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What does it mean to be a no-fault state?

Don’t Miss These Facts

  • No-fault auto insurance laws require drivers to file a claim with their insurance company after an accident, regardless of who was to blame
  • There are 12 states and territories that follow traditional no-fault insurance laws 
  • You can typically get compensation for several economic or out-of-pocket damages 

Car insurance is mandatory in almost every state, but its laws vary based on where you live. In no-fault states, drivers must file claims with their own insurance companies for medical bills and related costs, regardless of who caused the accident. They likely won’t be able to sue the other driver unless their medical condition or expenses meet a certain threshold.

This article will overview the states with no-fault laws and how no-fault car insurance works.

What does no-fault state mean? 

A no-fault state is a state with laws requiring injured drivers to first turn — often exclusively — to their car insurance coverage to get compensation for specific losses after an accident.

No-fault insurance regulations also impact a person’s capacity to sue if they get hurt in a car accident. In no-fault states, drivers may only be entitled to sue if their injuries or medical bills exceed a certain cost or verbal compensation. An injury must be of a specific severity communicated in linguistic terms in states with a verbal threshold (for example, disfigurement). Medical bills must reach a specific dollar amount before someone can sue the other drivers in states with a monetary threshold.

However, no-fault insurance does not apply to property damage.

Even in a no-fault state, the fault is always determined in an accident, and the at-fault driver’s liability insurance will cover property damage. That means that you will file a claim with your insurance for injuries, but against the at-fault driver’s insurance for damage to your car or other property. If you’re found at fault, damage to your car will be covered with collision coverage.

What is no-fault insurance?

If you’re wounded in a car accident, your car insurance policy will cover some or all out-of-pocket costs, regardless of fault. A no-fault claim gets made through personal injury protection (PIP) clauses in a car insurance policy. This kind of coverage is mandatory in no-fault states, but you can also purchase PIP-type coverage on top of traditional liability coverage in states without no-fault laws.

A simple way to remember what no-fault entails is that everyone will file an insurance claim, regardless of who caused the incident. Most no-fault accident states require personal injury protection coverage as part of the auto policy.

The rules in each no-fault state are different. In some states, purchasing no-fault insurance is required, and filing an injury claim through the no-fault system is the first — and sometimes only — option for injured drivers, passengers, and others. Car users in the number of “choice” no-fault states can opt out of the no-fault system and go with liability-based coverage by either obtaining a car insurance policy or filing an injury claim following an accident.

What is personal injury protection insurance? 

Personal injury protection coverage is mandatory in no-fault jurisdictions, but you can add it to your auto insurance policy in any state. It doesn’t matter who caused your car accident when filing a claim under PIP coverage, regardless of whether it’s mandatory or optional in your state.

What is the difference between no-fault states and tort liability states?

In tort liability states, someone injured in an accident they didn’t cause will file a claim with the at-fault driver’s insurer rather than their own insurance company. With no restrictions, the injured person can also sue the at-fault driver for any pain, suffering, or out-of-pocket medical costs.

Which states have no-fault insurance laws? 

The following states and territories follow the traditional no-fault insurance laws:

  • Florida
  • Hawaii
  • Kansas
  • Massachusetts
  • Michigan
  • Minnesota
  • New York
  • North Dakota
  • Puerto Rico
  • Utah
  • Kentucky
  • Pennsylvania

How do no-fault laws affect car insurance coverage? 

Generally, no-fault states require personal injury protection, though some at-fault states do. The minimum PIP coverage levels necessary for motorists get determined by the states. If an auto accident occurs, this coverage pays a specified amount of medical bills for you and your passengers.

Health insurance deductibles, lost income, necessary services you can’t perform due to an accident-related injury, funeral costs, and medical expenses above coverage limits are all covered by PIP.

The required PIP coverage limit gets set at the state level. For example, Florida mandates citizens carry $10,000 in personal injury protection and $10,000 in property damage liability insurance (PDL). If a driver is at fault and destroys another person’s vehicle or property, the PDL compensates them. PIP is the no-fault portion that each injured individual files a claim to cover medical expenses.

What does no-fault insurance cover? 

You can usually get compensation for several out-of-pocket damages resulting from a car accident if you file a no-fault insurance or PIP claim, including:

  • Medical bills related to your car accident injuries
  • Lost earnings — up to a certain limit — resulting from your injuries
  • Cost of replacement services; for chores you can’t do because of your injuries, for example
  • Burial or funeral costs if someone died in an accident.

A crucial aspect of the no-fault system is that you are not permitted to get compensation for pain and suffering as part of your claim.

You can file a liability claim — or personal injury lawsuit — against the at-fault driver only if your medical expenses reach a specific level or if the state’s threshold considers your damage serious.

If you live in a no-fault state, what should you think about?

If you live in a no-fault state, learn about the many types of no-fault. You can research this online and by contacting insurance companies in your area.

Inquire about optional no-fault insurance if you live in Kentucky, New Jersey, or any state where drivers can select between a no-fault or typical tort policy. The driver can make this decision when they receive their insurance coverage. 

What is a no-fault state?

​​​​No-fault auto insurance laws exist in some states, meaning drivers must make a claim with their insurance company after an accident, regardless of who was to blame. If you live in a no-fault state, you must get personal injury insurance and any other required coverage types.

If you’re searching for car insurance for the first time or recently relocated to a new state, check if your state has no-fault insurance laws and what coverage they require. Then, you can browse around and compare quotes from various companies to choose the insurance coverage that best suits your demands and budget. If you live in a no-fault state, ensure you understand your state’s no-fault laws, including any limitations on your ability to sue, by contacting your state’s transportation agency.