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What is no-fault insurance?


If you live in a state with no-fault insurance laws, your own insurance coverage pays for your medical treatment and lost wages no matter who is ultimately to blame for the incident in which you were injured.

Typically drivers are required to buy personal injury protection (PIP) in no-fault states.  PIP often comes with a limit and may come with a deductible amount, depending upon your state and policy.

No-fault does not cover damage to vehicles. The other driver’s property damage liability coverage would pay to repair your car if he or she were at fault.

Most no-fault state systems restrict your ability to sue the at-fault party, especially for pain and suffering.

Litigation against the at-fault party is usually allowed only if you have sustained permanent or severe injuries and if your situation meets certain conditions or thresholds, which are set by each state. These thresholds may be expressed in dollar amounts of medical bills (a monetary threshold) or terms listed in the law that establish certain levels of injury or disability (a verbal threshold).

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There are currently 12 states (plus Puerto Rico) with no-fault auto insurance laws in effect. These states are:

  1. Florida
  2. Hawaii
  3. Kansas
  4. Kentucky
  5. Massachusetts
  6. Michigan
  7. Minnesota
  8. New Jersey
  9. New York
  10. North Dakota
  11. Pennsylvania
  12. Utah

The Insurance Information Institute (III) notes that Florida, Michigan, New Jersey, New York and Pennsylvania have verbal thresholds. Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah have monetary thresholds.

New Jersey, Pennsylvania and Kentucky have "choice" no-fault laws that allow motorists to reject the lawsuit threshold and retain the right to sue for any auto-related injury.

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