What is no-fault car insurance?

no-fault car insurance

No-fault auto insurance is also known as personal injury protection (PIP) and is a requirement for drivers in several states. This type of insurance is designed to cover medical expenses in the event that you or your passengers are injured in a car accident, regardless of whether or not they were responsible for causing the crash.

What is no-fault insurance?

With no-fault insurance (sometimes called personal injury protection, or PIP), you and your passengers' medical and hospital bills are covered up to your policy limits, less any applicable deductible. It may also include coverage for lost wages, burial and funeral costs, and more, depending on the insurer and the state you live in.

No-fault insurance does not compensate you if your vehicle is stolen or vandalized, nor does it cover damage to your car or the personal property of others in the event of a collision. However, it limits your ability to sue for damages in most cases.

Personal injury protection or no-fault coverage is mandatory in a dozen states and optional in several others. Minimum coverage amounts vary by state, but range from less than $5,000 to $50,000, and you may be able to increase that amount up to a certain limit.

How does no-fault insurance work?

Let's say your car collides with another vehicle and you and the other driver receive minor injuries. In a state where no-fault insurance is required, you would file a claim with your own insurer to receive compensation for your medical expenses. The other driver would have to do the same with his insurance company. It doesn't matter who may have been responsible for the accident, because with no-fault insurance there is no need to file a claim against the other person's insurance.

Coverage levels for Personal Injury Protection (PIP) vary from state to state. In Kansas, one of 12 "no-fault" states where such insurance is required, the minimum amount of coverage required is $4,500. Compare that to Michigan, another "no-fault" state. Drivers in that state must have a minimum coverage of $50,000.

If you or your passengers are seriously injured in a crash and you want to sue the other driver in court for damages, certain rules apply. Your medical expenses must exceed a certain dollar limit (this is called a dollar limit) or meet a certain degree of severity, such as being disabled, disfigured, or dead (this is called a verbal limit). This varies between states. Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah use a monetary threshold. The other five no-fault states use a verbal threshold, according to the Insurance Information Institute (III).

What does no-fault insurance cover?

Details vary between insurers and policies, but no-fault insurance coverage can include:

  • Medical bills: This includes hospital, medical, and other related expenses for anyone injured in the vehicle.
  • Housekeeping services: Your policy may reimburse you for the cost of hiring someone to take care of household chores that you are unable to do due to injury.
  • Lost wages: Some insurers may compensate you with a fixed percentage of your salary or a fixed amount if you are unable to work.
  • End-of-life expenses:  Cremation, funeral, or burial costs may also be included

Although no-fault auto insurance is a form of vehicle coverage, you do not have to be driving at the time of the incident to qualify for compensation. In most cases, no-fault insurance coverage also includes medical payments if you are hit by a vehicle while biking or walking, for example.

What does no-fault insurance not cover?

No-fault insurance is not a type of umbrella coverage. It only focuses on medical and injury-related expenses for you and your passengers. In most cases, personal injury protection or no-fault insurance coverage does not include:

  • Property damage
  • Deliberate or criminal acts
  • Other parties’ medical expenses

Is No-Fault Insurance Required?

Unlike liability insurance, which is required in every state except Virginia and New Hampshire, only a few states require no-fault insurance or personal injury protection (PIP), according to the Insurance Information Institute (III). The minimum amount of coverage required per person varies from state to state (higher limits may be available) and are as follows:

  • Florida: $10,000
  • Hawaii: $10,000
  • Kansas: $4,500 
  • Kentucky: $10,000
  • Massachusetts: $8,000
  • Minnesota: $40,000
  • Michigan: $50,000
  • New Jersey: $15,000
  • New York: $50,000
  • North Dakota: $30,000
  • Pennsylvania: $5,000
  • Utah: $3,000

In three of these states (Kentucky, New Jersey, and Pennsylvania), drivers have the option of purchasing no-fault insurance or having traditional auto insurance, which does not limit their right to sue or be sued in court for related damages. with a collision. .

How much does no-fault car insurance cost?

The premium for a no-fault auto insurance policy depends on several factors, including where you live, your driving record, your age and gender, desired coverage levels, and deductibles. With so many variables, the best way to find out how much no-fault insurance would cost is to get a quote from your current insurer, as well as two or three other companies.

How do you buy no-fault insurance?

If you live in a state where personal injury protection is mandatory or optional, buying no-fault insurance is pretty simple. Before you buy, there are a few things to consider to ensure you get the best coverage for the lowest price.

Know how much you need

As detailed in the list of no-fault states, each has its own requirements for how much coverage you must have. However, the requirement is only a minimum amount. If you live in a state that requires a relatively low minimum amount of personal injury protection, and depending on the type of health insurance you have, if any, you may want to consider purchasing additional coverage if you can afford it.

Understand what is covered

PIP insurance is not a one-size-fits-all solution to auto insurance. It only covers the medical expenses of the parties in your vehicle. Most states require that you carry a minimum amount of auto liability insurance to pay for damage to other people's property (such as your vehicle) and medical bills. Collision insurance, which is optional, takes care of your own vehicle repairs.

There is a deductible

When you consider the cost of no-fault auto insurance, don't forget about the deductible. It is the amount you must pay out of pocket before your vehicle insurance steps in to pay the rest. A typical deductible amount is $500 or $1,000, but the amount varies by state.

Shopping around

As with any type of auto insurance, it pays to get multiple quotes. The same coverage could be considerably cheaper with a single provider.

Is no-fault insurance the same as liability insurance?

No. No-fault insurance covers medical expenses for you and any other passengers in your car, regardless of who caused the accident. Bodily injury liability insurance covers the occupants of other vehicles involved in a collision in the event you are at fault.

Next Post Previous Post
No Comment
Add Comment
comment url