Finance

What Does No-Fault Insurance Really Mean For You

What Does No-Fault Insurance Really Mean For You
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No-fault insurance is also referred to as personal injury protection insurance (PIP). PIP will help cover you and your passengers’ damages like medical expenses and loss of income in the event of a covered accident, regardless of who is at fault.

No-fault insurance laws require every driver to file a claim with their insurance company after an accident, regardless of fault. States without no-fault laws require drivers to purchase personal injury protection with their auto insurance policies.

No-Fault Provisions

By right, motorists can sue for severe injuries and pain and suffering when their injuries meet the severity threshold. A verbal threshold can be expressed in descriptive terms. A monetary threshold is expressed with dollar amounts and medical bills. 

Some laws also include minimum requirements for the length of time that you’re disabled due to the accident. What separates no-fault insurance from other types of insurance is that as long as the accident is covered within the terms of your policy, PIP coverage pays for the accident expenses. Those expenses include medical bills, income losses, and other related expenses incurred by you or your passengers (after your deductible, and up to your covered limit).

Is no-fault insurance required?

No-fault insurance is obligatory in 18 states. Some states require that medical expenses caused by the accident be covered by medical payments insurance instead of no-fault coverage.

No-fault Insurance Coverage

No-fault insurance typically covers the following for no-fault policy owners and their passengers:

  • Medical expenses resulting from the accident
  • Income losses due to the inability to work
  • Funeral costs

No-fault insurance covers economic losses, but damage to your vehicle would be covered by your collision insurance or the other driver’s liability policy. 

Auto Insurance Categories

Each state has its provisions about the different types of insurance coverage you need. That’s why it’s imperative to choose legal representation that understands the laws and insurance provisions in your state and local community. 

Auto liability insurance general laws fall into four broad categories: no-fault, choice no-fault, tort liability, and add-on. The principal differences are based on whether your policy restricts you from the right to sue. Another major difference is whether the policyholder’s insurer pays first-party benefits, or pays up to the state maximum amount, regardless of who is at fault.

Read on for more information about the different types of insurance policies and what each means for you. 

No-fault Insurance

The no-fault system is intended to lower the burden that small claims have put on the court systems by removing them completely. Insurance companies compensate policyholders for the cost of minor injuries regardless of who was at fault in the accident. 

Personal injury protection is mandatory in true no-fault states. The extent of coverage varies in each state. The major variations between no-fault state laws involve dollar limits on medical expenses, burial expenses, lost income, and the amount paid to a helping professional.

Choice No-Fault Coverage

In choice no-fault states, drivers select one of two options: a no-fault auto insurance policy or a traditional tort liability policy. 

Tort Liability

Tort liability states don’t have restrictions on lawsuits. A policyholder at fault in a car crash can be sued by the other driver and by the other driver’s passengers for the pain and suffering the accident caused and for out-of-pocket expenses such as medical costs.

Add-on Coverage

In add-on states, drivers receive compensation from their insurance company as they do in no-fault states, but without restrictions on lawsuits. The term “add-on” is used because in these states, first-party benefits have been added to the tort liability system. First-party coverage may not be mandatory in add-on states, and the benefits may be lower than in true no-fault states.

What to Do if You’re Involved in an Accident?

What you do after your accident will depend on your location. Since each state is different, personal injury accident professionals recommend speaking with an experienced attorney familiar with cases like yours. To navigate complex driving laws and complicated insurance requirements, you need professional help.

If you have already experienced an injury due to a car accident, a skillful car accident attorney can help you get compensation for your damages. The first thing you should do is get medical care for your injuries and call the police. Afterward, Balkin & Mausner advises that the next best thing you can do to protect yourself is to review your accident, terms of insurance, and injuries with licensed attorneys in your community. 

About the author

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Steven Ly

Steven Ly is the Startup Program and Events Manager at TheNextHint Inc. She recruits rockstar startups for all TC events including Disrupt, meetups, Sessions, and more both domestically and internationally. Previously, she helped produce Dreamforce with Salesforce and Next '17 with Google. Prior to that, she was on the advertising teams at both Facebook and AdRoll, helping support advertisers in North America and helped grow those brands globally. Outside of work, Priya enjoys Flywheel, tacos, the 49ers, and adventuring around the globe.

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