No-Fault Insurance
No-fault insurance is meant to cover the loss of your medical expenses and/or financial gains once you’ve been involved in a very similar motor vehicle accident, regardless of the United Nations agency’s culpability. Some states require drivers to hold no-fault car insurance, while others make this coverage an ex-gratia. No-fault insurance is usually brought in in the form of personal injury protection, or PIP.
key takeaways
No-fault insurance, commonly referred to as personal injury protection (PIP), pays for your passengers’ medical expenses if you are concerned in an accident.
With a no-fault policy, you submit your claim to your own non-depository financial institution and not to the opposite driver.
No-fault insurance is mandatory in some states and ex-gratia in others.
Even if you are not required to have no-fault insurance, you still need liability coverage for bodily injury and property damage in almost every state.
What is no-fault insurance?
In most states, once a motor vehicle accident has occurred, drivers’ insurance corporations plan to verify that the United Nations agency was to blame for inciting it. Thus if you associate is in an accident and it is determined that the opposite driver caused it, you will file a claim against their insurance for any injury or damage.
No-fault insurance does not consider who is at fault in a very similar motor vehicle accident once the medical claims are paid. Instead of filing a claim with the opposite driver’s non-depository financial institution, you would file it with your insurance company. It will then evaluate your claim and pay you the damages, backing up the extent of your money damages.
Which states have no-fault insurance?
Currently, twelve states—Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah—plus Puerto Rico have some form of mandatory no-fault insurance law, consistent with Insurance Data Institute. 1 It is in the market in other states on an allied grace basis.2
While laws vary from state to state, the business divides them into 3 basic types: “pure” or “true” no-fault, optional no-fault, and add-on no-fault.
“Pure” or “True” no-fault states
“Pure” (or “true”) no-fault policies refer to policies where driving force insurance pays first-party edges to the driver and their passengers and where the drivers are restricted in their right to sue. . The first-party clause implies that the driver’s non-depository financial institution can cover his medical elective expenses even if the United Nations agency is liable in the accident. The following states (as well as the territory of Puerto Rico) have pure fault-free laws:3
Choice no-fault states
Choice no-fault refers to states that offer residents a choice of pure no-fault and a standard car insurance policy that does not restrict their right to sue. These states (which absolutely top the list without fault) allow drivers who prefer :3
Kentucky
new jersey
Pennsylvania
Add-on no-fault states
The add-on no-fault policy is a form of hybrid. Like an antique car policy, drivers are uninsured to sue, although first-party coverage may be higher on the policy, meaning their own non-depository financial institution pays for their medical and elective expenses. The following states (and the District of Columbia) have add-on no-fault laws:3
Arkansas
Delaware
District of Columbia
Maryland
new Hampshire
Oregon
South Dakota
Texas
Virginia
Washington
Wisconsin
It is also worth noting that these laws are subject to legislative amendment. For example, Colorado and Connecticut passed no-fault laws in the seventies, only to repeal them several decades later. Pennsylvania also passed a no-fault law in the seventies, repealed it in the eighties, and therefore reinstated it in 1990.3.
How no-fault insurance works
No-fault insurance is meant to reduce the pressure on the court system related to lawsuits related to automotive accidents. States with no-fault laws typically allow you to sue for serious injuries or pain and suffering only if the damages meet certain thresholds.1
A typical no-fault insurance policy may include:
bodily injury liability (BI) coverage
Property Damage Liability (PD) Coverage
Personal Injury Protection (PIP) Coverage
In total, liability coverage is mandatory in fifty states except New Hampshire. In that state, drivers must still present proof of monetary responsibility in order to drive without insurance.4
The liability portion of a no-fault policy covers 2 different things: property damage and injuries caused to others. Property damage liability pays for damage caused to alternative property in someone else’s vehicle or an associated accident caused by you. Bodily injury liability coverage pays for costs related to medical expenses if you injure someone in an accident where you are found guilty. Your policy will have a bodily injury liability limit per person and a bodily injury liability limit per accident.4
None of these coverages pay for your own or your passengers’ medical expenses if you are concerned in a companion accident. This is where the personal injury protection (PIP) element of a no-fault policy comes in.
Personal Injury Protection Insurance allows you to file a claim for medical expenses or alternative costs resulting from a motor vehicle accident, regardless of the United Nations agency’s culpability. Depending on your policy, PIP coverage can recover lost wages or reimburse you if you have to hire someone to handle routine household chores for you while you recover from a colleague injury.
Each state specifies a minimum amount of non-public injury protection coverage that you are required to have as a part of a no-fault policy. For example, you must have up to $10,000, $20,000, or $50,000 in PIP coverage. The minimum coverage amount also applies to bodily injury liability and property damage insurance.
States have completely different rules when it comes to paying for no-fault policies. In Michigan, for example, PIP insurance can cover all necessary medical expenses without limitation. It also pays up to eighty-fifths of lost pay if you are unable to trace the cause of the accident-related injury.
In the big apple, PIP coverage is limited to $50,000 per person, and so the payment of lost wages accounts for one-eighty of the financial gains, up to a maximum payment of $2,000 per month.
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