No-fault insurance: Everything you need to know

A no-fault insurance is a certain type of auto insurance policy where you are indemnified for losses by your insurance company, regardless of fault in the incident that generates the losses. A no-fault insurance policy is not different from first-party coverage. Generally used in the context of state auto insurance laws, this policy ensures that the driver doesn’t need to run after another party’s insurance company to get indemnified for the damages. No-fault auto insurance is currently operational in 12 states and in the Commonwealth of Puerto Rico.

Which are the no-fault auto insurance states?

Here is a list of a dozen states that are currently having no-fault insurance laws:

1. Florida
2. Hawaii
3. Kansas
4. Kentucky
5. Massachusetts
6. Michigan
7. Minnesota
8. New Jersey
9. New York
10. North Dakota
11. Pennsylvania
12. Utah

What falls under no-fault?

Here are the three most important damages that no-fault car insurance covers:

1. Bodily injury: In traditional auto insurance policies, you can get a liability coverage to pay for injuries in an accident where you’ve been at fault. However, in a no-fault insurance policy, the coverage provided by your policy extends to you. The advantage of having a no-fault auto insurance is that the medical claims are paid sooner and you’ve no need to wait for lawsuits to get your reimbursement. In other policies, you’re initially needed to pay the medical expenses out of your pocket.
2. Medical bills and other losses: The no-fault car insurance ensures that you’re not only covered for the hospital bills, but also for any associated costs that incur. Even if you are injured and fail to work for some time, the no-fault insurance policy will also cover the lost wages. However, nothing is guaranteed and coverages vary from state to state.
3. What things no-fault insurance doesn’t cover? Usually, no-fault auto insurance only provides coverage for personal injury and not for any property related damages. If there are any damages to another person’s car, the liability coverage of your auto insurance policy will compensate for the expenses. You can also keep a collision coverage for better protection.

How does a no-fault claim work?

In a nutshell, suppose you’re caught in an accident, in which the other driver is at fault, and the following facts involve:

• Your state’s no-fault limit for medical bills for people without health insurance is $5,000, and $10,000 for people with health insurance
• Your state asks no-fault insurers to pay one-third of the injured person’s lost wages, which is up to $10,000 of lost wages
• You don’t have any health insurance policy
• You have incurred $20,000 of medical bills and $12,000 of lost wages
• Your state requires you to have at least $10,000 in medical bills if you are injured in a car accident and going to make a claim against or sue the other driver

If you satisfy the above-mentioned criteria, your auto insurance company will pay the initial $10,000 of your medical bills, which is the no-fault limit. However, you are obliged to pay the remainder of your medical bills. Your auto insurance company will also pay you $7,500 for the lost wages. Again, since you acquired $20,000 in medical bills and meet your state’s minimum medical bills requirements, you are eligible to file a personal injury claim against the negligent driver who hit you.

Do you need to have no-fault?

Deciding whether or not you need to have no-fault auto insurance is not at all required. You’re either need to have it, or you don’t as per your state law.