No Fault Insurance Guide

No-fault insurance is bad because car insurance premiums are higher in no-fault states, and it is difficult for drivers to sue for damages related to pain and suffering. No-fault insurance also does not penalize negligent drivers as much as so-called tort states. 

Why No-Fault Insurance Is Bad:

• Insurance rates are higher in no-fault states than tort states, on average, because more coverage is required.
• Your ability to sue an at-fault driver is limited.
• Negligent drivers face less of an insurance penalty when they injure someone in a wreck.
• No-fault states have higher traffic fatality rates than tort states.
• It's easier to commit insurance fraud in no-fault states.

On the other hand, there are also benefits to no-fault insurance. For example, no-fault insurance pays for medical expenses after all accidents, so it helps drivers immediately get their bills covered without having to wait for fault to be determined.

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

In a no-fault accident, each driver's insurance pays for their own medical bills, regardless of who caused the wreck. No-fault states require drivers to have personal injury protection (PIP) insurance in order to pay for their own injury-related expenses, including hospital bills and lost income.

A “no-fault” accident is a wreck that takes place in a state with no-fault laws. However, no-fault laws only apply to injuries, so at least one driver will still be deemed responsible for the crash. That at-fault driver's property damage liability insurance will cover damage to the other drivers' vehicles. If the at-fault driver doesn't have liability insurance, then you can use uninsured motorist or collision insurance to repair or replace your car.

On the other hand, if you cause a no-fault accident, you will have to use your collision insurance or pay for the damage out of pocket. Your liability insurance won't pay for your own vehicle repairs.

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

The no-fault states for car insurance are Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. In the 12 no-fault insurance states, each driver's car insurance provider pays their own medical claims after an accident regardless of who was at fault.

No-Fault Insurance States

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

A no-fault insurance system limits the ability of drivers and passengers to sue for additional compensation. Drivers in no-fault states can sue for injuries only if they are determined to be “severe” – the legal definition of which varies from state to state. No-fault rules only apply to injuries, however. Property damage claims in no-fault states are still paid by the at-fault driver's liability insurance. 

Of the 12 “pure” no-fault states, New Jersey, Pennsylvania and Kentucky are the only ones that give drivers an option to choose between buying a no-fault insurance policy and a traditional auto liability insurance policy.

Besides the 12 no-fault states, some “add-on” states have auto liability insurance laws that are a blend of the no-fault and at-fault insurance systems. These add-on states, such as Virginia and Texas, are not considered to be true no-fault states by the Insurance Information Institute because they do not restrict or place limits on a driver's right to sue for additional compensation.

Finally, at-fault states follow a tort system, which assigns responsibility for an accident to a driver or drivers. At-fault states also allow injured parties to sue negligent drivers for injuries, as well as pain and suffering, without restrictions. Most U.S. states are at-fault states.

Insurance Rates in No-Fault States

Drivers who live in one of the 12 no-fault insurance states can expect to pay more for auto insurance than those in at-fault states. Insurance fraud is more common in no-fault states, given that claims are paid regardless of who was at fault, providing an incentive for some individuals to exaggerate the extent of their injuries. Those heightened rates of fraud, combined with mandatory PIP insurance, raise costs for auto insurers, which are passed on to consumers.

It should be no surprise that the three most expensive states in WalletHub's Cheap Car Insurance Study – Michigan, New York, and New Jersey – are all no-fault states. So if you live in a no-fault state or will be moving to one, be sure to compare quotes so that you can get an auto insurance policy that fits your needs and your budget.

Yes, Michigan is a no-fault state for car insurance. In the event of an auto accident, a Michigan driver's no-fault personal injury protection (PIP) insurance pays for his or her own medical expenses, lost wages and at-home services like cleaning or laundry. It does not matter who caused the accident, unlike in fault states, where the at-fault driver must pay for the other party's expenses.

Michigan drivers generally need to carry at least $250,000 in PIP insurance, though there are certain exceptions for drivers with Medicaid or Medicare. In addition to PIP, Michigan drivers are required by law to carry bodily injury liability insurance of at least $50,000 per person ($100,000 per accident), plus $10,000 for property damage in another state. Lastly, Michigan drivers need at least $1,000,000 in property protection insurance, which covers damage to other people's property (except for moving vehicles) after an accident within the state.

