Under a no-fault system, when you have an accident, your auto insurance provider automatically pays for your damages, regardless of fault, up to a specified limit.
In exchange for this guaranteed payment, you must fore go some of your rights to sue the other driver involved in the accident. By the same token, you are also protected from being sued in the event you are at fault in an accident. There are elements of no-fault in all auto insurance coverage.
For example, medical payments and property damage are typically paid regardless of fault.
Some states have switched from a no-fault system to tort, like Colorado. A tort is a civil wrong that is not a crime.
Under tort auto insurance, someone has to be found at fault for causing a crash, and that person is responsible for payments. Under their old no-fault auto insurance system, every one's insurance company covered his/her own medical payments.
We had a visitor add this comment information. There was no author cited, but we believe there is a point to be made and some of the opinions are valid. Their comment in quotes:
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This doesn't apply to real life scenario. Driver A crashed into Driver B. Driver A is cited for various traffic violations. Driver A is plain wrong. Driver B loses car and is unable to replace it. Driver B loses job because cant get to work. Driver B loses home because cant pay mortgage. Driver A car is fixed and lives happily ever after. Driver A is at fault and Driver A is protected and Driver A insurance company is protected.
Who protects the victim?
Driver A has more coverage and more money to begin with. Driver A doesn't need protection. Driver B is poor and drives a crappy car. Driver B goes from poor to homeless and bankrupt. No fault protects insurance companies, rich drivers and hurts the rest of us. Lawyers have a field day suing in spite of law that doesn't work.
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Comment Update: PIP and no-fault are just one part of the auto policy. If Driver A was at fault, once PIP is exhausted Driver A or their company is still responsible.
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