Cash News
If you live in a “no-fault state,” your car insurance will kick in after an accident, regardless of who is at fault. Conversely, if you live in an “at-fault” state, the “at-fault” driver’s insurance picks up the bill.
In no-fault states, drivers are required to carry no-fault auto insurance, also known as personal injury protection (PIP). No-fault car insurance protects you and your passengers if you’re involved in a car accident. It helps cover your medical bills and theirs, no matter who’s at fault. So if you live in a “no-fault” state, slide into a guardrail on a rainy day, and break your arm, your no-fault car insurance covers your healthcare costs minus any applicable deductibles.
Here’s a look at which states have “no-fault” insurance laws, how the insurance in those states works, and the pros and cons of no-fault auto insurance.
Learn more: The minimum car insurance requirements in all 50 U.S. states
Currently, just 12 states, plus Washington, D.C., have no-fault insurance laws. Puerto Rico is also a no-fault jurisdiction.
-
Florida
-
Hawaii
-
Kansas
-
Kentucky
-
Massachusetts
-
Michigan
-
Minnesota
-
New Jersey
-
New York
-
North Dakota
-
Pennsylvania
-
Utah
While most states on this list require no-fault insurance coverage, Kentucky, New Jersey, and Pennsylvania have what’s known as “choice no-fault insurance.” In these states, drivers can sign a waiver if they choose not to carry PIP coverage.
On the flip side, Oregon and Delaware require personal injury protection coverage but are considered at-fault states.
Learn more: What is personal injury protection insurance?
In a no-fault state, drivers must file a claim with their own insurance company after an accident — no matter who’s at fault — to pay for their own and their passengers’ medical bills. In a serious accident involving severe bodily injury and expensive medical care, the at-fault party can be sued.
In contrast, in an at-fault (or tort) state, the at-fault driver’s insurance covers all associated costs, including medical bills and car repairs for other parties.
After an auto accident, if you or one of your passengers is injured, your no-fault auto insurance coverage will kick in and cover healthcare expenses up to your policy limit. Here are some other common things no-fault auto insurance might cover:
It’s possible to sue for damages in many no-fault states, though certain criteria need to be met. For instance, your medical costs may need to exceed a specific amount, or your injuries need to be serious. Criteria vary by state.
-
Legal recourse may be limited
-
Insurance premiums may increase even if you aren’t at fault
-
Auto policies may be more expensive due to additional coverage requirements
If you live in a no-fault state and are shopping for car insurance, there are a few things to consider before you choose a policy. It’s important to look at exclusions, out-of-pocket expenses, and your potential premium and deductible. Compare carriers before signing up for new coverage.
Understand minimum requirements
First, it’s essential to understand your state’s minimum insurance requirements and if no-fault insurance is optional or required. Your state’s Department of Motor Vehicles should be able to provide this information.
In states requiring no-fault car insurance, talk with prospective insurance companies about how much coverage makes sense for your situation. Despite your state’s minimum coverage amounts, you may want additional coverage to adequately protect you and your vehicle.
Learn more: The most common types of car insurance coverage explained
If personal injury protection is not required in your state, you’ll need to determine if you want the added peace of mind that comes with PIP coverage. Some drivers in at-fault states may feel their liability insurance and health insurance are enough.
Learn more: What is liability car insurance, and how much do you need?
In certain states, medical payments coverage, or MedPay, may be optional if you want additional protection. Like PIP, MedPay can cover medical expenses associated with injuries to you or your passengers, but its scope is more limited. For instance, it probably won’t cover lost wages due to a lengthy hospital stay.
No. Liability insurance covers property damage and injuries to others in an accident — it does not cover your own losses. Drivers in no-fault states typically need to carry liability insurance and PIP.
Even in no-fault states, the at-fault driver’s liability policy generally compensates the other party for damage to vehicles or property.
As the Insurance Information Institute notes, no-fault insurance laws were intended to control the costs of insurance coverage by keeping the injuries and other claims resulting from minor accidents out of court.
However, some claim no-fault insurance laws have been ineffective in lowering insurance costs and don’t provide appropriate compensation for pain, suffering, or other types of long-term damages that can occur even in minor accidents.
Most of the time, you can be sued in a no-fault state for severe injuries or extensive damages. Each state sets its own threshold for this, but most require medical expenses exceeding $1,000 or more or the loss or impairment of a bodily function. The damages that can be received may also be limited.
For instance, in New York, before a lawsuit can be brought, requirements include medical expenses exceeding $50,000, dismemberment, permanent loss or limitation of a body organ, disability for more than 90 days, or death.
The article was edited by Tim Manni.
Kaz Weida contributed to this article.