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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.
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.
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.
| Factors | No-fault states | At-fault states |
|---|---|---|
| How it works | Each driver’s insurance pays for their own damage | Driver who causes the accident pays for all damage to both drivers |
| Coverage required |
|
|
| Cost | Higher car insurance premiums than average | Average or slightly cheaper premiums than average |
| Where to file claims | File a claim through your own insurer to recover damages | File a claim through at-fault driver’s insurance |
| Limitations on lawsuits | Lawsuits limited to serious injuries or cases | No limitations |
| Which states | DC, FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA, UT | All other states |
These 12 states plus DC are considered no-fault states. All other states are at-fault states.
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 coverage | What’s covered | At-fault state | No-fault state |
|---|---|---|---|
| Bodily injury liability | Medical bills for other person injured in an accident you caused, legal fees | Required | Not required |
| Property damage liability | Car or other property repairs if damaged in an accident | Required | Required |
| Personal injury protection | Your own medical costs, plus lost income, child care or a death benefit may be included | Optional in some states | Required |
| Uninsured or underinsured motorist bodily injuries | Medical injuries caused by an underinsured driver | Optional or required, depending on the state | Not required if you have PIP |
| Uninsured or underinsured motorist property damage | Car or property damage caused by an underinsured driver | Optional or required, depending on the state | Optional or required |
| Collision | Damage to your own car if you cause the accident | Optional | Optional |
| Comprehensive | Damage to your own car from noncollision accidents, like theft or storm damage | Optional | Optional |
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.
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:
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.
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:
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.
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.
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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