provinces offer optional riders to extend coverage while traveling.

Unlisted or Unauthorized Drivers

If a driver not listed on your policy crashes your car or someone specifically excluded drives it, your insurer may limit coverage or deny it altogether. Therefore, it is important to keep your policy updated with regular drivers.

Undisclosed Modifications or Upgrades

Custom rims, turbocharged engines, or high-end stereo systems might look cool — but if you didn’t tell your insurer about them, they likely won’t be covered. Some modifications can also void parts of your policy.

Personal Belongings Inside the Car

Insurance generally doesn’t cover personal items inside the vehicle, like laptops, phones, tools, or bags. If those are stolen or damaged, you’d need to file a claim under your home or tenant insurance, if you have it.

Mechanical Failures or Wear and Tear

Insurance isn’t a substitute for maintenance. If your vehicle breaks down due to worn-out brakes, rust, or engine trouble, no-fault coverage won’t apply. These are considered maintenance issues, not accidents.

4. Is No Fault Insurance Mandatory in Canada?

Yes — in provinces that use a no-fault system, it’s mandatory. You can’t opt out or choose to have an at-fault policy instead. If your province has no-fault rules in place, that’s the system your auto insurance will follow.

But Canada doesn’t have a one-size-fits-all system. Each province sets its own auto insurance laws, which means the no-fault model isn’t applied the same way across the country. Some provinces use a full no-fault system, others use a hybrid (a mix of fault and no-fault), and a few still rely on traditional fault-based models.

Provinces That Use No Fault Insurance (Mandatory)

These provinces follow a no-fault system, meaning you always go through your own insurance company for injury-related claims, regardless of who caused the crash. This is done to speed up payouts and reduce legal disputes.

• Ontario – Has a no-fault system with standard accident benefits. You can still sue in serious injury cases, but there are restrictions.
• Quebec – Offers one of the most comprehensive public no-fault systems in Canada. The SAAQ handles injury claims, and suing for personal injury is not allowed.
• Nova Scotia, New Brunswick, Prince Edward Island – These provinces use a “modified” no-fault system. You go through your insurer first, but can still sue for certain damages depending on the severity.
• Manitoba – Operates a fully public no-fault system through Manitoba Public Insurance (MPI). Personal injury claims go through MPI, and lawsuits are generally not permitted.
• Saskatchewan – Offers a choice between no-fault and tort coverage. Most people choose no-fault, which includes broader injury benefits, but if you prefer to retain the right to sue for more compensation, you can opt for tort coverage at registration.

Provinces With Hybrid or Fault-Based Systems

These provinces either use a traditional fault model or have elements of both systems:

• British Columbia – Shifted to a no-fault system in 2021 under the Enhanced Care model through ICBC. Drivers are no longer allowed to sue for most crash-related injuries. ICBC pays for recovery regardless of fault.
• Alberta – Primarily a tort-based system. That means fault is assigned, and injury claims may be settled through legal action. Alberta has considered moving toward no-fault, but as of now, it’s still largely fault-based.
• Newfoundland and Labrador – Remains mostly fault-based. You typically claim through the at-fault party’s insurance for damages and injuries. Accident benefits are more limited compared to no-fault provinces.

What’s Mandatory Everywhere?

Regardless of which province you’re in, all drivers in Canada are required to carry a minimum level of auto insurance, which typically includes:

• Third-Party Liability Coverage – Pays for injury or damage you cause to others
• Accident Benefits – Helps with medical bills, rehab, and lost income (how much depends on the province)
• Uninsured Motorist Protection – Covers you if you’re hit by someone without insurance

What’s optional and customizable includes:

• Collision coverage – Pays for damage to your vehicle in a crash
• Comprehensive coverage – Covers non-collision events like theft, fire, or hail
• Loss of use – Helps pay for a rental car if yours is in the shop
• Waiver of depreciation – Protects your new car from losing value in the early years

5. Pros and Cons of No Fault Insurance in Canada

No fault insurance has its perks — especially when you’re shaken up after a crash and just want things sorted fast. But it’s not perfect, and depending on where you live and what kind of coverage you have, you might notice a few drawbacks too.

