What is No Fault Insurance and How Does a Claim Work?

If you live in a "no-fault" car insurance state, you'll likely make a claim with your own insurance company after a car accident.

About a dozen states follow what's called a "no-fault" car insurance system (District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah). No-fault insurance means that your own automobile insurer will pay some or all of your medical bills and lost earnings if you get into a car accident, regardless of who was at fault for the crash. A no-fault claim is typically made through the "personal injury protection" or "PIP" provisions of a car insurance policy (this kind of coverage is mandatory in no-fault states).

Every no-fault state’s rules are different. A few are even so-called "choice" no-fault states (Kentucky, New Jersey, and Pennsylvania), where vehicle owners essentially have the choice to "opt out" of the no-fault system when purchasing a car insurance policy.

What is A No-Fault Insurance Claim?

A no-fault insurance claim, sometimes called a Personal Injury Protection claim (or PIP claim), is one you make with your own automobile insurer for payment of medical bills, lost earnings, and certain other out-of pocket damages after a car accident.

A key component of the no-fault scheme is that you are never permitted to make a claim for pain and suffering with your own car insurance coverage, and you can only pursue this kind of recovery against the at-fault driver if your medical bills reach a certain level -- or your injury is deemed sufficiently serious -- so that you're permitted to step outside of the no-fault rules. For example, your state’s no-fault law might prohibit a personal injury claim against the at-fault driver unless your medical bills exceed $3,000 or you suffer a broken bone. This feature of no-fault laws is a legislative attempt to streamline car accident cases, especially smaller claims.

Let’s take an example. Let’s say that you got into a car accident in New York. The other driver was at fault, you broke your right leg in the accident, and you incurred $7,500 in medical bills. In order to step outside the no-fault system and bring a claim directly against the at-fault driver in New York, your claim must meet the "serious injury" threshold in place under state law. That means, as a result of the car accident, you've experienced any of the following:

  • significant disfigurement  
  • bone fracture
  • permanent limitation of use of body organ or member
  • significant limitation of use of body function or system, or
  • substantially full disability for 90 days.

Since your injuries qualify under this definition (because of your broken leg), you can file a third-party liability claim or personal injury lawsuit directly against the at-fault driver, demanding compensation for all categories of losses, including pain and suffering (which, again, isn't available in a no-fault claim). But if you suffered only minor injuries that don't qualify as "serious" under New York's threshold, you're limited to a claim under your own PIP coverage.

One last note: No-fault car insurance only applies to car accident injuries; for vehicle damage resulting from a car accident, you're free to pursue a claim against the at-fault driver.

You Must Cooperate With Your Insurer in a No Fault Claim

With a no-fault claim, the usual rules for dealing with an insurance company in a personal injury case usually should be disregarded. For example, in most cases, you do not want to give a recorded statement to the other side's insurance company. But, in a no-fault claim, state law generally requires you to cooperate with your insurer. Your policy may require you to give your insurer a recorded statement, and may require you to attend a medical examination with a physician selected by the insurance company. If you fail to cooperate with the process, your insurance company may have grounds to deny the claim.

If you get into an accident in a no-fault state, and need legal advice at any point in the claim process, it may make sense to contact a knowledgeable car accident lawyer.

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