What Is A No-Fault State?

In no-fault states, drivers file through their own car insurance for injuries—this reduces payout times, but it can also limit drivers’ right to sue.
Written by Jennifer Justice
Edited by Sarah Gray
No-fault states require drivers to file through their own
car insurance
policy for injuries to pay for medical bills regardless of who caused the accident. This reduces the time it takes to get your injury-related expenses covered, but it can also limit your rights to sue an at-fault driver for additional damages.
  • No fault states require drivers to file through their own insurance company for injury compensation following an accident, regardless of who’s at fault.
  • Drivers in no-fault states must carry no-fault personal injury protection insurance in addition to basic liability coverage.
  • The no-fault claims process reduces the number of small claims court cases, but it also restricts drivers’ right to sue other motorists for damages.

What is a no-fault state?

Unlike at-fault or tort liability states, no-fault insurance states require drivers to file through their own insurance for injuries following an auto accident, regardless of who’s at fault. This process helps limit the number of small-claims suits in the court systems, but it also restricts your right to sue for damages following an accident that results in injuries to you and/or your passengers.
Insurance laws in a no-fault system still require liability coverage for property damage, and all except Florida still require bodily injury coverage as well, but you’ll add
Personal injury protection (PIP)
to the policy to cover your medical expenses following an accident. In a no-fault state, the person who caused the accident still pays for property damage, but, in most cases, you can only file a personal injury claim with the at-fault driver’s insurance after you’ve exhausted your own PIP coverage limits. 
A major benefit of PIP is that it kicks in right away—you don’t have to wait for a judgment of who is at-fault to get help with your medical bills. Plus, even if you are responsible for the accident, your PIP will still cover your medical expenses up to your limits.
Property damage is handled the same in no-fault and at-fault states—if you cause an accident, your
liability coverage
will pay for the other driver’s repairs, and vice versa.
Let’s look at why living in a no-fault state has its ups and downs when it comes to car insurance:
Pros
Cons
PIP is part of required minimum coverage
Your insurance pays for your injuries, no matter who caused the accident, so you may have to pay a deductible
You get help with medical bills faster
The other insurance company usually only covers your medical costs after you reach your PIP limits, even if the other driver is at fault
Even if you cause the accident, you still get some insurance help with claims
If you’re at fault, damages to your vehicle are only covered if you purchase collision insurance.
No-fault state laws place limits on lawsuits, so you have some protection if you cause an accident
If the other driver is at fault, then it can be harder to bring them to court 

Which states are no-fault insurance states?

There are 12 no-fault states in the U.S. Each requires PIP and liability coverage and three also require
uninsured/underinsured motorist
protection to help pay for your damages if you’re in an accident caused by a driver with no or too little coverage. 
Here is a breakdown of
state minimum insurance requirements
for each of the 12 no-fault states
State
Minimum insurance requirements
  • $25,000/$50,000 BIL
  • $25,000 PDL
  • $4,500 PIP
  • $25,000/$50,000 uninsured/underinsured motorist coverage (UM/UIM)
  • $25,000/$50,000 BIL
  • $25,000 PDL
  • $10,000 PIP
  • $20,000/$40,000 BIL
  • $5,000 PDL
  • $8,000 PIP
  • $20,000/$40,000 UM/UIM
  • $50,000/$100,000 BIL
  • $10,000 PDL
  • $50,000–$25,000 PIP
  • $1 million property protection insurance (PPI)
  • $30,000/$60,000 BIL
  • $10,000 PDL
  • $40,000 PIP
  • $25,000/$50,000 UM/UIM
  • $15,000/$30,000 BIL
  • $5,000 PDL
  • PIP: $15,000
  • $25,000 per person/$50,000 UM/UIM
  • $25,000/$50,000 BIL
  • $10,000 PDL
  • $50,000 PIP
  • $25,000/$50,000 BIL
  • $25,000 PDL
  • $30,000 PIP
  • $25,000/$50,000 UM/UIM
  • $25,000/$65,000 BIL
  • $15,000 PDL
  • $3,000 PIP 

Choice no-fault states

While a key reason for establishing no-fault car insurance systems is to limit the number of frivolous lawsuits related to injury claims, some states have seen fit to offer drivers the choice to expand their right to sue. Choice no-fault states include:
  • Kentucky
  • New Jersey
  • Pennsylvania   
If you live and drive in one of these states, you can choose no-fault coverage or a full-tort policy. Choosing a full-tort or tort-liability policy provides the same coverage and rights to sue as those you’d find in an at-fault state—however, your insurance premiums will be more expensive, and in Kentucky, you lose your access to PIP coverage.

