A Close Look At No Fault Insurance

The need for no fault insurance became apparent when the insurance industry struggled to come up with the sufficient funds for covering the damage caused by an uninsured driver. At first, the industry sought to re-frame a driver’s actions as contributory negligence. For instance, few years ago, a man that was hit by a drunk and uninsured driver was charged with contributory negligence.

The insurance company charged him for failing to brake when hit, and therefore moving forward into the car in front of him. That provided them with some extra funds, that could be used to cover all the damage to the vehicles. Fortunately, no injuries got reported. The policy holder agreed to the insurer’s offer.

Today, drivers that are willing to pay extra can purchase no fault insurance. That provides the company with added money, which can be used to cover any insured drivers that get hit by a motorist without insurance.

Present system when policy holder has no fault insurance

The insured driver reports the injury and damage to the insurance company. That report functions as a claim, regardless of who gets named as the at fault driver. Because the Province of Ontario pays accident benefits, that same Province had to come up with a system similar to the one designed for buyers of no-fault insurance.

Ontario’s system

If a resident of Ontario gets involved in a motor vehicle accident, that same resident can make a no-fault claim. Ontario has given such claims a second name: first party claims. The Province pays the accident benefits, regardless of who might be named as the at-fault driver.

Options available to those with no fault insurance

Personal Injury Lawyer in Sudbury know that some insurance companies offer policies that include a provision that is known as accident forgiveness. The policy holder that has paid for inclusion of that provision does not have to fear an increase in his or her premium, after becoming involved in an accident. Those without such a provision do have to worry about the need to pay higher insurance rates in the near future.

How insurance companies make money

The insurer’s representatives try to get any accident victim to agree to an early settlement. That frees the company of concerns about any complications that might arise in the future, as the result of a victim’s accident-related condition.

No forgiveness for contributory negligence. Evidence of such negligence leads to a reduction of the plaintiff’s compensation and failure to wear a seat belt counts as contributory negligence.

A driver might be forgiven by being freed from the need to pay higher insurance rates. Still, the insurance company can create a timeline for the possible introduction of such rates in the future. For instance, a forgiven driver might be told that if he or she has another accident within the next 6 months, then the rate increase that was not enforced earlier could take effect at that time.

Smart drivers strive to avoid another accident. Yet as long as nothing happens during that 6-month period the careful driver has escaped the threatened higher payments. Even those that, by some quirk of fate, happen to have an accident after 25 weeks can feel relieved. Their rates will not go up, unless that accident gets followed by another one, within a surprisingly short space of time.