Pros of No Fault Insurance

1. Faster Payouts
Since you deal directly with your own insurer, you don’t have to wait around for the other driver’s insurance company to accept responsibility. This means medical treatments, income replacement, and other benefits can kick in much quicker.

2. Less Legal Drama
No-fault reduces the need to take someone to court just to get basic compensation after an accident. That means fewer delays, less paperwork, and lower legal costs overall.

3. More Support, Sooner
Because fault isn’t the first hurdle to clear, you can get access to things like physiotherapy, hospital costs, or income loss support without having to fight over who caused the accident.

Cons of No Fault Insurance

1. Limited Right to Sue
In many no-fault provinces, your ability to sue the at-fault driver is restricted. You can usually only take legal action if your injuries meet a certain severity threshold — and even then, there are limits on what you can claim (especially for pain and suffering).

2. It Can Feel Unfair
You could be completely innocent — rear-ended while parked, for example — and yet it’s still your insurance company handling the claim. That can be frustrating, especially if your premiums go up afterward.

3. Premiums Can Still Rise
Even in a no-fault system, fault is still assigned after an accident. So if you’re found even partially at fault, you might see a bump in your insurance rates. No fault doesn’t mean no consequences.

6. What People Are Saying About No Fault Insurance

 No fault insurance is designed to simplify the claims process and reduce legal battles, not everyone agrees it’s the best approach. We looked at conversations on Reddit to see how real drivers and insurance professionals feel about it—and the responses were anything but boring.

What People Like About No Fault Insurance

• Faster, Less Stressful Claims
  Many users appreciate that you don’t have to wait for the other driver’s insurer to accept the blame. You go through your insurer, and things move quicker—especially when it comes to medical bills or lost wages.
• Clearer Rules for Fault
  In places like Ontario, adjusters use a strict Fault Determination Rule system. That means fewer grey areas and fewer arguments over who’s to blame.
• Less Legal Drama
  Claims pros who’ve worked across multiple systems say they prefer no-fault. There’s less back-and-forth, fewer lawsuits, and more straightforward handling behind the scenes.

What People Don’t Like

• Limited Right to Sue
  Some people feel it’s unfair that they can’t sue the other driver unless the injury is severe enough. Even if someone else clearly caused the crash, your legal options might be limited.
• Premiums Can Still Go Up
  Just because it’s no-fault doesn’t mean your rates won’t increase. Fault is still assigned behind the scenes, and that can impact what you pay—even if you weren’t to blame.
• Not Always Clear-Cut
  Many drivers still get confused about what’s actually covered. For example, in some provinces, no-fault mainly applies to injuries—not property damage. That means you still need collision coverage if you want your car repaired.
• In B.C., when they moved to a no-fault model in 2021, some people reported feeling short-changed. For example, certain treatments weren’t fully covered, so they ended up paying out-of-pocket. Others were frustrated that they couldn’t sue the at-fault driver—even in serious situations.

Mixed Experiences Based on Where You Live

It turns out that how well no-fault works depends a lot on your province. Systems in Ontario and Quebec might feel very different from those in Alberta or Newfoundland. What works smoothly for one driver could be a frustrating maze for another—depending on how their province handles fault, lawsuits, and optional coverage.

Victims Lose Out Under No Fault Insurance

While no-fault insurance is often praised for simplifying the claims process, it’s not without controversy — especially when it comes to how accident victims are treated. A 2021 article from The Conversation raised some serious concerns about how these systems can limit compensation and silence those most affected.

1. Reduced Benefits for Victims

Under no-fault systems, insurers focus on quick payouts for basic benefits like medical expenses or income replacement — but that often comes at a cost. Many victims are no longer eligible for the kind of full compensation they could have received in a tort-based system. That means things like long-term care, loss of future earnings, or pain and suffering are either capped or not available unless strict conditions are met.

2. Limited Legal Rights

One of the biggest criticisms of no-fault systems is the loss of the right to sue unless the injuries are deemed “serious” by the province’s legal standard. For many, this shuts the door on seeking justice or holding a negligent driver fully accountable.

