Since 1978, there have been two parts to Québec’s auto insurance system:
- Private insurance, provided by private insurers, covers civil liability and material damage.
- Public insurance, provided by the Société d’assurance automobile du Québec (SAAQ), covers any bodily injury sustained during a car accident.
Mandatory private insurance
Under Québec’s Automobile Insurance Act, any owner of a vehicle operating in Québec is required to carry liability insurance for at least $50,000 (for a passenger vehicle). This insurance policy must cover:
- civil liability for material damage and bodily injury caused to other persons in accidents taking place outside Québec;
- material damage caused to a third party in Québec for which the policyholder is liable.
Mandatory insurance, along with optional protections covering damage to the vehicle, is provided by private insurers.
The Act also states that the Groupement des assureurs automobiles (GAA), a group that includes all of Québec’s automobile insurers, is responsible for guaranteeing that all Québec drivers have access to automobile insurance. This means that a driver unable to obtain mandatory insurance can get help from the GAA.
IBC works closely with GAA in Québec in all matters related to automobile insurance, both to inform Québec drivers and guarantee their access to automobile insurance, and to defend the interests of private insurers with regard to the legislative and regulatory framework.
One contract for all
In Québec, there is a single, standard automobile insurance contract that is approved by the Autorité des marchés financiers.
No fault vs. direct compensation
“No fault” is a term that often comes up in discussions about Québec car insurance. It is associated with a wide range of meanings, many of which are inaccurate.
“No fault” means that people are compensated without regard to their responsibility for an accident. In Québec, victims of car accidents are compensated according to this principle. The SAAQ provides compensation for victims regardless of their “fault,” that is, regardless of their responsibility for the accident. However, private insurers do take the insuree’s responsibility into consideration when they calculate compensation for material damage.
What about direct compensation? This is a provision of the Automobile Insurance Act ensuring that a driver who is not responsible for an accident will always be compensated by his insurer for material damage to his vehicle, whether or not he bought a policy covering this type of damage. Under direct compensation, a consumer who is not satisfied cannot sue anyone but his own insurance company.
To establish a client’s non-responsibility, the insurer uses the Direct Compensation Agreement, a document that describes various accident scenarios and each driver’s degree of responsibility.
Under this Agreement, which is binding on all Québec automobile insurance providers, no claim may be made against a third party that is responsible for an accident. Save in exceptional cases, the insurer of the non-liable party will not sue the party that is responsible in order to recover the compensation paid to its client.
Direct compensation, which has long been in force, has simplified and accelerated the claims settlement process. It has also made it less costly: some 90% of claims can be settled without any legal action.