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What Is No Fault Car Insurance?

Last Updated on February 14, 2024 by Andy Walker

Car insurance can be a bit confusing with all the options available. If you’re wondering about “no fault car insurance,” also known as personal injury protection (PIP), we can break it down for you.

Your no-fault auto insurance, or PIP coverage, helps pay for medical expenses after a car accident. This covers you and your passengers, no matter who caused the accident.

Here’s a big difference: with some types of car insurance, they only pay if someone is at fault for the accident. But with PIP, it usually pays out whether it was your fault or not. So, let’s say you accidentally hit another car and your friend gets hurt—PIP can help with their medical bills. And if someone else hits your car and you get injured, PIP can cover your medical costs.

But here’s the catch: not all states offer no-fault insurance, so you need to check if it’s available where you live. Plus, in some places, you might not even be required to have this coverage.

What Does No Fault Car Insurance Cover?

If you’ve been wondering how no-fault insurance works, it’s pretty simple. Let’s say you’re in a car accident and you or your passengers get hurt—no worries! PIP insurance steps in to help with things like:

  • Medical Bills: It pays for the doctor and hospital bills.
  • Health Insurance Deductibles: If you have to pay some money before your health insurance kicks in, PIP can help with that.
  • Lost Wages:  If the injury stops you or your passengers from working, PIP covers the wages you miss.
  • Essential Services:  Things like child care, cleaning, or grocery shopping that you might need help with.
  • Funeral Expenses: In case someone loses their life in the accident.

But here’s the catch: PIP won’t help with everything. For example, if you accidentally damage someone’s property, like crashing into a fence or denting another car, PIP won’t cover those costs. For that, you’d need property damage liability insurance. Also, if you mess up your own car, you’ll need collision insurance to pay for the repairs. Without these policies, you might have to pay for things yourself. So, it’s a good idea to have a complete protection plan by adding other types of auto insurance to your policy.

How Does No Fault Insurance Work?

If you have no-fault insurance and you’re in a car crash, you can use something called PIP to cover your medical costs. It’s like a way to get back the money you spent on medical bills.

Now, if you have a no-fault insurance and you’re in an accident with another car, it helps pay for the injuries you and your passengers have. But if you’re in a state that doesn’t have these no-fault insurance rules and you get hurt, here’s what you can do:

  • Work with the Other Driver’s Insurance: You can talk to the insurance company of the person who caused the accident. They might have something called bodily injury liability insurance, and that can help with your expenses.
  • File a Claim for Medical Payments: If you’re the one who caused the accident, you can still file a claim for something called medical payments coverage. This helps with your medical bills even if it was your fault.

What states are no-fault states?

Currently, there are 12 pure or “true” no-fault insurance states

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

Puerto Rico has its own mandatory no-fault insurance requirement

Is No-Fault Insurance Required?

Most states make it a rule to have liability insurance, except Virginia and New Hampshire. But only a few states say you must have something called no-fault insurance or personal injury protection (PIP), according to the Insurance Information Institute (III). Each state decides the least amount you need to have for each person (but you can choose to have more), and here’s what it looks like:

  • Florida: $10,000
  • Hawaii: $10,000
  • Kansas: $4,500
  • Kentucky: $10,000
  • Massachusetts: $8,000
  • Minnesota: $40,000
  • Michigan: $50,000
  • New Jersey: $15,000
  • New York: $50,000
  • North Dakota: $30,000
  • Pennsylvania: $5,000
  • Utah: $3,000

In three states—Kentucky, New Jersey, and Pennsylvania—you get to decide whether you want no-fault insurance or regular car insurance. The cool thing is, with regular insurance, you can still go to court if you want to, but with no-fault, it’s a bit different—you can’t sue or be sued as easily after a crash.

How Much Is No-Fault Car Insurance?

How much you pay for no-fault car insurance isn’t the same for everyone. It depends on where you live, how you drive, your age, and some other stuff. The best way to know how much it’ll cost is to ask your current insurance company for a quote. Also, check with a couple more companies to see who gives you the best deal. Since lots of things can change the price, comparing quotes is the way to figure out what works for you.

How Do You Buy No-Fault Insurance?

If you live in a place where you have to or can get no-fault insurance, it’s not too hard. But before you decide, think about a few things to make sure you’re getting the best deal.

  • Know How Much You Need: Different states have different rules about how much coverage you must have. But remember, it’s just the least amount. If your state says you need a small amount of coverage, and you can afford it, you might want to get a bit more, especially if you don’t have a lot of health insurance.
  • Understand What’s Covered: No-fault insurance doesn’t cover everything. It’s mainly for medical stuff for the people in your car. You’ll probably still need another type of insurance to pay for damage to other people’s things (like their car) or your car’s repairs.
  • There’s a Deductible: When you’re thinking about how much this insurance costs, don’t forget about the deductible. That’s the money you have to pay before your insurance starts helping. Usually, it’s around $500 or $1,000, but it can change depending on where you are.
  • Shop Around:  Don’t just settle for the first offer you get. Check with a few different companies. You might find the same coverage for way less with someone else.

Is No-Fault Insurance The Same As Liability Insurance?

Nope. No-fault insurance takes care of the medical bills for you and the people in your car, no matter who caused the accident. If you’re the one who caused the crash, bodily injury liability insurance helps pay for the people in the other cars involved.

About The Author

Andy Walker is a freelance content writer who specializes in writing for insurance and finance related niches. He has years of experience in this field and has written extensively on a variety of topics. Andy’s work is always highly polished and well-researched, ensuring that his clients are always happy with the results.

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