No fault auto insurance is active in 12 states and is enforced differently within these states. Understanding no fault insurance, no fault insurance states, and local no fault insurance law helps you understand your insurance coverage and benefits. Do you live in one of the twelve no fault insurance states? Keep reading and find out how the no-fault insurance policy can protect you.
This article will help you understand:
- what no-fault insurance is
- your benefit under no fault coverage, or Personal Injury Protection (PIP)
- the no fault insurance states
- no fault insurance law
- how to get a quote
What Is No Fault Auto Insurance?
No fault insurance was first adopted in 1971 by Massachusetts. The idea behind no fault car insurance is that when someone is injured in an accident, they can be reimbursed and get the medical treatment they need without having to determine who is liable for the accident. The no fault insurance policy allows a more timely compensation for losses because it eliminates the long litigation process that comes with the “tort” insurance system.
Under the no fault car insurance law, the policyholder has the right to compensate for medical expenses from their insurance company, regardless as to if they are at fault for the damage. However, the party liable for the accident is by no mean waived. For even greater understanding read No-Fault Insurance Definition.
Benefits of the No Fault Insurance Policy
Protection(PIP) No fault auto insurance is sometimes referred to as personal injury protection (PIP) because it is intended to cover income losses and medical expenses due to an accident. Here is an example of how no fault insurance coverage can protect a policyholder: An individual is involved in a car accident that is so severe that an ambulance is retrieved to take them to the emergency room. All of the expenses are covered by their PIP policy (including x-ray tests, if it is needed). However, every no fault policy has a threshold (or monetary limit ) as to what it will cover.
A threshold is a limit that is placed on the personal injury protection. It acts as a ceiling to let the policyholder and insurance provider know how much can be compensated to cover losses. The threshold can be verbal or monetary (or a combination) and is designed to limit lawsuits to only the more serious injuries. Other claims filed that exceed the threshold will not be covered.
The No Fault Insurance States
No fault insurance policies are currently active in twelve states. In addition to the twelve no-fault states, the commonwealth of Puerto Rico also offers no fault coverage as an auto insurance option. The twelve no fault auto insurance states are: Michigan (MI), New York (NY), Florida (FL), New Jersey (NJ), Kentucky (KT), Hawaii (HI), Massachusetts (MA), Kansas (KS), Minnesota (MN), North Dakota (ND), Utah (UT), and Pennsylvania (PA).
Of these no fault insurance states, Florida, Michigan, New Jersey, New York, and Pennsylvania have what is called a “verbal threshold” no-fault insurance coverage. Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah have what is called a “mandatory threshold“. Don’t forget to learn more about your local state law.
No fault automobile insurance was adopted so that insurance premium can be kept low. The “no litigation” process for reimbursement reduces the expensive court fees greatly, which then translates into cheaper insurance rates and premiums for policyholders. Sadly, this has also made it that much easier for fraud. To combat no fault auto insurance fraud, some states have tightened the reimbursement process, making it more difficult to receive payments, even for legitimate claims. Understanding the no fault insurance coverage and law of your state can help you file a more accurate insurance claim and save you money in you auto insurance premium.