How No-Fault Insurance Works & Which States Are No-Fault
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No-fault insurance covers your medical costs in the event of a car accident, regardless of who is at fault. It's also known as personal injury protection (PIP).
This kind of coverage ensures you can get medical care right away after an accident, without waiting to figure out who's responsible.
It also reduces the need for expensive litigation that can occur when two drivers are trying to prove the other is responsible. In no-fault states, PIP coverage is required and the right to sue is limited.
How does no-fault insurance work?
No-fault insurance covers your medical bills if you're injured in an accident, regardless of who is at fault. Your bills are paid by your insurance company. This differs from other types of auto insurance, such as liability coverage, that only pay out when fault for an accident is determined.
A core aspect of no-fault insurance laws is that they restrict a person's right to sue or file claims against other drivers for pain and suffering from an accident. However, under some state laws, drivers are allowed to seek payment for serious injuries. This is called "verbal tort threshold." Injuries that qualify usually include:
- Death
- Disfigurement
- Fractured bones
- Dismemberment
- Loss of a fetus
Some no-fault states also allow drivers to sue for economic losses after medical expenses or lost wages exceed a monetary tort threshold set by the state. Once this threshold is met, the injured driver is allowed to file a suit against another driver for economic losses.
Say you live in Utah and get into an accident that results in $10,000 in medical bills. You can file a claim against the driver who caused the accident, because your expenses exceed Utah's $3,000 threshold. You can do this even without using up the mandatory $3,000 of PIP insurance.
The typical form of no-fault coverage is personal injury protection (PIP), which covers medical bills and lost wages for a driver and their passengers. This differs from bodily injury liability coverage, which pays for other drivers' medical expenses if you cause an accident.
No-fault insurance claims
A no-fault insurance claim is filed with your own insurance company to cover your medical bills and possible lost wages due to injury. Depending on your company and the state you live in, though, filing a no-fault PIP claim may cause your rates to increase.
If you live in Washington, for example, your car insurance rates cannot go up for an accident that was not your fault. So, filing a PIP insurance claim wouldn't necessarily cause a rate increase unless you're proven to be at fault.
Why require no-fault coverage?
The idea behind requiring no-fault coverage is that it eliminates the legal costs associated with proving fault for an accident. Reducing those costs, in theory, means insurance companies can pass along the savings with lower insurance premiums. Another benefit of no-fault coverage is that it reduces the amount of time it takes to receive money for necessary treatments.
No-fault states
There are 12 no-fault auto insurance states where PIP is required.
State | PIP requirement | Tort threshold |
|---|---|---|
| Florida | $10,000 | Verbal |
| Hawaii | $10,000 | $5,000 |
| Kansas | $9,000 | $2,000 |
| Kentucky | $10,000 | $1,000 |
| Massachusetts | $8,000 | $2,000 |
| Michigan | $250,000 or opt out | Verbal |
| Minnesota | $40,000 | $4,000 |
| New Jersey | $15,000 | Verbal |
| New York | $50,000 | Verbal |
| North Dakota | $30,000 | $2,500 |
| Pennsylvania | $5,000 | Verbal |
| Utah | $3,000 | $3,000 |
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Optional no-fault states
Kentucky, New Jersey and Pennsylvania are the only no-fault states where drivers are given the option to maintain full tort rights when buying car insurance. That means drivers can retain the right to sue for medical expenses as well as noneconomic damages. However, the default in these states is a no-fault insurance system.
When you buy insurance, you must specify if you want to reject the restriction of your rights or, if you live in Kentucky, submit a form stating that you wish to maintain full tort rights. The trade-off for choosing to maintain full tort rights in a no-fault state is that your car insurance will likely be more expensive.
Kentucky is unique among optional no-fault states. Drivers who choose to reject the no-fault insurance coverage are not required to have PIP insurance for themselves. But they're still required to have guest PIP coverage, which covers passengers and pedestrians.
Other states that offer personal injury protection
Not all states that offer or require PIP are considered no-fault states. One example is Oregon, where drivers must have $15,000 in PIP coverage but can sue for economic and noneconomic damages without meeting any threshold.
State | PIP requirement |
|---|---|
| Arkansas | $5,000 per person |
| Delaware | $15,000 per person and $30,000 per accident |
| Maryland | $2,500 |
| New Hampshire | Optional |
| Oregon | $15,000 |
| South Dakota | Optional |
| Texas | Optional |
| Virginia | Optional |
| Washington | Optional |
| Wisconsin | Optional |
How much does no-fault coverage cost?
No-fault insurance costs vary by company, coverage limits and location. In theory, no-fault insurance is supposed to lower insurance costs, but in practice, rates are generally higher in no-fault states than in at-fault states. Part of the reason is that these states require drivers to buy more coverage. So, on top of the liability insurance required in all states except Florida, no-fault–state drivers have the additional cost of PIP.
Before auto insurance reform in July 2020, the most extreme case of this was in Michigan, which had the highest average car insurance costs in the country, primarily because of required unlimited PIP coverage for all drivers.
Depending on how much PIP you choose, it can make up a big portion of your monthly premium. While the actual prices may vary greatly by state and company, to give you a sense of typical PIP costs, here are several quotes:
Coverage | Cost of coverage | % of total policy cost |
|---|---|---|
| $50,000 PIP with $200 deductible | $277.60 | 22.85% |
| $50,000 PIP | $285.80 | 23.37% |
| $50,000 PIP with $2,000 monthly work loss | $294.50 | 23.91% |
| $100,000 PIP with $2,000 monthly work loss | $301.60 | 24.34% |
Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
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