What is No-Fault Insurance?
No-fault insurance is a general term that is used to describe any auto insurance system that both requires drivers to carry insurance for their own protection, and that places limitations on their ability to sue other drivers for damages. As of today, 12 states are consider no-fault states so if you live in one of them your auto insurance is a little different than standard insurance policies.
In an accident, under no fault laws, your auto insurance company will pay for your damages (up to your policy limits), regardless of who was at fault for the accident. The other drivers involved, if there are any, will be covered by their own auto insurance policies.
In theory this is supposed to help keep insurance costs lower as well as making claims processing an easier job. As of now, Colorado, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah are all no-fault states.
If you do have no-fault insurance coverage - also called “personal injury protection” or “PIP” - your coverage is most likely pretty limited. This type of insurance usually only pays for your medical bills and lost income up to the limits of your policy. Your pain and suffering, as well as medical bills over the policy limits, won’t be covered.
If your medical bills and lost wages are greater than the policy limits of your insurance, you may be able to collect from the driver at fault by suing them directly, under certain circumstances. The rules on whether you can sue the driver at fault for damages not covered by your no-fault insurance will vary from state to state.
In some states, lawsuits against drivers at fault after your no-fault insurance has been exhausted are limited to “serious” injuries or death. “Serious” means something different in each state, but generally includes broken bones, severed limbs, internal injuries requiring hospitalization, etc.
In other states, you can only bring a lawsuit against the driver at fault for damages not covered by your no-fault insurance if your total medical bills are over a specific amount, which varies by state.