If you have an automobile, you know that insurance is non-negotiable but not all insurance laws are created equally. The type of insurance you choose depends on a number of factors, including your vehicle’s status, your driving record, and even the state you reside in. There are two main types of insurance laws in the United States: tort insurance laws and no-fault insurance laws. If you have never heard of no-fault insurance laws, then you likely live in a state that does not recognize or practice no-fault laws. There can be a lot of confusion surrounding no-fault states laws, so let’s discuss what states are no-fault states and what that means for drivers.
What Does No-Fault Mean?
In the early 1970s, American car owners and drivers were not completely satisfied with the way insurance laws handled claims and processing, leading to the introduction of no-fault legislation, which aimed to reduce the cost and time spent determining fault.
Each state that identifies as a no-fault state has various rules and laws that are unique to that specific state (we will get into what states are no-fault states in just a minute). The general definition for no-fault insurance states typically refers to the idea that all drivers are responsible for their own medical expenses, etc., in the event of a collision, regardless of who was at fault. This means that instead of spending time and resources determining fault, the insurance company will pay the policyholder for any injuries sustained from the collision. For instance, if Vehicle 1 and Vehicle 2 were involved in an accident, each driver would file their own claims with their insurance companies through the personal injury protection (PIP) provisions that are set in place within the policy. As we mentioned, the laws do vary by state, but some of these no-fault states have laws in place to prevent one driver from suing the other driver. However, if you live in a no-fault state, you can still seek damages from pain and suffering depending on the severity of injuries sustained.
No-Fault Vs. Tort
Tort insurance laws are the most common throughout the United States and typically assign fault to a driver involved in the collision. Let’s say Vehicle A runs a red light and hits Vehicle B; the insurance agency would [likely] determine that that Vehicle A was at fault and therefore responsible for the accident. In this situation, the at-fault driver would cover costs associated with the collision – property damage and medical bills. Assuming they have coverage, the at-fault driver’s insurance policy would pay for the expenses within coverage limits. In the event that the responsible party does not have auto insurance, they would still be liable for damages and possibly even lawsuits if they cannot pay.
Another major component of no-fault or personal injury protection (PIP) laws that should be noted is that no-fault insurance only covers costs associated with injuries. So what about property coverage? Drivers still have to obtain auto property coverage through their insurance while also carrying their no-fault or PIP policy. Even in a no-fault state, the responsible party or at-fault driver can still be sued in certain situations. This is why it is crucial to contact your insurance agent and an attorney if you have been in an accident in a no-fault state.
So what states are no-fault states? Currently, within the U.S., there are only 12 states that have no-fault laws in place. The following states have no-fault laws in place:
- New Jersey
- New York
- North Dakota
If you live in one of these states, be sure to check the laws within your state that discuss your no-fault insurance options. In a true no-fault state, all drivers have the opportunity to choose between no-fault or tort insurance. Choice no-fault states include Kentucky, Pennsylvania, and New Jersey, but even these three have slightly different stipulations. For example, if a driver does not specify, each state’s default plan will take effect; for Kentucky and New Jersey, the default is no-fault insurance. In Pennsylvania, it defaults to tort insurance coverage.
Insurance is something that most drivers simply get because it is required, but it’s imperative that you understand the laws in your state in case you are involved in an accident. If you live in a no-fault state and were involved in an accident that caused damages beyond the policy thresholds, contact us today to see if you have a case.