Add-on no-fault states

While PIP coverage is required as part of a no-fault insurance policy, 10 at-fault states also allow drivers to add PIP as optional coverage on an at-fault policy. Add-on no-fault states include:
While these states offer some of the same insurance options as no-fault states, the Insurance Information Institute1 doesn’t consider them true no-fault states since they don’t place the same restrictions on a driver’s right to sue for damages.
Choosing to add PIP as optional coverage in an add-on no-fault state can give you the same quick-payout benefits no-fault drivers have. Plus, PIP covers expenses your personal health insurance will not, such as lost income and funeral expenses.
With so many options available even in defined at-fault and no-fault states, it’s understandable if you’re a bit confused about car insurance and what types of coverage you need. That’s why, especially in the 23 states that include no-fault coverage as a requirement or an option, it’s important to discuss your options and
compare quotes
from multiple insurers before settling on a policy.

How do no-fault laws affect car insurance coverage?

Every state, except
New Hampshire
, requires drivers to carry liability coverage to pay for damages they may cause if they’re at fault in an accident. But no-fault states also require PIP, sometimes called no-fault insurance or first-party benefit coverage.
PIP covers a variety of expenses associated with injuries you might sustain in a vehicle accident, plus it extends to some additional expenses and bills that may accrue in relation to these injuries, such as:
  • Surgical operations
  • Hospitalization
  • Lost wages
  • Continuing care
  • Household services (limited)
  • Childcare (limited)
  • Funeral expenses
  • Death benefit (cash payout)
PIP is about taking care of the policyholder’s medical bills and related costs, and your insurance pays up to the limits of your policy’s coverage, regardless of whether you are at-fault in the accident. If the other driver caused the accident, their liability insurance will pay for property damage, but your PIP will cover your personal injury expenses regardless of who’s at fault.

How does PIP differ from liability coverage?

The key difference between PIP and liability is who and what they cover:
  • PIP covers you, your passengers’, household members’, and pedestrians’ medical expenses. 
  • Liability covers the other driver’s property damage and injuries to another party for which you’re found legally liable.
Put simply: PIP covers you, liability covers others.

How does PIP affect my insurance rates?

Since PIP insurance is required in addition to standard liability coverage, it should come as no surprise that average auto insurance costs tend to be higher in states that follow a no-fault system. That said, even those living in no-fault states can find great rates on car insurance by
comparing quotes
from multiple providers.

What happens when you’re in an accident in a no-fault state?

Since no-fault states use a combination of liability and PIP, it changes how claims are handled. You’ll file a claim with your own provider to cover your medical expenses, but property damage claims depend on who caused the accident. 
If you cause the accident, the other driver files a claim against your liability coverage to pay for their repairs and any medical bills that exceed their PIP limits. You file a claim against your PIP coverage to pay for any injuries you might sustain in the accident, but your car repairs will not be covered, unless you added
collision coverage
to your policy.
If the other driver causes the accident, you still file a claim against your own PIP coverage to pay for your injury-related expenses, and the other driver’s BIL insurance helps out if you exceed your PIP limits. You’ll also have the choice to file a claim against the other driver’s PDL to get repairs covered, or you can file a claim on your own collision insurance. 
For an even better understanding, let’s look at two scenarios using New York’s 25/50/10 liability with $50,000 PIP coverage requirements to see how the claims process changes depending on who causes the accident.
If you cause the accident:
Expense
Your insurance covers . . .
The other driver’s insurance covers . . .
Your injury expenses
$50,000
$0
Your property damage expenses
$0 without collision coverage
$0
The other driver’s injury expenses
Expenses in excess of $50,000
$50,000
The other driver’s property damage
$10,000
$0
If the other driver causes the accident:
Expense
Your insurance covers . . .
Their insurance covers . . .
Your injury expenses
$50,000
Expenses in excess of $50,000
Your property damage expenses
$0
$10,000
The other driver’s injury expenses
$0
$50,000
The other driver’s property damage
$0
$0 without collision coverage
As you can see, each driver’s PIP covers their own medical expenses up to $50,000 regardless of who caused the accident. But whether vehicle repairs and other property damage is covered depends on who causes the accident and whether each driver carries their own collision coverage. 
These scenarios also illustrate that living in a no-fault state doesn’t mean you’ll never be responsible for another driver’s expenses if you cause an accident. Even carrying coverage that meets your state’s minimum guidelines can’t always protect you from out-of-pocket expenses after an accident.
To make sure you’re adequately covered no matter where you live, talk with your insurance agent, or, better yet, ask an
independent broker
, like those at
Jerry
, for help. Independent brokers work for you, not the insurance company, so using one can help you
lower your insurance costs
and tailor your policy to fit the unique needs of drivers in no-fault states.  
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