If you currently reside in one of the twelve states which operate under a no-fault policy as far as auto insurance is concerned, then your insurance may be somewhat different than more traditional insurance policies. The twelve no-fault states are DC, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah. There is wide misunderstanding about what no-fault auto insurance is and how it can hurt or help in the event of an auto accident. No-fault insurance encompasses an automobile insurance system which requires that all drivers carry insurance for their own protection and also limits the right to sue other drivers for damages following an auto accident.
No Pure No-Fault System
Under a pure no-fault system in the event of an accident each driver’s insurance pays for their specific damages—up to the policy limits—without consideration of who might have been at fault in the accident. There is no state which currently operates under a pure no-fault auto insurance system meaning these no-fault states operate under a combination of a no-fault system as well as the standard liability system. This means each driver is financially responsible for the cost of the damages they directly caused.
Positive Aspects of No-Fault Insurance
In theory no-fault insurance guarantees each driver receives immediate medical treatment which is surely a good thing. Benefits such as medical expenses, lost wages, funeral and death benefits and compensation for loss of services are usually fully covered under no-fault insurance policies. No-fault auto insurance is convenient regarding the time-consuming task of filing a claim following an accident and can also reduce the legal and administration fees associated with insurance claims which would lead you to believe that no-fault insurance is considerably less expensive. Unfortunately, the liability portion can actually cause insurance premiums to be higher than those of states without no-fault laws.
Still, those injured in an accident in a no-fault state are more readily able to have their medical expenses and auto damages dealt with quickly allowing them to get on with their life. If you are the at-fault driver in an accident, then no-fault car insurance means you are not responsible for the other driver’s expenses which can be a huge financial relief. Of course the driver who was not at fault may find this system somewhat unfair, however generally speaking the driver who was not at fault probably spends the same amount of time collecting compensation whether no-fault insurance is involved or not.
Statistics for No-Fault Insurance States
Some no-fault states will allow the injured person or persons to sue but only if their injuries meet a specific standard set for severity of injury or a certain financial level. On the surface it would appear that the no-fault insurance system should be working well, however statistics prove otherwise. Litigation costs for property damages following a collision remain high and there are no consequences associated with driving recklessly meaning the insurance premiums may be significantly higher in no-fault states. The numbers show that the states with some form of no-fault automobile insurance have the highest premiums and insurance premium in no-fault states rose 92% faster than those in personal responsibility states. Overall insurance premiums in no-fault states are approximately 20% higher than those in states with other forms of auto insurance.
If you live in a no-fault state you must read your policy carefully to determine what is covered under your policy. If you are injured in an accident in a no-fault state it’s important that you get legal advice to ensure your injuries and damages are fully covered.