No Fault Auto Insurance

Some drivers get confused when they come across the term, “no-fault insurance.” To make it simple, a no-fault plan—also known as personal injury protection (PIP)—covers you and the passengers in your vehicle for loss of income and medical expenses if you are involved in a car accident. It does not matter who is at fault. The insurance will cover you financially.

These coverages set no-fault insurance apart from other kinds of auto insurance, such as collision insurance, comprehensive insurance, and liability coverage. As long as an accident is covered within the terms of an insurance plan, no-fault or PIP insurance will pay for the medical bills, loss of income, and other associated expenses of an accident.

These costs may be incurred by either your or your passengers and are paid after the amount of the deductible is assumed. All the costs are repaid up to a specific covered limit. No-fault insurance is mandatory certain US states. Otherwise, states require that medical costs be paid by a MedPay plan or a medical payments insurance plan.

What Do No-Fault Policies Cover?

The main costs covered by no-fault plans include the following:

Medical and hospital costs that result from a car crash or accident.
Loss of income, resulting from the incapacity to work.
Funeral costs.

More specifically, no-fault insurance or PIP coverage helps pay for the following:

The deductible for your health insurance
Costs that surpass your health insurance protection limits
Certain basic services, such as cleaning or child care – tasks that cannot be performed because of your injuries

What No-fault Policies Do Not Cover

The insurance, will not, under any circumstances, cover the following:

Damage to your vehicle (this is covered by a collision insurance plan)
Damage to another person’s property (this is covered by your liability policy for property damage)
Medical costs that exceed the coverage limits

In basic terms, no-fault insurance will not cover theft or physical damage to your vehicle. Either of these incidents are covered by comprehensive insurance or collision plans. Your liability coverage covers physical damages to another person’s vehicle. To make a distinction between coverages, remember – no-fault insurance pertains to coverage for bodily injury.

States Where the Coverage is Required

No-fault insurance can be either mandatory or optional, depending on the state where you live. No-fault coverage is required in the following states:

States Where Optional Coverage Can Be Purchased

No-fault insurance is an option in the following:

District of Columbia
New Hampshire
South Dakota
Texas
Virginia
Washington
Wisconsin

Any no-fault claim has a certain coverage restrictions, which is the maximum amount an insurance company will pay for a claim. In the states where personal injury protection (PIP) is required, the state laws invoke coverage limitations.

Drivers must buy at least the minimum amount in PIP protection required by state law. In some instances, you can buy extra protection to add to you PIP limits. These higher limits can be helpful, especially if you have to pay out-of-pocket medical costs that surpass your limits for coverage.

How the Insurance Coverage Works

In states that do feature no-fault coverage, you can use the insurance to help injuries inflicted in an auto accident, regardless of the at-fault party. This coverage is provided up to selected limits.

How Insurance Claims Are Filed in States with No-fault Plans

If you live in a state without no-fault coverage and are injured in a car accident caused by another driver, the driver’s at-fault bodily injury liability plan can help reimburse you. The plan can cover you for medical costs up to your policy’s limits. If you are injured in an accident that you cause, a medical payments plan (if you have taken one out) can help reimburse you for medical costs, up to the selected limits.