What is a No-Fault State?
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A No-Fault State Car Insurance Guide

In many states, when you're involved in a car accident, the responsible driver is the one who bears financial liability for everything associated with the accident, including the other party's medical bills and lost time at work as well as the physical damages from the accident. Unfortunately, this can leave the other driver struggling to pay their bills, especially medical bills, while they wait for the insurance companies to sort things out.

In no-fault states, things work a little differently.

While the rules vary by state, there are several characteristics that hold true in most no-fault states.


What is No-Fault Insurance?

No fault insurance is designed to cover medical bills and lost time at work when you're involved in an accident regardless of who carries that insurance. Instead of relying on the other party's insurance or your uninsured motorist coverage to take care of your medical bills or to offer compensation for time lost at work due to the accident, no-fault insurance automatically covers those expenses. It doesn't matter who caused the accident when you turn to your no-fault insurance for coverage.

No fault insurance may also provide coverage for passengers in your vehicle at the time of an accident, including minor children or passengers who do not carry their own personal injury protection insurance.

Under no-fault insurance, you can pursue compensation for medical expenses and lost time at work, but not for pain and suffering. In order to pursue this type of compensation, your claim must reach a certain threshold, which is generally determined individually by state. In order to pursue a pain and suffering claim in a no-fault state, you must either experience a serious injury, including things like amputation and paralysis or have medical expenses that far exceed the coverage of your personal injury protection policy.


How Much Coverage Do You Have to Have?

Most states that require no-fault insurance require $10,000 minimum coverage. Often, people try to save money by taking out policies with lower monthly payments, but higher deductibles. An average deductible for no-fault insurance runs about $1,000, but many people look for policies that start at a $2,500 deductible.

How much coverage you take out, however, will depend on your specific needs and your personal situation. If you have ongoing medical problems that could be made worse by an accident, for example, you may want more coverage. If you drive frequently for work or have a profession that causes you to be at a higher risk for an accident, you may want to carry a lower-deductible policy. Talk with your insurance agent about how much coverage you really need and what you are likely to need after an accident.


What if Your Injuries Exceed Your No-Fault Insurance Coverage?

In some cases, you may suffer serious injuries in a car accident that cause you to exceed the $10,000 of medical coverage and lost time at work offered by your no-fault insurance. In this case, you have several options.

Your medical insurance may kick in and cover some of your medical bills. The cost of ongoing care, for example, may be covered by your medical insurance, especially if you have permanent injuries.

The other driver's insurance may offer a settlement. In some cases, the other party's insurance may offer a substantial payout after an accident with serious injuries. Typically, this occurs when the cost of your injuries clearly exceeds the $10,000 of coverage you carry.


What if I Don't Carry Personal Injury Protection Insurance?

If you are a driver in a no-fault state, like New Jersey, New York, or Florida, you are legally obligated to carry personal injury protection insurance. If you allow your insurance coverage to lapse, you may be personally responsible for those expenses--and you may face fines and penalties associated with the accident. You may also face fines and penalties if you're pulled over during a routine traffic stop and found not to carry adequate insurance.

If you do not drive or do not have a car, you may not need to carry personal injury protection insurance. In this case, several things could happen if you are injured in an accident:

  • The driver of your car may have personal injury protection insurance that extends to cover you.

  • Your injuries may be covered by the driver who caused the accident.

  • You may need to turn to your medical insurance to cover your bills, especially if no one carries insurance that can help.


Getting a Quote

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