When you hear the phrase “no-fault insurance,” what do you think it means?
Does it sound like fault doesn’t matter? Or that no one is ever held responsible after an accident? Not quite. What it actually means is that after an accident, each driver files a claim with their own car insurance provider, regardless of who caused the crash.
So, why exactly is it called “no-fault” insurance? How does it differ from the traditional fault-based (or tort) system? Is no-fault insurance used everywhere in Canada, or only in certain provinces?
In this article, you’ll learn what no-fault insurance really means, how it differs from tort-based systems, and what it means for you as a driver.
What is the no-fault system?
In a no-fault system, every driver files a claim with—and is paid by—their own car insurance provider for any eligible damages or losses caused by a car accident, regardless of who was at fault.
This is different from a tort-based system, where the driver who caused the accident is held financially responsible, and claims are made through the at-fault driver’s insurer. This means drivers cannot be compensated until the insurance providers determine who was at fault for the accident. Unfortunately, this can lead to lawsuits, which further delay payment and access to benefits.
By eliminating the need to first establish fault, no-fault systems allow drivers to get reimbursed more quickly, avoid costly legal fees, and gain access to the medical and financial support they need when they need it most.
Why is it called no-fault insurance?
The term no-fault insurance can be confusing. It may give you the impression that fault is never assigned or that no one is held responsible after a car accident.
In reality, the opposite is often true. Fault may still need to be determined, especially if a claim involves damage to your vehicle, or if you live in a province where at-fault drivers can be sued for serious injuries or losses.
Rather, it’s called no-fault because everyone involved can file a claim with their own insurance provider and receive compensation for certain benefits—like medical care and income replacement—even if they were at fault, and without having to wait for a fault investigation to be completed.
Which provinces have no-fault insurance in Canada?
Every province and territory in Canada either already uses or is transitioning to a no-fault car insurance system in some form, at least for bodily injury claims.
In some provinces, like Ontario, no-fault also applies to vehicle/property damage through Direct Compensation Property Damage (DCPD). Meanwhile, in Quebec, the no-fault system applies only to bodily injuries (handled by the public SAAQ plan), while property damage remains fault-based — though you still file your claim through your own insurer rather than the other driver’s.
Provinces and territories with some form of no-fault:
- Quebec
- Ontario
- British Columbia
- Manitoba
- Saskatchewan
- New Brunswick
- Nova Scotia
- Prince Edward Island
- Newfoundland and Labrador
- Yukon
- Northwest Territories
- Nunavut
- Alberta (Transitioning to a “care-first” model in January 2027)
- Saskatchewan (No-fault is standard, but drivers can switch to tort-based coverage)
Is no-fault car insurance better?
No-fault insurance is designed to address some of the challenges that often come with traditional tort-based systems, like lengthy lawsuits, delayed payouts, and unequal access to benefits. Some of the intended advantages of no-fault systems include:
- Faster access to medical and rehabilitation benefits, without waiting for fault to be determined
- Less reliance on lawsuits to receive compensation
- Lower out-of-pocket legal costs
- Faster resolution of claims
- Eases the burden on courts and the legal system as a whole
That said, no-fault insurance isn’t without trade-offs. Depending on where you live, there may be limits on suing for pain and suffering, caps on certain benefits, and less flexibility to pursue full compensation through the courts.
So, is no-fault insurance better? That depends on your perspective, needs, and the details of your provincial system. Either way, understanding how your coverage works—and what it does or doesn’t include—is key to making informed decisions.
