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no fault insurance

You may be familiar with at-fault car insurance. If you’re in an accident with someone, the person who caused the accident is responsible for helping pay for damage done to your car—and in some cases—helping with medical bills.

That person would file a claim with their car insurance company. Most state laws operate on an “at-fault” basis. (These states are also known as tort states. No, it’s not a dessert.)

There are some states that use no-fault laws. If you’re from an at-fault state or are new to no-fault insurance, read on to learn more about the insurance requirements, if you need it, and what it means if you’re in an accident.


What is No-Fault Insurance?


No-fault insurance is a type of auto insurance that covers your medical costs in the event of a car accident, regardless of who is at fault. The theory behind requiring this kind of coverage is to save on expensive litigation costs that can occur when two parties are trying to prove fault in the other party.

Let’s look at an example to make things a bit clearer. Assume you were in a minor accident with another driver, we will call him Tom. Tom ran a stop sign and collided into your car. You suffered injuries that came with $8,000 in medical bills. Under a no-fault system, you would submit a claim to your own insurance company who would pay it despite the fact that the accident was completely Tom’s fault.

In a tort state, you would submit a claim (or your insurer would) to Tom’s insurance company to cover your medical costs since the accident was completely Toms fault. However, if you were deemed to be partially responsible, let’s say the accident was 30 percent your fault, the payout (from Tom’s insurers) would be reduced by 30 percent, which your insurance company would then cover.

In no-fault states, personal injury protection (PIP) coverage is required and drivers are limited in their right to sue other drivers. Below, we go in-depth about what no-fault insurance covers, where it’s required, and how much it costs.


What does No-Fault Insurance Cover?


In some states, no-fault insurance is required in addition to your other auto insurance coverage, while other states offer it as optional insurance, but in either case, the coverage is called Personal Injury Protection (PIP).

PIP helps cover the medical bills of you and your passengers (and in some states, pedestrians) if you’re involved in an accident. This insurance can also help cover:

  • Medical expenses resulting from the accident, which could include X-rays, hospital visits, rehabilitation or ambulance rides
  • Your health insurance deductible
  • Lost income as a result of the accident
  • Childcare expenses
  • Funeral expenses

Your insurance payout after a claim depends on the limits you chose for PIP coverage. The higher the limit on your policy, the more your insurance can cover when you file a claim. Before you choose a limit, you should know that the higher your limits, the more you pay for your policy. In most no-fault insurance states you also have the option of selecting a deductible (like health insurance) and doing so will reduce your PIP insurance premium.


How much does No-Fault Insurance Cost?

If you are moving to a no-fault state or are considering PIP insurance in a state where it is optional, click on your state in the map below for the best rates on car insurance in your state:

Which States are No-Fault States?


There are currently 13 states that are considered true no-fault states and require PIP insurance plus an additional 10 states where the coverage is optional.


Mandatory No FaultOptional No Fault
MassachusettsNew Hampshire
MinnesotaSouth Dakota
New JerseyTexas
New YorkVirginia
North DakotaWashington
Puerto Rico


What are the Pros and Cons of No-Fault Insurance?


Between 1971 and 1976, two dozen states adopted no-fault car insurance laws. Four decades later, spiraling medical costs and rampant fraud have made the system a persistent target for reform. No-fault insurance schemes can be expensive (think Michigan) and often lead to fraud (think Florida), which ends up pushing up costs for everyone.

High costs can put a serious damper on no-fault insurance. In Michigan, unlimited lifetime medical benefits for accident victims caused the state to have the highest average car insurance rates in the country for years. But, now that reform laws have passed, which go into effect in July of this year, drivers in that state hope to get some relief from super high car insurance costs.

While the intentions of a no-fault system are good (lower costs, quick payment of claims), it can be difficult to get a well-oiled system set up.

Florida is a prime example of where an outdated PIP system has driven up insurance costs and spawned massive fraud. Florida has the third most expensive car insurance in the country with an average premium of $2,050. This is 50 percent more expensive than the national average.

While Florida did put a 14-day limit on seeking treatment after a crash and instituted a $2,500 benefits cap unless a medical doctor, osteopathic physician, dentist or a supervised physician’s assistant or advanced registered nurse practitioner determines the injured person has an “emergency medical condition” in 2013, premiums have continued to rise.


What is Choice No-Fault Insurance?


“Choice” is another hybrid of the pure no-fault system. It creates two classes of insured drivers by retaining parts of both the pure no-fault and traditional fault-based systems. Versions of choice no-fault have been implemented in Pennsylvania and New Jersey. It is also the plan proposed by the federal government in its Auto Choice Reform Bill.

Under a choice system, drivers choose whether they want to be insured under a pure no-fault plan or retain some traditional tort rights similar to modified no-fault.

  • If you choose the pure no-fault plan, you are unable to sue negligent drivers for non-economic damages, and you are immune from such suits yourself.
  • If you choose to retain your traditional tort (personal injury suit) rights, you can sue other drivers who have also chosen to retain their tort rights, and in return, they can sue you. Your traditional tort rights are not unlimited, however. If you have an accident with a driver who has opted for the pure no-fault option, you are unable to sue that driver.

By its design, choice no-fault tends to lead good drivers to pick the tort option (which is more expensive) and bad drivers to pick the pure no-fault option (which is less expensive). Critics charge that this unfairly punishes good drivers with higher rates and rewards bad drivers with no personal liability.

Frequently asked Questions

Isn't PIP insurance a lot like med-pay?

Benign breast conditions and life insurance?

PIP and med pay are similar because neither coverage requires the insured to be the at-fault driver, however, PIP covers additional risks that med pay does not cover:
Lost income as a result of the accident
Childcare expenses
Funeral expenses

What does no-fault insurance do?


No-fault insurance is a type of auto insurance that covers your medical costs in the event of a car accident, regardless of who is at fault. The theory behind requiring this kind of coverage is to save on expensive litigation costs that can occur when two parties are trying to prove fault in the other party.

Does no-fault insurance cover damages to my car?

what is collision insurance

Personal Injury Protection (PIP) insurance was designed to only cover the insured driver and some passengers who are injured in a car accident. PIP always responds first unless the accident is work-related. If the insured driver is injured in a work-related car accident, the employer’s workers’ compensation would be the primary coverage and the PIP secondary.

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