What is No fault insurance and what does it cover?
No fault insurance is the auto insurance that cover you and your passengers’ medical bills, lost earnings, and certain other out-of pocket damages after a car accident regardless of who is at fault. No-fault insurance is the same as personal injury protection insurance (PIP). Unlike comprehensive, collision and liability which require that the insurance company to establish who is at fault before the victim is reimbursed for damages, no-fault insurance coverage will pay you for damages in the event of a covered accident, whether you are at fault or not.
What this means is that, if you are involved in an accident, you will need to file claim on your insurance company. Personal injury protection insurance (PIP) will pay you, after your deductible, up to your covered limit within the terms of your policy. You can’t sue to get the other driver or his insurance company to pay. The rationale behind no-fault insurance is that, if you have to file a suit against the other driver that is at fault, it may take a longer time to get reimbursements. However, your insurance company may want to know who is actually in fault. You will need to cooperate with them, otherwise you may forfeit your claims. In some no-fault states, you can pursue a claim against the at-fault driver if your injury breaches the tort threshold. The tort threshold is usually serious injury or medical expenses over a certain dollar amount. For Instance, in New York, serious injury threshold means that you suffered significant disfigurement, bone fracture, permanent limitation of use of body organ or member, significant limitation of use of body function or system, or substantially full disability for 90 days. If you are the one in fault, your insurance company will only reimburse you to the limits of your coverage.
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No-fault states include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah. In Kentucky, New Jersey and Pennsylvania, drivers are allowed to choose either an at-fault or a no-fault insurance policy. These states where no-fault insurance are made optional are referred to as “Choice States”. If you are in a fault State, your insurance company will only pay for the damages sustained according to the degree of your fault.
What No Fault Insurance Covers?
I understand that you will like to know what exactly no-fault insurance covers. It covers the following both for the policy owner and his passengers.
- Medical expenses
- Funeral expenses
- Loss of earnings
- Survivors’ lost benefits
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Please note that no-fault auto insurance covers only people, not their property. For any damage to your car as a result of an accident, you will need to file your claim against the at-fault driver.