What is "choice no-fault" car insurance?

Learn more about "choice no-fault" car insurance, and the states that allow it.

Question:

What is "choice no-fault" car insurance?

Answer:

"Choice no-fault" car insurance is a variation on traditional no-fault car insurance rules, one that lets buyers of car insurance choose the kind of coverage they want when they first purchase their policy. Only three states (out of the dozen or so that follow no-fault rules) currently allow the “choice no-fault” option: Kentucky, New Jersey, and Pennsylvania.

A hallmark of the traditional no-fault car insurance system is that after a car accident, drivers turn to their own insurance policy to get compensation for things like medical expenses and lost income (up to certain limits) regardless of who was legally at fault for the accident. Under no-fault rules, you can’t get certain non-economic damages like pain and suffering, and you can’t file a liability claim against the other driver (through their insurance policy or via a personal injury lawsuit) unless your claim meets the threshold in place in your state that lets drivers step outside the no-fault system. These thresholds are based on a claim’s monetary value, or whether the claim involves “serious injury.”

But drivers in three no-fault states -- Kentucky, New Jersey, and Pennsylvania -- have the choice to “opt out” of no-fault when they first purchase their car insurance policy. Terminology varies by state, but essentially, drivers can choose between standard no-fault coverage and traditional tort-based coverage.

By choosing no-fault, drivers can’t file a liability claim against anyone else after an accident (again, unless their case meets the threshold for taking the claim outside of no-fault).

By choosing tort coverage, drivers have all their options on the table after an accident. They don’t need to meet any threshold. They can file a lawsuit against the at-fault driver and collect pain and suffering damages, but they can also be sued if they’re responsible for the accident.

There are numerous wrinkles in the “choice no-fault” system, and they vary among the states that offer this option. For example, let’s say two drivers are in a car accident, and Driver A has chosen traditional no-fault coverage, while Driver B has opted for tort-based coverage. Driver B probably still can’t sue Driver A, but questions like these can get tricky.

If you live in one of the three “choice no-fault” states, do your own legal research or speak to an attorney to understand how the law applies to your particular case.

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