Understanding No-Fault Insurance

A pretty common misconception is that no-fault car insurance means your insurance company never considers you “at fault” for an accident. The truth is, there are driving rules for everyone. If you break one, you face the possibility of a traffic ticket, or worse, criminal prosecution. In other words, the law may determine an accident to be your fault.

No-fault insurance is a term used by the auto insurance companies to describe a system of how a claim is paid out. The goal is to ensure that compensation and benefits are paid to the injured party, regardless of who was at fault. If you live in Calgary, Medicine Hat, or Brooks, your TSG Insurance agent is happy to sit down with you and discuss your specific needs. We work with you to review your current policies and offer custom insurance quotes to help you get the required protection.

How No-Fault Insurance Works

Known as Direct Compensation Property Damage (DCPD), this type of claim system reduces the delays that can happen when going to court. Instead of having to wait, DCPD works to provide treatment and benefits quickly. Here is a simple breakdown of how it works and who pays your auto claim after an accident:

  • When you are at fault and have no-fault insurance – Your insurer will pay for damages to your car under your own collision coverage.
  • When you are not at fault and have no-fault coverage – Your insurer will pay for damages to your automobile under your DCPD coverage.
  • When you are at fault and have traditional coverage – You insurer will pay for damages to your vehicle as set out in your collision coverage.
  • When you are not at fault and have traditional insurance – The other party’s insurer pays for damages under the other driver’s liability coverage.

Examples of No-Fault Insurance vs. Traditional Insurance at Work

To better understand how traditional insurance and no-fault insurance work in the real world, here are a couple of examples:

Traditional Coverage

Bill and Sue get into a fender-bender. If Bill is found at fault for the collision, Bill’s insurance company will be responsible for paying out claims for damages to both vehicles.

No-Fault (DCPD) Coverage

Dan and Sam are in a collision where Sam is at fault. With DCPD, it does not matter who is actually at fault. Sam’s insurance will cover Sam’s vehicle damage. Dan will deal with his own insurer to receive compensation.

Find the Best Insurance for Your Needs

Alberta functions with a no-fault car insurance system. So, you do not have to deal the same hassles that a traditional system brings. Speak with a TSG Insurance broker to get the answers to your questions on insurance services. Since 1985, TSG has served customers in the Alberta area to protect their cars, homes, and businesses, as well as help with financial planning.

Contact us online and we will respond as quickly as possible. Also, please feel free to call us toll-free at 800-830-9423 to book an appointment at one of our convenient locations in Calgary, Brooks, Medicine Hat, Edmonton, or Bassano.