What Does it Mean to be a No Fault State?

August 10, 2019

Auto insurance protects those involved in a car accident. In some states, your insurance protects only you, not the others involved in a car accident. This is the case in no fault states. You file a claim against your own insurance after an accident. Some states call no fault insurance Personal Injury Protection, or PIP. Keep reading to learn how it works.
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How Does No Fault Insurance Work?

No fault insurance covers you and any passengers in your vehicle after an accident. The PIP policy covers the medical expenses of anyone in your car (no other cars involved in the accident). It may also cover loss of income of anyone in your vehicle because of the accident.

Typically, no fault insurance covers:

  • Medical expenses coinciding with the accident whether doctor or hospital related
  • Loss of income due to the inability to work
  • Final arrangements in a fatal accident

In a no fault state, you file a claim with your own insurance company after an accident, regardless of who caused the accident. You don’t have to worry about disputes or going through the he said/she said process of placing blame.

You cannot sue for pain and suffering or general damages in a no fault state, though. You only receive reimbursement for the costs incurred because of the accident or lost income. Typically, because of the lack of dispute in a PIP case, insurance companies pay the claims faster.

No fault insurance also eliminates the need for lawsuits. Only in certain circumstances can you file a lawsuit in a no-fault state:

  • Significant injuries causing life-altering conditions
  • Significant medical bills that exceed the PIP threshold

What Does No Fault Insurance not Cover?

No fault insurance leaves many expenses outstanding including:

  • Vehicle damage
  • Vehicle theft
  • Property damage
  • Excessive medical bills

If you want coverage for vehicle damage or vehicle theft, you need collision and comprehensive insurance respectively. Property damage liability insurance covers damage you caused to other people’s property, such as a house, yard, or building.
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Which States are No Fault States?

The following states are no fault states, but they each have different types of coverage. For example, some states allow drivers to choose between no fault and liability-based insurance. Others only allow you to file medical and loss of income claims on your no fault insurance. Any property damage, pain and suffering, or excessive claims must be brought against the ‘at fault driver.’

  • Arkansas
  • Delaware
  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

Choosing no fault insurance (if you have the choice) is an important decision. Talk with your insurance provider to determine if it’s the right choice for you. The limitations on the type of claims you can file can put the financial burden on you even when you didn’t cause the accident. Understand the full implication of this type of insurance to make sure it’s right for you.
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