3. Higher Premiums — Despite the Limits

Ironically, some no-fault provinces don’t always deliver on the promise of lower insurance premiums. The article suggests that insurers, facing fewer lawsuits, might still raise rates — while offering fewer benefits. That combination leaves many policyholders feeling like they’re paying more, but getting less.

Final Thoughts

No fault insurance in Canada is designed to simplify claims, help you recover faster, and reduce courtroom battles. But that simplicity comes with trade-offs — especially if you’re expecting big payouts for minor pain or cosmetic damage.

Tip: Always read your policy carefully and consider extra coverage like collision or comprehensive — they’re not included by default in every province.

Still feeling confused about what’s actually covered and what you need? — Get a quote on BeatMyInsurance.com and let brokers bid to get you the best deal for your needs.

Your child just passed their G2 test. They’re thrilled. You’re proud (and maybe a little terrified). But before they take the family car for a spin, there’s one huge thing you can’t skip: adding them to your car insurance.

It’s not just a good idea. In Canada, it’s a legal requirement—and skipping it could raise your car insurance cost or even lead to denied claims.

Let’s break down what this means, how much it’ll cost, how to save, and what parents really need to know when it comes to insuring their teenage driver.

Also read: New mortgage rules in Canada: What Changed?

#1 Thinking It’s Unnecessary

Yes, absolutely. As soon as your child gets their G2 license, they must be listed on your policy—even if they’re only driving occasionally. Every licensed driver in your household needs to be disclosed to your insurer.

Why it matters:

• If your teen gets in an accident and isn’t listed, your claim could be denied.
• You could be personally liable for damages—which can easily hit over a million dollars in injury claims alone.
• Not disclosing them is considered non-disclosure, and it could affect your entire policy.
• If your adult child still lives with you and uses your car now and then, they must be listed on your policy—typically as a secondary or occasional driver. It’s based on residency and access to the vehicle, not just age.

Optional: Using an Exclusion Form

Some parents choose to formally exclude their child from the insurance policy using a legal document called an exclusion form. This means the child is not allowed to drive the insured vehicle under any circumstance, and if they do, there will be no coverage. This approach may help keep car insurance costs lower, but it should only be used if you’re certain the child won’t be driving the car.

#2 Not Being Prepared of The Costs

Here’s the not-so-fun part: your car insurance costs will go up. In Canada, car insurance usually costs between $1,300 and $1,800 per year. But for teen drivers, it’s much higher—often two to three times more.

Suppose you live in North York, Ontario, adding an 18-year-old to your policy as an occasional driver could cost anywhere from $500 to $3,000 per year. But it depends on:

• Your insurer
• Where you live (urban vs rural)
• Your teen’s driving history
• The type of vehicle they’ll be using

Male drivers aged 16–19 typically face the highest premiums, but don’t worry—there are ways to cut that down.

But why so expensive, you might ask? They are just teens! That’s exactly why!

Teen car insurance in Canada is expensive because young drivers are more likely to get into accidents. Their lack of experience, riskier driving habits, and higher chances of speeding make them high-risk for insurers. As a result, premiums for teen drivers are much higher than average. Here are some stats –

#3 Thinking high premiums are the only option!

What if we tell you paying high car insurance costs isn’t the only way? Here’s how-

Add Them as an Occasional Driver

If your teen won’t be driving every day, this designation is much cheaper than making them the primary driver.

Get Driver’s Education

A government-approved driving course can save you 10–25% on premiums.

Use the Right Car

Avoid flashy sports cars or anything new and expensive. Insuring a teen on a safe, older, lower-value car is way more affordable. The car you choose plays a big role in your insurance premiums. Find out which car can help keep your car insurance cost low.

Note: If your teen is driving the newest or most expensive car in the house, your insurer may assume they’re the primary driver unless you tell them otherwise.

Consider a Separate Policy

If your teen owns their own vehicle, a separate policy keeps their accidents and tickets off your record. Just be aware: it may cost more initially, but can be smart in the long run.

