No fault auto insurance is a system adopted by certain states (New York, New Jersey, Washington DC, Florida, Hawaii, Kansas, Kentucky, Michigan, Minnesota, Nort Dakota, Pennsylvania and Utah) designed to protect drivers by requiring them carry their own insurance while placing limitations on their ability to sue, and conversely be sued. Under this system, insurance companies are obligated to pay for economic damages (medical costs, damage to vehicles etc) regardless of who was at fault in the accident. Most attractively, no fault insurance guarantees medical treatment if you are involved in an accident.
The system is designed to keep auto insurance costs down by reducing the administrative and legal fees associated with most claims, by limiting the scope and number lawsuits permitted. However, no fault insurance can still be expensive due to many liability issues. Presently, there are no ‘pure’ no fault systems, or policies which completely cover all costs regardless of fault and prevent all lawsuits. Instead, a blend of traditional and no fault systems give drivers coverage of certain types of damage and protection against many, but not all lawsuits.
No fault insurance usually falls under an umbrella policy called personal injury protection (PIP), which vary in coverage from state to state. In most cases, PIP will cover injury related expenses, including loss of wages, medical bills and rehabilitation in some cases. While each state has its own criteria on allowing lawsuits, most base their judgments on the severity of the accident, and the liability of the drivers involved.
States offering no fault policies include NY, NJ, DC, FL, HI, KS, KY, MI, MN, ND, PA and UT. In New York State for example, in order to register a vehicle a driver must assume no less $50,000 in PIP. The minimum insurance structure requires $25,000 in insurance for each individual you injure in an accident and up to $50,000 total. $10,00 is allocated for damage to the other party’s property (such as their vehicle). In the event of death, the minimums are raised to $50,000 for injury per person and up to a $100,000 total for all injured.
Uninsured motorist bodily injury coverage is also required, at the same minimums as PIP to cover your injuries in case of an accident. Additional coverage over the $50,000 minimum is available in New York as an option. Drivers may also purchase other coverage such as collision and medical expenses with their no fault insurance. It is always important to bare in mind that no fault auto insurance does not guarantee freedom from liability in the event of an accident, and can still be expensive, so as always it’s important to compare policies to find the best price.
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