Michigan No-Fault Restrictions on Car Accident Lawsuits

Each no-fault state has its own rules for when you can sue an at-fault driver after an accident. Currently, Michigan is one of the strictest no-fault states in the country, only allowing you to sue the at-fault driver under very limited circumstances.

When You Can Sue

• If the accident is in Michigan and causes death, serious injury, or permanent disfigurement

• If a Michigan driver is involved in an accident in another state

• If a Michigan driver is in an accident within the state involving a non-resident driving a car not registered in Michigan

If the at-fault driver is sued, their liability policy will pay up to its limits. If the court awards more than their limits, they will be personally responsible for paying the amount not covered.

No, California is not a no-fault state for auto insurance. California is one of the 38 states in the country where the person who causes a car accident has to pay for the damage and injuries. When an accident occurs, the police determine who's at fault. Then, to collect payment for their losses, victims must file a claim with the at-fault driver's insurance company. Liability insurance is the type of insurance that pays victims' claims, and all drivers in California are required to carry it.

Although you're not required to carry any other kind of car insurance in California, you may want to protect yourself in case of an accident, too. For example, if you are at fault in a crash, your car can be covered by collision insurance. Medical payments coverage can pay your medical bills.

What No-Fault State Means for Car Insurance

In a no-fault state, each driver in an accident is responsible for covering their own losses through their insurance company. No one needs to prove who caused the accident to be covered. These states have different types of mandatory insurance, such as personal injury protection, which covers medical bills, costs related to medical care like transportation expenses, and lost wages.

Because of the required personal injury protection, or PIP, drivers in most no-fault states – like Florida, Michigan, New Jersey and New York – pay more for their insurance than California residents. Being a “fault” state helps keep California around the middle of the state rankings for insurance costs.

If you're at fault in a car accident, your liability insurance pays for the other driver's car repairs and will likely cover any doctor's bills if they're injured. No-fault states are the exception, as they require each driver to use their own insurance to pay for medical expenses after an accident. But regardless of the state, fault always dictates whose liability insurance pays for property damage.

Your liability insurance never covers your own expenses, so you will need collision insurance, personal injury protection (PIP), or MedPay in order to avoid paying out of pocket for an at-fault accident. Some states require drivers to have PIP or MedPay, while collision insurance is usually required if you are leasing or financing your car.

After an at-fault accident, car insurance rates go up by an average of 48%. The exact amount that your premium will go up depends on a few factors, including your state and how much damage you caused. But any increase is only temporary, usually lasting about 3-5 years. And if you have accident forgiveness with your insurance company, your rates might not go up at all.

Ultimately, no one wants to be at-fault in a car accident, but it's important to understand how at-fault accidents work just in case. With that in mind, here's a quick summary of what you really need to know.

Here's What Happens If You Are At-Fault in a Car Accident

• Your liability insurance should pay for the other driver's expenses.
• You will need to use other types of car insurance to cover your own repair and medical bills.
• Your car insurance rates will go up by an average of 48% for 3-5 years.

Georgia is not a no-fault state for auto insurance. Somebody has to be found at-fault for an accident before any claims are paid. However, fault is not an either-or issue in this state. Georgia is one of 12 states that has a Modified Comparative Fault rule. That means the jury in a personal injury trial can divide fault among the drivers involved in an accident in Georgia.

In some states with Modified Comparative Fault, you can have 99% responsibility for an accident and still place a claim against the 1% at-fault party. However, in Georgia you must be less than 50% at fault to receive any compensation from the other party. If your percentage of fault is less than 50 but more than 0, your claims are reduced by that percentage. For example, if a jury declares you to be 10% at fault because you were driving above the speed limit when the other car hit you, your claim will be reduced by 10%.

By law, motorists in Georgia must carry minimum liability insurance of $25,000 for bodily injury per person, up to $50,000 per accident, and $25,000 for property damage per accident. If an at-fault driver's liability insurance doesn't fully compensate the victims, the at-fault driver can be held responsible for paying the remainder out of pocket. This makes carrying extra liability insurance in Georgia well worth considering, to protect your assets and financial security.

Yes, Pennsylvania is a no-fault state, which means each driver's insurance pays for their own medical bills after an accident, regardless of fault. To pay for these expenses, drivers in Pennsylvania are typically required to carry $5,000 in medical benefits coverage.

