Alberta General Insurance Level 1 Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

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What defines a No-fault insurance system?

Compensation is based on the level of fault

Coverage is exclusively for property damage

Drivers are compensated for injuries without regard to fault

In a No-fault insurance system, drivers receive compensation for their injuries regardless of who was responsible for the accident. This means that each party's insurance covers their own medical expenses and lost wages without the need to prove fault or negligence. The purpose of such a system is to simplify the claims process, reduce litigation costs, and ensure prompt payment for injuries, thereby providing financial stability for individuals involved in an automobile accident.

The other options do not align with the principles of a No-fault system. For example, the concept of fault (as mentioned in option A) directly contradicts the no-fault approach. Option B limits coverage to property damage, which doesn't encompass the primary focus of no-fault insurance—driver injuries. Finally, option D discusses premiums and coverage, which are not foundational elements of what constitutes a no-fault insurance system.

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