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.
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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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You should not send any sensitive or confidential information through this site. Any information sent through this site does not create an attorney-client relationship and may not be treated as privileged or confidential. The lawyer or law firm you are contacting is not required to, and may choose not to, accept you as a client. The Internet is not necessarily secure and emails sent through this site could be intercepted or read by third parties.

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