Determining who is at fault for an auto accident can be tricky; when fault is in dispute, it often leads to litigation and delays in awarding damages.
In the 1970s, several states decided to pass legislation that introduced no-fault car insurance, which is intended to help simplify fault determinations and avoid litigation for minor injuries.
More specifically, no-fault car insurance allows a policyholder (sometimes called the first-party) to collect damages from their own insurance company, no matter who is at fault for the accident.
Moreover, in some states, this type of insurance system sets limitations on the right to sue over a car accident, thereby avoiding needless litigation. The benefit coverage of this insurance system is called personal injury protection, or PIP for short.
Today, 12 states have variations of no-fault insurance, which we’ll cover in more detail below. Whether you live in a no-fault state or not, it’s good to know how this type of insurance works in the event you ever experience an accident in a state with this type of insurance system.
States with No-Fault Insurance
There are currently 12 states in the US that have adopted a no-fault system:
- New Jersey
- New York
- North Dakota, and
Florida, Michigan, New Jersey, New York, and Pennsylvania have elected to use verbal thresholds for determining fault, which is to say that specific injuries are detailed in writing to describe what is or is not covered by the policyholder’s agreement (i.e. death, disfigurement).
Conversely, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah have monetary thresholds, or a dollar amount to be covered by the policyholder’s agreement.
Four Types of No-Fault Insurance
There are four basic types of no-fault car insurance: No-fault, choice no-fault, tort liability, and add-on.
- No-fault insurance allows car accident victims to sue under certain conditions (thresholds) that are outlined verbally or in monetary terms.
- In states with choice no-fault systems, drivers can choose no-fault insurance or a tort liability policy.
- Tort liability policies do not place restrictions on drivers seeking damages through litigation. Car accident victims (including passengers) can sue for lost wages, pain and suffering, and future medical expenses.
- Add-on states give drivers the ability to sue for damages, but they are also able to recover damages from their own insurance company.
What Isn’t Covered by No-Fault Insurance?
Like the name suggests, no-fault insurance helps individuals recover from car accidents that they themselves are not responsible for.
No-fault insurance does not cover damage to your vehicle unless you have some form of collision coverage. No-fault insurance does not cover damage to someone else’s property, or excess medical expenses that go beyond the limits of state laws.
Are You Fully Covered?
Nobody wants to get in a car accident, but accidents still happen every single day. The important thing for a driver is knowing that they’re properly covered, and that their needs will be met in the event of a car accident or personal injury.
Regardless of the state, sometimes accidents are so severe that medical expenses and lost wages go well beyond policy coverage; fault may be disputed thereby suspending relief.
In some cases, litigation will be necessary to uncover fault and to claim damages that are rightfully owed.
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