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Car insurance in no-fault vs. at-fault states

No-fault state laws limit your ability to go to court. But that applies only to accident injuries.

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Man signing a sheet in front of two cars

If you live in an at-fault state, the driver who caused an accident pays for the damage of both cars. No-fault states, however, have a different set of liability rules, typically for bodily injury claims. Fortunately, claiming other types of damage is similar across all states.

What is no-fault car insurance?

No-fault car insurance refers to the state’s requirements as to who pays for bodily injuries after an accident. In states with no-fault laws, each driver’s insurance company is required to pay for medical injuries for its policy holders up to the policy limit. That’s why no-fault states require all drivers to buy personal injury protection (PIP) coverage, covering the medical bills of both drivers and their passengers.

No-fault laws limit drivers from suing for injuries, taking small claims out of the courts. The idea is to reduce overhead and the time it takes to pay out claims.

In a few states like New Jersey and Kentucky, you can choose between no-fault or liability when buying car insurance. In these choice no-fault states, choosing no-fault protects you from being sued for minor injuries if you cause an accident, unless there’s serious personal injury. If you choose traditional tort liability, you can sue other drivers who also chose this liability but not drivers who chose no-fault. A lawyer can better help you navigate these complexities.

How does car insurance work in an at-fault state?

Tort liability rules in at-fault states. This means whoever caused the car accident pays for injury expenses, car damage and other property damage for both drivers.

This typically falls under bodily injury liability and property damage liability. Bodily injury liability kicks in to pay for medical bills for another driver or passengers. Property damage liability covers damage to someone else’s property, including the other driver’s car.

FactorsNo-fault statesAt-fault states
How it worksEach driver’s insurance pays for their own damageDriver who causes the accident pays for all damage to both drivers
Coverage required
  • PIP required
  • Property damage liability
  • Underinsured motorist, in some states
  • PIP optional
  • Bodily injury liability
  • Property damage liability
  • Underinsured motorist, in some states
CostHigher car insurance premiums than averageAverage or slightly cheaper premiums than average
Where to file claimsFile a claim through your own insurer to recover damagesFile a claim through at-fault driver’s insurance
Limitations on lawsuits Lawsuits limited to serious injuries or cases No limitations
Which statesDC, FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA, UTAll other states

Which states have no-fault insurance?

These 12 states plus DC are considered no-fault states. All other states are at-fault states.

  • DC
  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • NewJersey
  • NewYork
  • NorthDakota
  • Pennsylvania
  • Utah

No-fault vs. at-fault car insurance coverage

Many of the same types of coverage are offered whether you live in a no-fault or at-fault state. But a few types of coverage are different or not required in no-fault states. Consider whether you need these types of coverage:

Type of coverageWhat’s coveredAt-fault stateNo-fault state
Bodily injury liabilityMedical bills for other person injured in an accident you caused, legal feesRequiredNot required
Property damage liabilityCar or other property repairs if damaged in an accidentRequiredRequired
Personal injury protectionYour own medical costs, plus lost income, child care or a death benefit may be includedOptional in some statesRequired
Uninsured or underinsured motorist bodily injuriesMedical injuries caused by an underinsured driverOptional or required, depending on the stateNot required if you have PIP
Uninsured or underinsured motorist property damageCar or property damage caused by an underinsured driverOptional or required, depending on the stateOptional or required
CollisionDamage to your own car if you cause the accidentOptionalOptional
ComprehensiveDamage to your own car from noncollision accidents, like theft or storm damageOptionalOptional

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Car accident claims in no-fault vs. fault states

When filing a car accident claim, in an at-fault state, you would typically file a claim with the at-fault driver’s car insurance.

However, in a no-fault state, you file claims for medical injuries through your car insurance company. Then, your car insurer works with the at-fault driver’s insurance to get a reimbursement that pays for your car’s damage.

Claims in no-fault states

The main differences are where you file your bodily injury claim and how fast you get your insurance settlement. In no-fault states, you should receive your bodily injury settlement more quickly than in at-fault states since you’re not proving who was at fault.

The claims process looks like this:

  1. Report the accident and specific details about personal injuries to your insurance company.
  2. Report property damage to the at-fault driver’s insurance company. Provide detailed information about the accident, but beware of admitting fault in the accident. The insurance company will investigate this on its own.
  3. Provide extra documentation, like doctor’s office invoices or a diagnosis to prove your medical injuries. A police report can also help to determine who caused the car damage.
  4. Speak with your insurance company about accident details and the extent of your injuries. This information helps the company work with the other driver’s insurer for property damage settlement.
  5. Receive your claim settlement, after approval. Your check may come by mail, in person or by a direct bank deposit. The settlement may take a few days for bodily injury claims.

Case study: Car accident in a no-fault state

John was T-boned by another driver at an intersection near his home in Florida, a state with no-fault laws. John filed a car insurance claim with the other driver’s insurance for his sedan’s $500 side door damage. John also owed $1,000 in medical bills for his broken leg, which he claimed using his own PIP coverage.

Claims in at-fault states

In an at-fault state, the claims process looks similar but relies more on the at-fault driver’s insurance. The claims process looks like this:

  1. Report the accident to the at-fault driver’s insurance company, including specific details about the car damage and your injuries. Let the insurance company determine fault on its own, avoiding blame during any interviews.=
  2. Provide extra documentation, including car damage photos or repair estimates, doctor’s invoices or a diagnosis to prove medical injuries. You may need a police report or insurance adjuster to determine the at-fault driver before proceeding.
  3. Speak with your insurance representative about accident details and the extent of your injuries. Back-and-forth communication between your insurance company and the at-fault driver’s is common.
  4. Once approved, receive your claim settlement by mail, in person or through a direct deposit. The settlement could take a few weeks as the insurance companies iron out the details of fault and damage expenses.

Case study: Car accident in an at-fault state.

Stacy lives in New York, an at-fault state, and was T-boned by another driver. However, she was deemed 60% at fault because she was speeding through the intersection. Stacy could claim 60% of her medical bills and property damage on the other driver’s insurance.

Then, Stacy would need to claim the remaining 40% using her own policy’s collision and medical payments coverage. In addition, her insurance pays 40% of the other driver’s expenses for injuries and car damage.

Are car insurance premiums different for fault and no-fault states?

Yes, premiums are usually higher in no-fault states since they’re more likely to pay out for bodily injuries in an accident. Also, some no-fault states require wide insurance coverage, such as PIP with childcare and lost income benefits.

You might see insurance premiums around $1,500 annually or $125 a month in no-fault states. The national average for car insurance is $1,300 a year or $108 a month, which is slightly lower than the average for car insurance in no-fault states.

Bottom line

Whether you live in an at-fault or no-fault state, ample car insurance coverage helps cover the bills for costly injuries and car damage. The main concern is whether you’re buying medical bill coverage for yourself or for other injured drivers or passengers.

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