No-Fault Insurance – Some States Have It, Some Don’t

Fault for crashes is assigned even in “no-fault” states. (carclipart.net)

The world of auto insurance can often be a confusing one. Consumers have no shortage of policy and provider options and in some states people can even opt for no-fault coverage, an insurance system that requires drivers to carry insurance for their own protection and also places limitations on their ability to sue other drivers for damages. The system is called “no-fault” because drivers are reimbursed for damages regardless of who was at fault in the accident.

Currently, this coverage is only offered in 12 of the 50 states including:

• Florida
• Hawaii
• Kansas
• Kentucky
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Pennsylvania
• Utah

Puerto Rico, a U.S. territory, also has no-fault insurance in place for its residents.

What Exactly is No-Fault Insurance?

In a nutshell, no-fault insurance compensates policy holders for the damage done to their personal property but does not cover damages for which the driver is responsible. For example, if a minivan is involved in a fender-bender with a truck, the insurance company of the minivan driver would pay for damages to the van. On the other side of the scenario, the truck driver’s insurance company would pay for damage done to the truck.

Many people who have only ever known the alternative tort insurance system don’t fully understand the other option and vice-versa, so below is a list of some of the common advantages and disadvantages to the system to help them better comprehend the similarities and differences.

Some positive aspects of no-fault car insurance are:

• Claims are handled more efficiently and quickly.
• Fewer court cases, which means lower legal and administrative costs.
• Insurance premiums should be lower and/or more affordable for motorists.
• Every driver is guaranteed immediate medical treatment in the event of an accident.

However, there are some drawbacks to this coverage including:

• Imposes limits on injured motorists’ ability to sue.
• There’s little incentive to be a good driver or to avoid negligence.
• Legal loopholes overcomplicate a process that is already difficult to navigate.
• Premiums show no price advantage for drivers, and in some cases, might be more expensive.

Specifics will vary from state-to-state, but in general, when a driver is involved in a crash or collision in a no-fault state, their claims for both property damage (their automobile) and injury claims will be handled by their own insurance company. And this is the basic way claims will be handled, regardless of whom is at fault for a collision.

To ensure you know and understand all of the options available to you, it’s important to check the insurance rules and regulations for your specific state. Don’t let yourself get overwhelmed by all of the variations. For more information, do some research and talk to a provider in your area.

The post No-Fault Insurance – Some States Have It, Some Don’t appeared first on CarInsurance.org.

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