No Fault Insurance Guide

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.

A no-fault insurance system also 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. 

List of No-Fault States for Car Insurance 

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

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.

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.

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.

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.

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.

Yes, New Jersey is a no-fault state, which means that each driver's insurance pays for their own medical bills after an accident, regardless of fault. To pay for these expenses, drivers in New Jersey are typically required to carry $15,000 in personal injury protection (PIP) per person and per accident.

New Jersey is also one of three “choice no-fault” states that allow drivers to opt out of the no-fault system, which would mean no limitations when it comes to filing a lawsuit after a wreck. If a driver does not opt out, they can only sue the at-fault driver if they have experienced the loss of a body part, significant disfigurement or scarring, a displaced fracture, loss of fetus, permanent injury, or death.

How Fault Affects Lawsuits in New Jersey

 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, New Jersey has modified comparative negligence laws.

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

For example, if you're 30% at-fault, you can get 70% of your damages covered by the other driver. In New Jersey, 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 New Jersey is a Tort/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 New Jersey 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 New Jersey's laws, the circumstances of the collision, and drivers' testimonies before deciding who is at fault.

New Jersey vs. Other No-Fault States

No, no-fault insurance does not cover car damage. No-fault insurance does not cover property damage of any kind, instead, it covers injuries sustained by the policyholder and their passengers in a car accident, regardless of whether the policyholder or another driver was at fault. This is due to the fact that no-fault insurance usually refers to personal injury protection (PIP) or medical payments (MedPay) insurance.

Even in no-fault states, policyholders need to file a claim with the at-fault driver's property damage liability insurance if their car was damaged and they were not responsible. Otherwise, drivers can use their own collision insurance to pay for damage to their cars regardless of who was at fault. Drivers who were at fault but do not have collision coverage will need to pay for repairs out of pocket.

For more information, check out WalletHub's guide to no-fault insurance.

Yes, you can sue after a car accident in no-fault states. Each of the 12 no-fault states allows drivers to sue for damages if their injuries are particularly severe or if their medical expenses surpass a certain amount, though each state has its own threshold. If you do not meet the lawsuit threshold for your state, then you cannot sue the at-fault driver.

When You Can Sue in No-Fault States 

In Kentucky, New Jersey and Pennsylvania, drivers can choose to opt-out of the no-fault system. In that case, the limitations on lawsuits no longer apply. To learn more about the laws in no-fault states, check out WalletHub's 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.

No, Nebraska is not a no-fault state. Nebraska is an at-fault (or “tort”) state. That means the driver who causes an accident uses their insurance to pay for the other driver's bills from the collision. Police and insurance companies use the available evidence to decide who is at fault for the accident. Then the at-fault driver's insurance pays to cover the other driver's damages. Depending on their coverage, they might have insurance for their own damages, too.

“Fault” can be shared by drivers – for example, one driver could be 20% responsible for an accident while the second driver is 80% responsible. Nebraska has modified comparative negligence laws. That means if you are 50% or more at fault, you can't collect any 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.

Why You Should Care That Nebraska is a Tort/Fault State

In tort states like Nebraska, medical coverage only pays out after fault has been determined. That means there are more legal hoops to jump through and a longer waiting period before fault is decided and a driver can get reimbursed. This type of system has other implications for drivers, too, including some that vary by state due to nuances in local car insurance laws.

Here's what tort insurance means for Nebraska drivers:

• Tort insurance is typically cheaper than car insurance in no-fault states.
• Drivers can sue the at-fault party for almost any type of loss after their collision. This includes lost wages, emotional distress, and hospital bills that exceed the at-fault driver's coverage.
• You can collect damages from the other driver as long as you are less than 50% responsible for the accident.
• Nebraska has a statute of limitations of 4 years after a car accident. That means you have 4 years from the time of the car accident to sue the at-fault driver, or vice versa.

Nebraska vs Other Tort/Fault States

Yes, you should buy PIP insurance if you live in one of the 13 states where it is required. You should also buy personal injury protection (PIP) insurance if it's available in your state and you would need financial support in the event that you're injured in a car crash. Even if you have health insurance, PIP can still be a good investment because it is inexpensive and does not involve as many out-of-pocket costs.

PIP insurance is available in 21 states and covers medical expenses, legal fees, and lost wages after a car accident regardless of who was responsible. Besides covering the policyholder, PIP applies to passengers in the policyholder's car, too. It also applies to named drivers on the policy who are hit by a car while biking or walking.

In some states, drivers may be able to purchase medical payments insurance (MedPay) instead. MedPay also covers the policyholder's medical expenses after an accident, but it does not cover lost wages or child care. MedPay does not require any copays or deductibles, so it can be a good alternative if PIP is not available.

For more information, check out WalletHub's complete guide to personal injury protection.