Nearly all states require drivers to have auto insurance. Each state has its own car insurance laws. There are two types of states: fault states and no-fault. The main difference is how you are reimbursed for injuries sustained in an accident.
It is crucial to find out if your state has no-fault or fault laws as a driver. It affects how you file claims and also the type of insurance premium you pay.
The key takeaways
- Your insurance company will typically pay for your medical bills and lost earnings if you are in a no fault state. This applies regardless of who caused the accident.
- Drivers who live in certain no-fault states must have Personal Injury Protection (PIP), in addition to their basic liability coverage.
- PIP insurance doesn’t cover damage to your vehicle or another driver’s health expense, nor medical bills beyond your policy’s limits.
What is no-fault coverage?
Imagine that you’re in an accident that causes a broken leg. You live in a no fault state. It doesn’t matter who caused it. When you visit the emergency room to have your leg fixed, you will need to give your insurance information. Your insurance company will be billed by the hospital for the cost of your medical treatment. If you are able to pay for the costs, your insurer should send you a check detailing the amount.
Personal injury claims can be quickly paid by no-fault coverage. There is more to it: you will not have the other driver take you to court. Your ability to sue is limited. No-fault insurance was created to reduce the cost of auto insurance and keep smaller claims out of court. You can only sue another driver in certain cases of serious and high-cost injuries.
No-fault insurance will cover you for your medical expenses and lost wages if you are in a car accident. Certain states have a cap on the amount you can get from your auto insurance. Others do not.
Personal injury protection is the portion of your policy that covers these expenses. It is required in no-fault states, meaning you need to carry it in addition to your state’s minimum liability requirements. Sometimes, people confuse the terms “no-fault insurance” with “PIP insurance”.
State with no-fault
These are the states where there is no fault and you must have PIP coverage.
- New Jersey
- New York
- North Dakota
- Puerto Rico
PIP is also available in several other states. However, it is not mandatory. These states are not considered no-fault states. These are:
- District of Columbia
- New Hampshire
- South Dakota
States may have different requirements. Find out what your state’s no fault requirements are.
What is no-fault insurance?
Although the regulations regarding PIP cover vary from one state to another, they are generally expenses that you can expect to pay under your PIP coverage in an accident-free state.
- Medical expenses include: Hospital fees, prescriptions and surgery.
- Loss of wages: In the event that you are unable or lose your job due to injuries, lost wages may be included in the settlement.
- Funeral expenses: Insurance can pay for funeral costs if you are involved in an accident that results in your death.
- Other costs: PIP can cover some household chores in certain cases.
These are some of the expenses PIP will not cover in a state with no-fault:
- Injuries to other drivers or passengers: This should be covered by the other driver’s policy.
- Accidents to pedestrians: Your PIP will pay for you if you’re a pedestrian who is struck by a car. Their insurance should cover you if you hit someone who is riding a bicycle or walking in a car.
- Your policy limits do not allow you to get additional coverage for medical expenses. If the accident was their fault, you might be able to sue them for the excess costs.
- Your car, or any other object, may be damaged. This includes items like a fence or lamppost. If you have collision insurance, it will cover damage caused by an accident.
- Damage caused to your car by bad weather, vandalism, theft, or hitting an animal: You will be covered for these losses if you have optional comprehensive insurance.
For more information about exclusions and inclusions, consult your insurance policy.
Questions frequently asked
What is the cost of PIP insurance?
You can find the cost of the PIP section of your insurance on your insurance documents. The cost of PIP depends on many factors, including your age, gender and the type and age your car. Also, how much coverage you want.
Is PIP a way to pay for pain and suffering
No-fault rules allow you to sue for pain or suffering only if your case meets specific criteria. These criteria vary from one state to the next and often involve severe injury or high medical costs. However, PIP is generally meant to keep smaller claims from the courtroom.
I’m a resident of New Jersey. Can I sue for damages after an accident?
Three states, New Jersey, Pennsylvania and Kentucky, allow you to sue for any accident injury. A lawyer or insurance agent can help you understand your options.
Who is responsible for car damage in a state with no fault?
These policies, if you have optional collision or comprehensive coverage, will cover car damage regardless of who is at fault.