No-fault accident insurance is a form of contract with an insurance company. It contrasts directly with the traditional form. No-fault does not hold anyone responsible for the accident. Traditional insurance automatically assumes someone is to blame and must pay. The approach adopted by no-fault insurance ensures different consequences when there is an accident.
No Fault Accident Insurance
No fault accident insurance essentially allows compensation no matter who caused the accident. The money for damages comes from the individual insurance companies. Each policyholder holds responsibility for the accident. Each insurance company “pays out.”
No-fault insurance is not uniform in its application cross the United States. Essentially, there are 2 basic types of no-fault accident policies. These either restrict the ability of an individual to sue for damages to property or person or allow the individual to sue. In some states, however, the individual may choose between traditional and no-fault coverage for automobiles.
Why No-Fault Accident Insurance
No-fault accident insurance has its appeals to insurance companies, policyholders and governments alike. There are several reasons why it is seen a favorable light.
- It avoids the costly price of litigation
- lowers the overall premium costs and
- encourages quicker payments than in the traditional system
Yet, the instance of no-fault accident insurance in the States has been spotty at best.
State Coverage
Between 1970 and 1975, several states opted to implement come form of no-fault accident automobile insurance. Several of them decided to opt out and revert to traditional fault-based systems. Colorado appealed its no-fault accident insurance laws in 2003. New York and Florida stayed within the system but have amended or re-introduced the laws to reflect concerns regarding fraud.
Originally, 24 states enacted no-fault accident legislation. Today, only 12 retain this form of automobile insurance. These are:
- Florida
- Hawaii
- Massachusetts
- Michigan
- Minnesota
- Pennsylvania
- Kansas
- Utah
- North Dakota
- New York
- New Jersey
- Kentucky
No-fault accident insurance is also operating in Puerto Rico and the District of Columbia.
Do not assume the type of no-fault insurance is the same for all states. It is not. Pennsylvania, New Jersey and Kentucky allow you to choose between traditional and no-fault kinds of insurance. This is not the same for the other states. Strict no-fault accident insurance is the law in the remaining states. Yet, the extent of the claims and the right to sue will differ from state-to-state.
As a result, you will need to hire an experienced and knowledgeable insurance lawyer to help you understand what and what is not applicable in your state.
