Figures show that drivers are paying for accidents they don’t have. Insurers charged New Brunswick drivers $373.7 million in premiums during 2012, while drivers only filed $204.4 million in accident claims that same year. This is the 10th year in a row that auto insurance companies in the province have overestimated claims and beaten profit targets.
Probably the greatest reason for New Brunswick auto insurance companies’ rising profits is the province’s no fault auto insurance policy.
The insurance systems and their consequences are very complicated, but we’re going to try to break them down for you. Here are facts you should know about no fault auto insurance:
- If someone is injured in a no fault jurisdiction or their vehicle damaged, their own insurance pays, regardless of who is responsible for the accident.
- Auto insurance policy falls on a spectrum of no fault and tort (fault-based).
- Provinces with pure no fault systems include Quebec, Manitoba, and Saskatchewan. New Brunswick has a mixed system along with Ontario, PEI, Alberta, and Nova Scotia. British Columbia and Newfoundland and Labrador have primarily tort-based systems.
Here’s what auto insurance companies claim about no fault insurance:
- No fault insurance excludes illegitimate and small claims (ex. whiplash).
- You can still get significant compensation for so-called serious injuries, depending on each jurisdiction’s threshold for seriousness.
- Preventing the small claims process drives down the cost of car insurance and prevents premiums from increasing.
Here’s what insurance companies won’t tell you about no fault auto insurance:
- Cutting out so-called small claims means that if you get in a car accident and suffer from a soft tissue injury, your insurer will give you significantly less money than what you could sue for in a tort jurisdiction. For example, if you are injured in a car accident in Quebec (no fault system) and suffer from whiplash, you would not receive any compensation for pain and suffering regardless of fault. If you are injured in a car accident due to someone else’s negligence in Newfoundland and Labrador (tort system) and suffer from whiplash, you can sue the person at blame and potentially achieve $25,000 in compensation. (If you’ve ever had a whiplash, you know that the $25,000 is worth every penny).
- By preventing so-called small claims, auto insurance companies in no fault jurisdictions absorb the money that they no longer have to pay out.
And to make matters worse, here’s some information insurance companies DEFINITELY won’t tell you:
- Practice shows that premiums continue to rise for no fault auto insurance, despite promises that premiums stay low.
- Studies show that drivers aren’t as careful when there’s no longer a fault-based system. Fatality rates in no fault jurisdictions go up by 10%.
There you have it. New Brunswick drivers are paying far more than the insurance companies are providing compensation for, to the point that insurance companies are exceeding profit targets. And they’re doing it by preventing people from making legitimate claims. Moreover, no fault auto insurance makes driving more dangerous.
No fault? No thanks.