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What Is No-Fault Insurance & Which States Have It?

by Karl Eisenhower

Why wait to assign blame for an accident before paying for necessary medical care? No-fault coverage prevents delays but is only available in some states.

You have been injured in an automobile accident, leaving you with medical bills and perhaps other costs such as lost income. Maybe you were at fault in the accident, maybe another driver was. How will you be compensated for these losses?

Twelve states have “no-fault” car insurance laws, and in these states, benefits for personal injuries are provided to each driver by his or her own insurance company, regardless of fault. The general idea is to make sure everyone has a minimum level of coverage for injuries without the delays and costs associated with determining who caused the accident.

Do You Live in a No-Fault State?

No-fault insurance only matters to you if you live in one of the states highlighted in blue or green on the map below.

These 12 states have instituted no-fault insurance laws to save costs by taking small personal injury claims out of the courts. In no-fault states, drivers get “first-party” coverage for car accident injuries from their own insurer without the need to determine who caused the accident. All car insurance policies in these states must include personal injury protection (PIP) insurance, which provides this basic coverage for minor injuries.

Since all motorists carry mandatory first-party coverage, people hurt in a car accident are not permitted to sue the other driver for compensation unless their injuries are severe.

What Is Choice No-Fault? Three no-fault states, sometimes called “choice no-fault” states, allow consumers to opt out of the no-fault system. These states are highlighted in green in the map above.

  • Kentucky: Consumers can reject limitations on their rights to sue by filing a form with the state Department of Insurance.
  • New Jersey: Consumers can choose “unlimited right to sue” insurance and, thereby, opt out of the no-fault system.
  • Pennsylvania: Consumers can choose a “full tort” policy that means opting out of the no-fault system.

The remaining 38 states are “tort” states, which have a different system for paying for minor injuries.

Comparing No-Fault And Tort States

The alternative to “no-fault” insurance laws is a “tort” system for paying claims for personal injuries. In these states, the at-fault driver – and that driver’s insurance – are responsible for compensating everyone injured in the accident. In tort states, there are no restrictions on the right to sue after an accident, even if a motorist chooses to purchase PIP insurance.

The table below outlines some of the differences between no-fault and tort insurance.

Category: Insurance

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