On May 1, the Insurance Corporation of British Columbia (ICBC) launched its no-fault auto insurance program. Though heralded by ICBC president and CEO Nicholas Jimenez, some stakeholders believe no-fault systems limit legal options and compensation for not-at-fault drivers.
What is No-Fault Auto Insurance?
Broadly, no-fault auto insurance means that each party involved in a motor vehicle collision will be indemnified by their own insurance provider regardless of who, if anyone, is at-fault for the accident. So, if a driver causes a three-vehicle collision, they are not responsible for compensating the other drivers; that responsibility will fall to the other drivers’ insurance companies.
In addition to British Columbia, no-fault auto-insurance is used by Ontario, Quebec, Nova Scotia, New Brunswick, and Prince Edward Island. Alberta is also considering a move to this system.
What are the Benefits of No-Fault Auto Insurance?
The primary benefit touted by the ICBC is an immediate reduction of premiums. For several years, British Columbia has had the highest average annual insurance premiums in Canada; the shift to no-fault insurance is expected to save drivers an average of $400 per year.
“A big part of the savings in the new system is the fact that we won’t be spending hundreds of millions on litigation,” Jimenez explained.
The no-fault system can also be more efficient, at times. In lieu of drivers suing each other for compensation, the ICBC will now dole out benefits based on the severity of injuries and auto damage. Disputes over benefits amounts will also be resolved by the ICBC.
Are There Negatives to No-Fault Insurance?
Many auto insurance experts, including some personal injury lawyers, believe no-fault insurance makes life more difficult for motor vehicle accident victims. They believe this for several reasons:
- The option for not-at-fault drivers to launch a civil action is severely curtailed
- Compensation is generally capped for both minor and traumatic injuries
- In the unique case of the ICBC’s no-fault scheme, there is concern that the insurance provider may not be fully impartial in accident benefits disputes
In other words, even though no-fault auto insurance guarantees a certain level of benefits to accident victims, seriously injured victims may have access to significantly less compensation than before.
Also, there is no guarantee that no-fault insurance will lead to permanently lower premiums. After all, Ontario has struggled for years to reduce auto insurance costs; in 2016, the then-Liberal government resorted to slashing benefits, and even that hasn’t curbed premium increases.
Contact a Personal Injury Lawyer
Even though Ontario uses a no-fault insurance system, a personal injury lawyer can still help accident victims get access to the benefits and compensation they deserve. Contact us today to schedule a free, no-obligation consultation if you’ve been involved in a motor vehicle accident.