Pennsylvania is also one of three “choice no-fault” states that allow drivers to opt out of the no-fault system, which would mean there are no limitations when it comes to filing a lawsuit after a wreck. Specifically, drivers can choose between a full tort or limited tort policy. Full tort policies are more expensive than limited tort insurance, and they eliminate all barriers to filing a lawsuit against an at-fault driver. On the other hand, if a driver purchases a limited tort policy, they can only sue the at-fault driver if they have suffered serious impairment of body function, permanent disfigurement, or death.

How Fault Affects Lawsuits in Pennsylvania

When a driver files a lawsuit against an at-fault party, even in no-fault legal systems, the state's laws will affect how compensation is awarded. Specifically, Pennsylvania has modified comparative negligence laws.

• If you are 51% or more at-fault, you cannot collect damages from the other driver.
• If you are less than 50% at fault, you can college damages minus the percentage that you're at fault.

So, if you're 30% at fault, you can get 70% of your damages covered by the other driver. All states have a statute of limitations for lawsuits after a car accident. In Pennsylvania, the statute of limitations is fairly short: just two years. That means you have two years after your accident to file a lawsuit for medical damages.

Why You Should Care That Pennsylvania Is A No-Fault State

No-fault means faster payouts. Police and your insurance company don't need to investigate the accident's cause before you can get paid for your medical bills. As a result, your bills get paid more quickly than they would in a tort state, where fault for the accident determines the payout.

 Another benefit of no-fault insurance is the knowledge that you're covered no matter who causes an accident. That can make driving in Pennsylvania a bit less nerve-wracking.

No-fault insurance also has downsides, unfortunately. The most obvious is higher premiums. States with no-fault insurance struggle with high rates of fraudulent claims, which raise the costs of insurance for everyone.

No-fault rules don't apply to property damage, either. One or both drivers will be at fault after a collision, no matter which state you live in. The police and your insurance company consider Pennsylvania's laws, the circumstances of the collision, and drivers' testimonies before deciding who is at fault.

Pennsylvania vs Other No-Fault States

No, Oregon is not a no-fault state. Oregon is a tort state that requires drivers to have no-fault insurance, which means drivers must use personal injury protection (PIP) insurance to pay for their own injuries after an accident but are not limited when it comes to suing an at-fault driver for compensation. As a result, Oregon is a type of tort state that is often referred to as an “add-on” no-fault state.

In tort states like Oregon that still require drivers to have no-fault insurance, you get the quick payout of a no-fault state while still being able to sue the at-fault driver for your expenses, including pain and suffering. However, Oregon's system also means that you could be stuck paying a higher premium if you file a personal injury protection claim, even if you didn't cause the accident.

How Fault Affects Lawsuits in Oregon

In Oregon, it's possible for fault to be shared by drivers. Specifically, Oregon has modified comparative negligence laws.

• If you are 50% or more at fault, you can't collect damages from the other driver.
• If you're less than 50% at fault, you can collect damages minus the percentage that you're at fault.

So, if you're 30% at fault, you can recover 70% of what you spent on damages after the crash. Oregon has a statute of limitations of 2 years after a car accident. That means you have 2 years from the time of the car accident to sue the at-fault driver, or vice versa.

Oregon vs. Other Tort States

In Michigan's no-fault insurance system, each driver pays their own deductible for personal injury protection (PIP). Under the state's no-fault rules, drivers must use their own PIP coverage to pay for basic medical expenses after an accident, regardless of fault.

Michigan's no-fault insurance system is only applicable to injuries, not property damage. If you file a property damage liability or uninsured motorist claim, you do not have to pay a deductible due to the nature of the coverage involved. However, your ability to collect a settlement from the at-fault driver's liability insurance may be limited by state law.

Michigan's modified comparative negligence system means that you can't receive damages from the other driver if you are more than 50% at-fault for the accident. If that applies, you will have to repair your car using collision insurance, which usually requires a deductible.

You may be able to avoid paying a collision deductible, depending on the type of collision coverage you have and your share of the fault in an accident. In Michigan, drivers can choose between limited, standard, and broad-form collision coverage. Limited and standard collision coverage always require you to pay a deductible, while broad-form only has a deductible when you are more than 50% at-fault for an accident.  

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