No-fault insurance is a type of auto insurance that restricts a driver’s ability to hold someone else responsible for a car accident. It covers the policyholder’s medical expenses for injuries from an auto accident, regardless of fault, using personal injury protection (PIP) coverage. Mandatory PIP insurance in no-fault states offers benefits for medical care after a car accident. It does not, however, cover property or vehicle damages.
What Is No-Fault Insurance?
No-fault insurance is a type of car insurance that is mandatory in only 12 states. It places financial responsibility on the policyholder after an auto accident regardless of whether he or she caused the crash. PIP insurance covers the policyholder’s medical bills without having to prove fault. Most states, however, exclude property damage coverage in no-fault insurance requirements. Therefore, you may have to pay out-of-pocket for property damages in a no-fault state unless you purchase comprehensive or collision coverage.
No-fault insurance aims to make the claims process more efficient by restricting litigation, reducing costs and avoiding delays in payouts. Since a driver does not have to prove fault, he or she can receive insurance benefits sooner than with fault-based insurance. The driver also does not have to pay for an investigation or litigation. In exchange for a faster and easier claims process, however, a driver in a no-fault state gives up the chance to hold the at-fault party liable for damages. This often means no payments for vehicle damages in no-fault states.
What States Are No Fault?
Most states in the U.S. use fault-based auto insurance laws, with only 12 exceptions. These 12 states use pure no-fault laws, meaning all drivers must carry personal injury protection insurance. Living in a no-fault state means drivers file accident claims with their respective insurance companies, regardless of who might have caused the collision. In pure no-fault states, drivers will not have the option of filing fault-based car accident claims unless their injuries qualify as serious under the state’s threshold.
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
Other states are not true no-fault states but offer no-fault insurance add-ons to drivers. These states are Arkansas, Delaware, Washington D.C., Maryland, New Hampshire, Oregon, South Dakota, Texas, Virginia, Washington and Wisconsin. Drivers in add-on states have the option to add no-fault insurance to their regular fault-based policies. After an accident, these drivers can decide whether to file no-fault or third-party claims depending on which would foreseeably result in greater compensation.
What Is the Serious Injury Threshold?
No-fault states bar most crash survivors from filing third-party claims unless their injuries are serious enough to qualify as an exception under the state’s injury threshold. This threshold differs from state to state. In general, serious injuries include broken bones, disabilities, or permanent scarring or disfigurement. If your accident is serious enough to meet the threshold in a no-fault state, a claim against the at-fault driver could pay for your vehicle damages as well as your medical bills. Otherwise, you might only qualify for vehicle repair compensation if you have the correct type of add-on insurance.
If you live in a fault-based car insurance state, the driver who caused your accident will be liable for your medical bills and any property damages. In Texas, for example, you may receive insurance benefits from the other driver if you or your car accident lawyer can prove his or her fault. All drivers in Texas must carry at least $25,000 in property damage liability insurance. This will pay for your vehicle repairs in an accident the other driver caused. If you caused the accident or live in a no-fault state, you may only receive coverage for vehicle damages if you have more than the minimum amount of insurance. The best way to ensure a fair insurance process after a car accident in any state is with help from a personal injury lawyer.