Discover the Facts About No Fault Auto Insurance

Do you understand exactly what is meant by no fault auto insurance? If so, you’re certainly not alone as many drivers become confused by this type of coverage. Generally speaking, no fault insurance will cover the cost of any vehicle damage or medical expenses incurred in an accident, regardless of who was at fault.

One of the advantages of this type of insurance is the fact that the majority of claims are paid very quickly; litigation is rarely a factor in no fault insurance situations. Certain states require drivers to purchase no fault insurance. Other states leave this decision up to motorists, but they do require drivers to buy first party benefits like personal injury protection or PIP insurance.

No Fault Insurance Threshold

Drivers are not normally legally permitted to file a lawsuit against another driver who has caused an accident that occurs in a no fault insurance state. However, there are special circumstances when this is permitted. In this case, drivers must meet certain criteria referred to as threshold which concerns the severity of injuries. The threshold amount may be verbal or monetary, and it determines when an individual is able to file a lawsuit to be covered for pain and suffering or medical expenses.

The threshold amount varies depending on the particular no fault insurance laws in each state. If you live in a state with a written monetary amount for a threshold, lost wages and medical expenses will automatically quality you for the threshold. However, other states may require you to meet certain written requirements before qualifying. For example, you may need to amass a specified number of days on disability before you meet the amount of the descriptive threshold.

History of No Fault Insurance

In the United States, no fault auto insurance became much more common in the 1990s. The concept was originally created from 1970s legislation which enabled individuals to legally seek reimbursement for medical expenses from their insurance company. The main goal of no fault auto insurance was to prevent complicated, prolonged litigation procedures and any relevant expenditures. If you have no fault insurance, you will receive coverage for lost wages, funeral expenses, lost services and medical expenses through your insurance provider.

No Fault Insurance States

The following twelve states currently have no fault auto insurance laws:

New Jersey
New York
North Dakota

Optional No Fault Insurance

Certain states permit motorists to choose between purchasing liability coverage, regular tort or no fault insurance. For example, the District of Columbia enables drivers to choose whether they wish to buy no fault insurance coverage. Any driver can purchase regular tort-liability or no fault coverage. However, some states set specific minimums for personal injury protection or PIP insurance concerning the no fault portion of an insurance policy.

Limited No Fault Insurance

Some states have decided to offer partial no-fault coverage, rather than full coverage. Under this type of system, drivers are only able to file a lawsuit against another driver if they meet the specified threshold for that particular state. For example, Florida is a partial no fault state that requires drivers to purchase first party benefits such as personal injury protection of at least $10,000. However, the local no fault auto insurance laws also require motorists to purchase a minimum of $10,000 per person for bodily injury liability coverage and up to $20,000 for every injured person. This type of auto insurance coverage will pay for any medical expenses incurred by another driver.

Statistics Concerning No Fault Insurance

The Property Casualty Insurers of America conducted a study that revealed that personal injury protection costs have risen by more than 17 percent since 2000 in the state of Florida. Insurance companies believe the higher number of lawsuits has resulted from injuries that are very hard to assess and the rising cost of health care. Many drivers who live in a no fault insurance state automatically want to sue other drivers when they are involved in a car accident; they realize that their insurance claim will be processed very quickly and all of their expenses will be covered. This is why many people believe the no fault insurance system does not work.

Other experts argue that no fault insurance states in the United States charge higher premiums than other states. Critics of no fault insurance believe the system is flawed because it fails to punish drivers who are at fault. They feel that at-fault drivers who are required to face litigation and pay damages will become safer, more careful drivers. Many states are returning to at-fault insurance, rather than no fault insurance coverage.