Faulty 'no fault' definitions

As soon as the term 'no fault' comes up in discussing accidents, collisions and insurance there is a lot of confusion as to what 'no fault' means.

The Insurance Bureau of Canada does an excellent job of explaining how 'no fault' insurance works. It even attempts to clear up some of the confusion but misses out on a little history that would really help clear things up. I am going to try to sort things out for you by example. I have simplified things a great deal as there can be many exceptions and thresholds that apply.

Let us go back to the time when 'no fault' insurance did not exist. If I were to hit Herb in his Hummer with my Smart Car, Herb's insurance would pay for his damages. Then his insurer would sue my insurer to be compensated for the funds they paid out. This is pretty much how most civil suits outside of car insurance work to this day. The person suing must prove that the other person is the one at fault. This process would be the same if I had hit Herb while he was on his bicycle.

At the end of the year Insurance companies saw that their losses under this scheme were comparable to one another. In addition they had big legal bills to deal with. It was clear that the easiest way to save money was to stop suing one another and to just pay their insured directly.

Let us look at my motor vehicle collision with Herb under the 'no fault' scheme. No longer would Herb's insurer sue mine for Herb's loss. They would pay Herb and simply add it to their loss column saving the cost of a lawsuit. The insurers no longer have lawsuits to determine risk of each of their insured. They use risk to determine rates. So the government came up with 'fault charts' that could be universally applied by insurers internally to asses the risk of each of their insured. My insurer would look at my collision and compare it to the fault chart. If the fault chart said I was 70% at fault, they would raise my rates accordingly.

The 'no fault' scheme applies only to collisions between motor vehicles. If I hit Herb while he was on his bicycle, Herb would be suing me via a pre-'no fault' type lawsuit or more precisely just the plain old lawsuit. Yet there is an important distinction when it comes to a driver hitting a cyclist. When Herb sues me, I will have to prove I was not at fault as opposed to Herb proving that I was at fault (s.193 HTA). In theory, Herb only needs to show up in court and I have to do all of the work proving my innocence. He would only have to challenge any inaccuracies. This works in theory but it becomes a much more difficult concept when put in practice. Various laws, rights and regulations come into play that lawyers need to sort through. In other words, if you get hit while riding a bicycle, get professional advice before you think you can just show up in court and fold your arms.

It should be noted that s.193 applies only to the civil issues in a car/bike collision and not any HTA/criminal charges. Often the rationale for the existence of s.193 is that the cyclist or pedestrian may not have any insurance whereas the driver is required to have insurance. This would give the driver an economic benefit in any action.

There are problems with 'no fault' insurance. A good example is what happened to Lela Gary of Toronto. Her insurer found her at fault for a collision but a HTA court determined that she was not. The 'fault charts' do not, nor can they, cover every conceivable type of accident and/or sometimes they are misapplied. There is a process, as Ms.Gary availed herself of, to have the insurers' determination reversed.

What is most problematic for cyclists is the determination of fault by the police officer at the scene. They may not lay any charges yet indicate the cyclist as "Driver 1" on the collision report. This indicates that the officer believes the cyclist is at fault by recording them as 'Driver 1'. This would become a significant hurdle to overcome in court if the cyclist seeks compensation. It more or less wipes out any protection/benefit the cyclist gets from s.193 of the HTA and puts them in to the position of being at fault. A recent case I followed had the cyclist spending many thousands of dollars more in extra legal costs to overcome the officer's determination of fault. The officer's investigation of the collision was itself faulty.

I hope that I have cleared some things up in trying to figure out what 'no fault' really means.

Here is a link to a Toronto Star article. About half way through it details some issues with the 'no fault' scheme.