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Purchasing No Fault Insurance

No fault auto insurance, which can be purchased for additional fees, pays for hospital bills or car damage (up to policy limits) without the burden of proving fault. For this reason, unless there is additional litigation, most claims are paid swiftly. In most states that have no fault insurance, first party benefits such as personal injury protection (PIP) are required.

The no fault insurance laws do prohibit individuals from filing suit against an at-fault driver, unless certain criteria are met. The criteria, called the "threshold," focuses on the severity of an injury. The threshold amount, which is either monetary or verbal, says when a person can file a suit to retain money for medical expenses or for pain and suffering.

No fault states legislate the threshold amount differently. In states where the threshold has been written as a monetary amount, the medical expenses and wages lost would suffice for evidence for meeting the requirements of the threshold. In other states, the descriptive threshold provides written requirements for reaching the threshold. A few states require that a certain number of days of disability must have occurred for a person to meet the descriptive threshold amount.

No fault auto insurance gained momentum throughout the 1990s in the United States. The idea stemmed from legislation during the 1970s which granted individuals the right to pursue medical bill reimbursements from their own insurance companies. The no fault insurance reform aimed to do away with lengthy litigation processes and to stop the excess spending needed for such practices. This type of insurance pays for most medical expenses, funeral expenses, wage loss, and services lost by one’s own insurance.

Types of No Fault Insurance Coverage

 Some states allow drivers a choice between no fault insurance or regular tort or liability coverage. The District of Columbia allows drivers "choice" no fault coverage. Basically, every driver has the option of buying no fault coverage or regular tort-liability coverage. For the no fault portion, states require PIP coverage minimums.

Other states do not offer a pure no fault coverage, but go with partial no-fault instead. Under a partial no fault system, a driver can only file suit against another driver if the threshold is met (as we outlined above). Florida offers a good example of a partial no fault state. Under Florida no fault auto insurance laws, they require that drivers have "first party benefits" of personal injury protection with minimums of $10,000, but they also require bodily injury liability protection minimums of $10,000 per person and up to $20,000 for all injured persons. This coverage will pay for medical expenses of the other driver and are what makes it a partial no fault state.

Insurance providers sited higher cost of health care and difficult-to-assess injuries as reasons for the increase in lawsuits. Of course, with all these elements, a person’s PIP coverage level would be met quickly and the option to sue would emerge. Many believe that this argues against the need for no fault insurance and beckons towards the standard at-fault insurance system.

No-fault insurance premiums are often higher. The critics of the no fault car insurance think that it is wrong not to punish the at-fault driver. They believe that litigation and having to pay for damages can teach a lesson to at-fault drivers and make them more cautious in the future. Many states are doing away with these auto insurance plans, and heading more in the direction of at-fault insurance.

States with No Fault Coverage

There are 12 states that have no fault auto insurance laws in place:

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

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