No-Fault Car Insurance and State Laws: The Basics
If your accident occurred in a no-fault state, start here to understand the no-fault rules.
No-fault auto insurance is a little like cod liver oil. Everyone’s heard of it, most everyone’s been convinced it must be good for you, a lot of people have been forced to take some, but nobody seems to know whether it does any good. One group, however, has clearly benefited from no-fault: the insurance industry. Although lower insurance rates was one of the basic promises on which no-fault was sold to legislators, it has failed to deliver lower costs to the consumer. About half the states that originally adopted no-fault laws have since repealed them.
The following states have some form of no-fault automobile insurance law -- often referred to in policies as Personal Injury Protection (PIP): District of Columbia, Florida, Hawaii, Kansas, Kentucky, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.
How No-Fault Works
In general, no-fault coverage eliminates injury liability claims and lawsuits in smaller accidents in exchange for direct payment by the injured person’s insurance company of medical bills and lost wages -- up to certain dollar amounts -- regardless of who was at fault for the accident.
No-fault doesn't usually apply to vehicle damage (except in a few states, like Michigan); those claims are typically still handled by filing a liability claim against the one who is responsible for the accident, or by looking to your own collision insurance.
After you file your PIP claim, you may also be able to file a liability claim against the person at fault. The circumstances under which you can file a liability claim vary from state to state.
The Limits of No-Fault
Prompt payment of medical bills and lost wages without any arguments about who caused the accident is the simple part of no-fault. But most no-fault insurance provides extremely limited coverage to the injured person:
- It pays benefits for medical bills and lost income only.
- It provides no compensation for pain, suffering, emotional distress, inconvenience, or lost opportunities.
- It does not pay for medical bills and lost income higher than the PIP benefit limits of each person’s policy. PIP benefits often fail to reimburse fully for medical bills and lost income.
Do You Have No-Fault Coverage?
Whether you have no-fault coverage and the amount of PIP benefits you carry -- that is, the amount of medical bills and lost income your own insurance company will pay regardless of fault in the accident -- depends on your individual insurance policy. To determine whether you have PIP coverage and what your PIP benefits are, read your policy carefully. If your policy includes PIP protection, file your first claim for injury compensation -- medical costs and lost income only, up to the dollar limit of your coverage -- with your own insurance company, following the procedures set out in the PIP section of your policy.
Liability Claims Are Also Allowed
To make up for what PIP benefits do not cover, all no-fault laws also permit an injured driver to file a liability claim, and a lawsuit if necessary, against another driver who was at fault in an accident. The liability claim permits an injured driver to obtain compensation for medical and income losses above what the PIP benefits have paid, as well as for pain and suffering and other general damages, the same as a liability claim in a state without a no-fault law.
Whether and when you can file a liability claim for further damages against the person at fault in your accident depends on the specifics of the no-fault law in your state.
No-fault states have different types of thresholds that an injured person must reach before being permitted to file a claim for full compensation against those at fault for an accident. Some states have a monetary threshold only, some states have a serious injury threshold only, and some states have both. States with both requirements permit a liability claim if an injured person meets either one. Learn more about States with Monetary Thresholds and States with Serious Injury Thresholds.
To learn more about how insurance coverage works after a car accident -- and everything you’ll need to navigate your claim -- get How to Win Your Personal Injury Claim by Joseph L. Matthews (Nolo).