What Is No-Fault Car 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.

By , J.D., University of San Francisco School of Law

If you're injured in a car accident and you live in a no-fault car insurance state, you'll likely make an injury claim with your own car insurance company regardless of who caused the crash. Here's what to know right off the bat:

  • No-fault car insurance can lead to a streamlined claim process and quicker payment, but "pain and suffering" and other non-economic effects of the accident aren't compensated.
  • You can step outside of the no-fault system in every no-fault car insurance state, if your injuries qualify under the statutory threshold.
  • Some form of no-fault car insurance is mandatory in around a dozen states, but it's available as an add-on to your car insurance policy in every state.

What Is No-Fault Car Insurance?

No-fault insurance means that if you're injured in a car accident, your own car insurance coverage will pay some or all of your out-of-pocket or economic losses, regardless of who was at fault for the crash. A no-fault claim is made through the "personal injury protection" or "PIP" provisions of a car insurance policy (this kind of coverage is mandatory in no-fault states, but you can also purchase PIP-type coverage on top of traditional liability coverage in non-no-fault states).

Every no-fault state's rules are different. In some, purchase of no-fault insurance is mandatory, and participation in the no-fault scheme when making an injury claim is the first (and sometimes only) option for injured drivers, passengers, and others. In the handful of "choice" no-fault states, vehicle owners essentially have the choice to "opt out" of the no-fault system and go with liability-based coverage, either when purchasing a car insurance policy, or when making an injury claim after an accident.

No-Fault Car Insurance States

The answer here depends on your definition of "no-fault state." Ten states follow a traditional "no-fault" car insurance system, where anyone injured in an accident must turn first to their own car insurance coverage:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New York
  • North Dakota, and
  • Utah

Three states follow a "choice no-fault" or "hybrid" system, meaning that when you purchase car insurance in these states, you elect whether you want to be insured under no-fault or under a traditional liability-based scheme (and even after you've made your choice, you might later be able to decide whether to continue with no-fault before making a claim after an accident):

  • District of Columbia
  • New Jersey
  • Pennsylvania

A handful of states (including Delaware and Oregon) require no-fault coverage as an add-on to your car insurance policy, but in these "required add-on" states, after a crash there are typically no limitations on your options for holding another driver responsible for your damages.

What Does No-Fault Car Insurance Cover?

In a no-fault insurance or PIP claim, you can usually get compensation for a variety of economic or out-of-pocket losses resulting from a car accident, including:

  • medical bills related to your car accident injuries
  • lost earnings (up to a certain limit) resulting from your injuries
  • cost of replacement services (for chores you can't do because of your injuries, for example), and
  • burial/funeral costs if someone died as a result of the accident.

A key component of the no-fault scheme is that you are not permitted to get compensation for pain and suffering as part of your claim.

You can only step outside the no-fault rules and file a liability claim (or personal injury lawsuit) against the at-fault driver if your medical bills reach a certain level—or if your injury is deemed sufficiently serious—under your state's threshold. For example, in order to bring a liability claim or file a lawsuit after a car accident in Massachusetts,

  • the injured person's medical bills must add up to at least $2,000, and/or
  • accident injuries must include permanent and serious disfigurement, fractured bone, or substantial loss of hearing or sight.

Let's look at one more 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 or PIP 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.

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.

What's Next?

If you're injured in a car accident in a no-fault state, and you think your claim might qualify you to step outside of the no-fault system, it might make sense to discuss your options with a legal professional. Learn more about when to hire a car accident lawyer.

You can also connect with a car accident lawyer near you using the tools on this page. Answer a few questions and you'll be on your way to a free case evaluation from a local car accident attorney.

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