Lorraine Explains: Think 'no-fault' means it's not your fault? Think again

In a car collision, the blame always go somewhere — here's how your insurance company figures out where

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There are some words you might be unintentionally using wrong. Usually, not a big deal. But sometimes, that misuse has consequences that will cost you in ways you didn’t foresee.

In many parts of Canada, your auto insurance (or parts of it) is called “no-fault”. Seems clear enough, right? When no-fault divorce was introduced, it meant you didn’t have to prove you’d been neglected or abused or fooled around on.

The courts didn’t care whose fault it was, because you were allowed to get divorced if you chose to. It was a welcome relief to those trapped in horrible marriages who could now get out because they wanted to, without first having to prove how horrible their hopefully-soon-to-be-ex was. The courts recognized that it really wasn’t helping anyone to forge ahead into the future hanging onto bad historic law.

That “no-fault” is not this “no-fault.” If you crash into someone, there is absolutely fault. And if it’s yours, you will pay.

Paint tells stories, and dashes and scrapes and broken lights tell more.

The term’s root is in insurance jargon, and it’s unfortunately been carried over into everyday usage.

In looking for ways to streamline paying out claims and stopping the continual clogging of our courts over tangles that were essentially pretty cut and dried, the insurance industry realized it made a lot more sense to pay out their own clients — to stop trading cheques.

Everybody got their claims paid faster, and more money got to those with damages. Two people are involved in a collision; Driver A has their claim paid out by their insurance company, and Driver B has theirs paid out by their company. You deal with your company.

It’s a system that makes sense, but it has a misleading name. Too many people, especially those unfamiliar with the older system or those who have never made a claim, believe it means, like divorce law, that there is “no fault.” There is no mythical Mr. Nobody to blame it on. 

Virtually every crash you see is somebody’s fault, and it will be determined who that somebody is. The most obvious way it’s sorted out is by looking at who gets the ticket from the officer investigating the collision. But even if it’s not bad enough to get the cops involved, your insurance company will determine fault, and if it’s you, you will see your rates go up. The only part of the term “no-fault” that matters is that your company will pay out your damages, and the other person’s company will pay theirs. 

The upcoming ‘hard market’ for insurance won’t be easy on your wallet. Susan Gamble / Sun Media

If somebody backs into you in a parking lot, unless there is personal injury, it’s unlikely the police will be called. Be very careful of the other party telling you, “let’s not report this, I’ll just pay for the fix.” Your idea of getting it fixed might be taking it to your dealer; their idea might be taking it to their cousin Eddie.

Today’s cars throw another wrench into the works, because with all the embedded cameras and sensors in bumpers and side mirrors, you would be amazed at how expensive that fix can end up being. If it’s not done correctly, important safety features on your car can be compromised. A ding is no longer just a ding.

An insurance adjuster is pretty good at determining who did the hitting, who was where and what happened. The fact everybody has a phone in their hands these days helps, too. Paint tells stories, and dashes and scrapes and broken lights tell more. If someone – a someone you’ve never seen before, let alone know – tells you not to report it, there’s nothing stopping them from reporting it. Next thing you know, you’re getting a call from your insurance company because they’ve heard from the other insurance company.

Word to the wise: at the very least, go to a collision reporting station in your community (it doesn’t have to be where the incident occurred) and get a record of the damage. It might not be enough for a claim, but it won’t look like you’re hiding something.

In the event the insurance companies can’t figure out who did what, they will likely determine a 50/50 split on blame. If you’re half at fault, your rates could go up. Heck, in this insurance climate, count on it. You can dispute this. If you’ve ducked out on reporting, you’re not on a great footing to launch a dispute. 

Being at fault will also cost you your deductible. Most of us have raised our deductibles in an effort to keep rates as low as we can. The problem is that first $1,000 is a wicked bite. You want a chance to prove if you are innocent, and thinking “oh, I have no-fault insurance, it’s not a problem” is a problem. Never forget that other entities are definitely establishing fault. Don’t be lulled or misled.

Insurance rates continue to skyrocket everywhere. Understand your policy, know how a claim works, protect your rating — and get a dashcam

A video is worth a thousand words, and insurance companies love you to solve their problems for them.

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