Explore Telematics

Some insurance companies offer apps or devices that track driving habits (braking, speed, time of day). Safe driving = discounts.

Bundle Up

Home + auto with the same provider? You could save 15–20%. Try apps like beatmyinsurance.com to save time and let brokers come to you instead!

Winter Tires & Anti-Theft Devices

These can earn you extra discounts in many provinces.

Maintain a Good Academic Record

Teens with a B average or higher can qualify for good student discounts.

#4. Not Knowing About These Factors

• Territory Rating: Living in a city = higher premiums. Rural = less risk, lower rates.
• Credit Score: In some areas, your credit score (or the family’s) can influence rates.
• High-Value Homes: Own a home worth over $1M? Some insurers offer better packages with lower auto rates.
• Multiple Vehicles: Households with more than one car can qualify for multi-car discounts.
• Deductibles: Choosing a higher deductible lowers your monthly rate, but means you’ll pay more if there’s a claim.
• Advanced Training: Courses beyond basic driving school may qualify for even more discounts.
• Annual Reviews: Always review your policy yearly—your teen’s experience, age, and driving record can lead to rate changes.
• G2 to G: Once your teen gets their full G license, notify your insurer—it could lower their premium.

#5 Risk Management

Some families buy a cheap, older car and insure it with a minimum coverage policy just for their teen. This separates risk and often encourages safer habits.

Why?

• When teens have their own policy, they tend to drive more carefully—because they know one ticket means years of higher rates.
• At-fault accidents or multiple violations can make your teen a high-risk driver, and insurers may drop or deny coverage.
• A clean driving record leads to gradually lower premiums over time.

#6. Not Updating Policy for Absent Teen

If your child moves away for college and doesn’t have regular access to a car, ask your insurer about “away-from-home” discounts—especially if they’re over 100 km away.

Some companies even offer seasonal policies for part-time student drivers.

#7 Accident Forgiveness

If your policy includes accident forgiveness, your teen’s first at-fault accident may not raise your premium. It’s a valuable option to consider with new drivers.

What Is Accident Forgiveness in Car Insurance?

Accident forgiveness is an optional feature offered by many car insurance companies. It means your insurer won’t raise your rates after your first at-fault accident. It’s a way to protect your premium from going up just because of one mistake—especially helpful for drivers with a clean record.

How It Works

• If you’re in an at-fault accident and you have accident forgiveness on your policy, your insurer will “forgive” the crash and your premium won’t go up because of it.
• It only applies to the first at-fault accident and is usually available to drivers with no previous claims or serious driving violations.
• You’ll still have to pay your deductible for any damage, but your rates won’t spike.
• Accident forgiveness isn’t automatically included—you need to request it and it often costs extra.
• You must already have the coverage before the accident happens. You can’t add it after.

Who Qualifies for Accident Forgiveness?

Not everyone can get accident forgiveness. Insurance companies typically require:

• A clean driving history with no at-fault accidents or serious violations for several years (often 6).
• An active policy with the company.
• That the vehicle is for personal use—not commercial.

Some insurers include it in their standard coverage, while others offer it as an add-on (known as an “endorsement”). If you switch companies after an accident, the forgiveness usually doesn’t carry over.

#8 Policy Lapse!

Gaps in insurance history = higher future rates. Even if your teen isn’t driving full-time, keeping continuous coverage helps in the long term.

Also: Don’t miss payments. If a policy gets cancelled for non-payment, your teen will face much higher premiumswhen reapplying.

#9 Not Planning Ahead

Once your teen is older, gainfully employed, or owns their own car, it might be time to transition them to their own policy. Done right, this move:

• Helps them become financially independent
• Keeps your policy clean
• May unlock new discounts or bundles

Having a strategy for that shift saves money in the long run.

Final Thoughts

Yes, adding your teen to your car insurance might sting a little financially—but not doing it can hurt a whole lot more.
The key is to stay informed, use discounts wisely, and shop around for the best deal.

Tip: Insurance quotes for teens can vary a lot between companies.
Before locking into anything, compare rates from multiple providers to see who offers the most value.