What does "no-fault" state mean?

A no-fault state is a state that requires its drivers to file claims for bodily injury with their own insurer, rather than with the at-fault driver's insurance. States with no-fault auto insurance laws typically require drivers to carry personal injury protection, also known as no-fault insurance, which covers medical bills and other accident-related expenses for the insured and their passengers. No-fault states also typically prohibit drivers from filing lawsuits for minor injuries suffered in an accident.

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What are the states with no-fault insurance?

There are 12 states with no-fault insurance laws:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

Three of those states allow drivers to opt out of buying a no-fault car insurance policy, known as "choice no-fault" states:

  • Kentucky

  • New Jersey

  • Pennsylvania

Drivers who reject a no-fault policy retain the right to sue for injuries they suffer in an accident, regardless of severity. There are also several other states that either require or allow you to buy PIP coverage without restricting your right to sue, such as Oregon (PIP required) and Texas (PIP optional).

Check out our state car insurance information hub to learn more about each state's insurance requirements.

Learn the differences between how at-fault and no-fault accidents are handled by insurance companies.

What are the advantages of a no-fault state?

According to the Insurance Information Institute, the no-fault auto insurance system is meant to lower the cost of insurance by keeping claims for minor injuries out of the courtroom. This generally speeds up the claims process as well since there's no lengthy litigation involved for smaller claims.

Additionally, PIP coverage may pay for other accident-related expenses besides medical bills, such as lost wages or childcare services, depending on the state and your policy's limits.

What are the disadvantages of a no-fault state?

Drivers in no-fault states are typically only allowed to file lawsuits if certain severe injury conditions are met. Bodily injury claims that fall below the state's tort liability threshold are covered by the injured party's PIP coverage instead. Depending on the state, this threshold may be verbal (a description of the severity of injuries) or monetary (a specific dollar amount for medical bills).

VERBAL VS. MONETARY THRESHOLD

A verbal threshold describes the extent of injuries necessary for filing a lawsuit, such as death or severe disfigurement. A state with a monetary threshold has a specific dollar amount your claim must meet before you can file a lawsuit. In Massachusetts, for example, you must have damages in excess of $2,000 in order to file a lawsuit for bodily injury.

Who pays for vehicle damage in a no-fault state?

Vehicle damage resulting from an accident is handled the same way as in other states: Fault is determined, and the responsible driver pays for the damage to the other driver's vehicle. Drivers in no-fault states are still required to carry liability coverage in order to pay for vehicle damage and severe bodily injuries they cause in an accident.

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