Ace the Alberta General Insurance Level 1 Exam 2025 – Insure Your Success Today!

A "No-fault insurance system" is designed to allow drivers to receive compensation for their injuries and damages without having to establish who was at fault in the accident. This system simplifies the process of claiming insurance benefits, as it removes the need for lengthy investigations and legal battles to determine liability.

Under this system, injured parties can claim benefits directly from their own insurance company for medical expenses and other related costs, regardless of whether they caused the accident or not. This not only speeds up compensation but also helps reduce the costs associated with legal disputes over fault, often leading to lower overall insurance costs in regions where it is implemented.

The other options do not accurately reflect the core characteristic of a no-fault insurance system. For instance, the first option incorrectly suggests that no compensation is provided at all, while the third option indicates a limitation on coverage that does not pertain to the no-fault principle. The fourth option introduces the concept of deductibles, which isn't specific to the no-fault framework. Thus, the defining feature of the no-fault system is the ability of drivers to receive compensation regardless of fault, which is articulated in the second option.