What Is No-Fault Car Insurance?

No-fault auto insurance covers you and your passengers' injuries. It doesn't matter who caused the accident. Learn about it here.
Woman feeling pain after car accident

Did you get into an accident? If you live in a “no-fault” state, how you handle the aftermath of your accident might be a bit different than usual. No-fault insurance or personal injury protection (PIP) will cover your injuries from an accident regardless of who’s at fault. This is different from other types of insurance, such as liability or collision, where they only kick in depending on who’s at fault.

In this article, we’ll explain the basics of no-fault insurance. This includes a breakdown of the following:

  • No-fault insurance
  • No-fault states
  • Who might need to buy it
  • What it does and doesn’t cover
  • Cost of insurance
  • How much to buy
  • Frequently asked questions

What is No-Fault Insurance?

No-fault insurance pays for any injuries you or your passengers suffer in an accident. You’ll receive coverage no matter who’s at fault in the accident. Insurers often refer to no-fault insurance as personal injury protection (PIP). PIP is what’ll you see when you go to buy “no-fault” insurance from an insurer.

No-fault states require drivers to file a claim with their insurer after an accident occurs. Even if they were the ones that were at fault. The type of insurance that you need to file a claim is PIP. PIP isn’t mandatory in most states. But you should check your state’s bare minimum insurance requirements to be sure.

Relationship Between No-Fault Insurance and Personal Injury Protection (PIP)

No-fault coverage and PIP can be a bit confusing. Most insurance companies will describe no-fault as being the same thing as PIP. This is because PIP is the type of insurance that no-fault states require you to have. It’s also what’ll pay for your injury costs, regardless of fault.

What are No-Fault States?

No-fault states are those that require drivers to buy insurance to pay for their injuries and medical bills from an accident regardless of fault. If you live in a no-fault state, you’ll need to buy PIP. Also, no-fault states require drivers to file a claim with their insurer, no matter who caused the accident.

Who Needs It?

So, who needs no-fault insurance? You’ll only need it if your state requires it. Otherwise, coverage is optional, and you’ll be able to decide if you want it as part of your policy. Injury and medical costs can be in the thousands without any insurance. It’s a good idea to have PIP on your policy to ensure that your injuries are covered in an accident.

Which States Require PIP

No-fault auto insurance is mandatory in only 16 states. Some states also require that medical payments coverage (MedPay) covers your injuries instead of PIP. Below are the states that require you to carry no-fault coverage/PIP on your policy:

The states that require no-fault insurance are called no-fault states. They require you to file a claim with your insurance company, despite who’s at fault in an accident.

States That Make PIP Optional

While the states above may require no-fault insurance, these aren’t the only ones that offer it. Some states allow the driver to decide whether or not they would like to add it to their policy. Below are the states where no-fault or PIP insurance is available:

If your state doesn’t require no-fault insurance, you may want to consider a couple of things. First, if you have MedPay, you either may not be able to have no-fault/PIP or you won’t need it. Also, your health insurance policy may not cover as much as no-fault or MedPay.

What It Covers

No-fault insurance covers many different medical expenses and injuries that you or your passengers suffer from an accident. Here’s a list of what no-fault insurance covers:

  • Lost income and wages
  • Health insurance deductibles
  • Any costs that go over health insurance limits
  • Funeral costs
  • Essential services (things you can’t do or perform due to injury, such as child care)

What It Doesn’t Cover

PIP covers a wide range of expenses. The constant is that they will always relate to injuries and damage to the passengers. Below are some examples of what PIP won’t cover:

  • Damage to another person’s property. This refers to any physical object e.g., buildings, light posts, fences, etc.
  • Damage to your car and damage to the other party’s car.
  • Medical bills that are above your coverage limits.
  • Injuries on farm equipment, mopeds, off-road vehicles, and motorcycles
  • Intentional injuries
  • Injuries that a person sustains while committing a felony

PIP covers any expenses that relate to accidental injuries and medical expenses. All other damages fit under other forms of auto insurance, such as liability insurance and comprehensive coverage.

Per the Washington state insurance commissioner, PIP covers anything that an insurer deems as:

  • Reasonable
  • Necessary
  • Directly part of the accident
  • Within three years of the accident in question

Everything else is not part of the coverage. Be sure to ask your insurer if you’re unsure about whether they’ll pay for a certain expense.

Cost of No-Fault Auto Insurance

The cost of PIP can vary depending on the car insurance company that you work with. Your rates will also vary depending on several factors. These factors are small details about you that’ll tell your insurer whether you’re a risk for filing claims. Common rate factors include:

These aren’t the only factors that affect the cost of your car insurance, but they are some of the most significant ones. Knowing what impacts the price of insurance most can help you save money in the long run.

Each car insurance company will offer a unique rate to you. It’s always a good idea to compare car insurance quotes to find the best price.

How Much to Buy

After deciding that you want to buy PIP, it’s best to have an idea of exactly how much you’d like to carry on your policy. Because no-fault or PIP is sometimes a requirement in certain states, it’s important to check the minimum limits for your state.

Often, your state’s minimum coverage won’t be enough to cover all of the expenses in an accident. The general rule of thumb is to buy as much insurance as you can afford. Medical expenses can be very expensive after an accident. And while you may also have MedPay, PIP can help cover other expenses, like lost wages.

Frequently Asked Questions

Q: What’s the difference between no-fault insurance and PIP?

A: Personal injury protection (PIP) is the type of insurance that no-fault states require. No-fault states mandate that drivers must purchase insurance to pay for their injuries. In this case, PIP is the option that states require because it covers injuries regardless of fault.

Q: What does no-fault insurance mean?

A: No-fault insurance covers the driver in an accident no matter who was at fault during an accident. It refers to personal injury protection. Drivers must carry it in no-fault states.

Q: Can I sue the other driver to help pay for my injuries?

A: In some cases, you can sue for more money to help pay for your injuries. To do this, your case must meet a certain set of conditions according to the Insurance Information Institute (III). This set of conditions is the tort liability threshold, and it evaluates whether or not a person’s injuries are severe enough to sue for more money (dismemberment, death, etc.).

Q: Do I need both MedPay and no-fault insurance?

A: The quick answer is you don’t have to buy MedPay on top of no-fault insurance unless it is a requirement in your state. The other side to this is that it may be a good idea to have both. MedPay covers much of your expenses after an accident including doctor visits, ambulance rides, prosthetics. PIP covers many things such as lost wages and health deductibles.

Carrying both types of insurance on your policy can help greatly in covering medical costs.

Q: How does filing a claim work?

A: No-fault claims are usually personal injury protection claims. You would file the claim with your insurer to pay for any injuries to you or your passengers. An example of these would be:

  • Lost wages
  • Medical bills
  • Funeral expenses

In rare cases, you may sue for more damages. In these situations, your injury must be severe enough to meet your state’s threshold. Dismemberment, death, and broken bones are common examples of severe enough injuries to meet the threshold.

Finally, it’s important to follow your insurer’s rules and policies. Doing so will ensure you get the best result possible. This could be filing the claim within the time limit, having an examination from a doctor, or giving a witness statement.

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