What are the pros and cons of no-fault insurance?

No-fault state means that drivers are responsible for their own medical expenses in the event of an accident regardless of who causes the collision. In most no-fault states, drivers are required to use personal injury protection (PIP) insurance to cover their own medical bills and related expenses.

Additionally, no-fault states restrict your ... read full answerright to sue for damages to only state-specified cases where severe injuries are sustained or expenses surpass a certain threshold.

These rules only apply to bodily injuries, though. Whichever driver is found to be at fault, according to the state’s negligence laws, will still be responsible for the victim’s property damages.

What Key Features of No-Fault States Mean for Drivers

The opposite of a no-fault state is called a tort state. In tort states, drivers are not limited in their ability to sue after an accident, and fault is used to determine responsibility for both bodily injury costs and property damage.

To learn more, check out WalletHub’s guide to no fault insurance.

No-fault insurance is more expensive than insurance in at-fault states because it includes personal injury protection (PIP) in addition to basic liability insurance. Insurance fraud is also more prevalent in no-fault states compared to at-fault states, which increases rates for everyone.

On average, state minimum insurance in no-fault states costs $898 per year, compared to $659 for at-fault states. But even between no-fault states, the cost of coverage can vary widely. For example, Michigan has the most expensive car insurance in the country. But North Dakota, which also is a no-fault state, is the ... read full answerfifth cheapest state for coverage.

To learn more, check out WalletHub’s guide to no-fault insurance.

If a car accident is not your fault, your insurance rate could still go up, depending on your state and insurance company. On average, a not-at-fault accident makes insurance costs go up by about 12%, compared to 45% for an at-fault accident.

Insurance rates can go up after a not-at-fault accident because statistics show that having any accident on your driving record makes you more likely to file a claim in the future. And in some situations, not-at-fault accidents can still cost insurers money. ... read full answer

California and Oklahoma are the only two states that prohibit insurance companies from raising rates after not-at-fault accidents. In states where it is allowed, the exact amount that your premium will go up depends on your insurance company. As of 2017, for example, Progressive increased premiums by an average of 16.6% after a not-at-fault accident. Meanwhile, Allstate only increased rates by 4.8%, and drivers with State Farm didn’t see their rates go up at all.

Situations Where Your Insurance Company Has to Pay

In most cases, your insurance company won’t have to pay for a not-at-fault accident since the other driver’s policy will cover your expenses. But if you’re hit by an uninsured motorist or you’re the victim of a hit-and-run, your policy might cover the damages depending on what types of coverage you have. Liability insurance alone wouldn’t cover your expenses, but other types including collision and uninsured/underinsured motorist would. And if you live in a no-fault state, your insurance company will have to pay for your medical expenses regardless of who caused the accident. As a result, any cost to your insurer will be taken into consideration when your insurer is re-evaluating your premium.

Although it’s frustrating to be charged for an accident that wasn’t your fault, the effects on your premium will only be temporary. Accidents usually only stay on your driving record for three years, so if you continue to practice safe driving habits during that time, your rates will eventually go back down.