No-fault is an auto insurance system that is designed to lower the cost of car insurance by removing the ability to sue. When an auto accident happens, each person involved in the car accident is compensated by their own auto insurance company for small injuries, regardless of who was at fault. Neither driver is allowed to sue the other unless their injuries are serious and meet a certain threshold. Different versions of no-fault insurance exist based on states and thresholds.
In no-fault states, each driver on the road must carry a Personal Injury Protection (PIP) insurance policy. Insurance coverage provided by a PIP will vary by state, but most should cover medical fees, lost wages, funeral costs and other out-of-pocket expenses. The major difference between no-fault states is the dollar limits on the various coverage's.
No-fault insurance refers to injuries and medical bills. If your vehicle was damaged in an accident and you were not at fault, the cost to repair your vehicle would apply to the at-fault drivers insurance policy.
Example:
Let’s say you were in a minor car accident with another driver, we will call him David. David ran a stop sign and ran into your car. You suffered injuries that totaled $10,000 in medical bills. Under a no-fault system, you would submit an insurance claim to your auto insurance company who would pay it even though the accident was completely David's fault.
List of no-fault states
There are currently 12 states with no-fault auto insurance laws in effect. These states are:
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
In Idaho, you are not required to carry no-fault insurance. Idaho is a Tort state meaning that the driver at fault must pay a victim's medical expenses. Further, the victim can also pursue compensation for additional lost wages as well as pain and suffering.
Washington is not a no-fault insurance state. Washington State is a comparative fault state, meaning the fault of all parties involved in a car accident comes into play when determining compensation for damages.