The definition of no-fault varies from state to state that chooses to be a no-fault car insurance state instead of a tort state. Under a no-fault system, when you have an accident, your auto insurance provider automatically pays for your certain damages, regardless of fault, up to a specified limit.
In exchange for this guaranteed payment of no-fault insurance, 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.
The type of no-fault insurance required in each state differs. In many states, such as Florida, no-fault basically means you are required to have Personal Injury Protection (PIP) which you use if injured in an accident no matter who was at fault. So if you were not at fault in an accident you would place a claim against your own PIP coverage instead of the at-fault party's Bodily Injury Liability. However in the same scenario damage to your car would still go through the at-fault party's Property Damage Liability coverages.
In Pennsylvania, New Jersey and Kentucky motorists are allowed to choose between traditional tort and no-fault coverage. These states thus may be referred to as optional or choice no-fault states. Auto insurance policyholders need to choose between full tort and limited tort (no-fault) options when obtaining their coverage.
Michigan has one of the most comprehensive no-fault auto insurance systems in the United States. There are three basic parts to a MI no-fault policy that must be purchased and carried on every vehicle and this basic coverage is referred to by many as PLPD.
The 3 parts to the MI no-fault policy are: Personal Injury Protection (PIP), Property Protection (PPI) and Residual Bodily Injury and Property Damage Liability (BI/PD). In Michigan PPI pays up to $1 million for damage your car does in Michigan to other people's property, such as buildings and fences but not to other cars unless they were legally parked when you hit them. So here a basic no-fault policy in this state does not pay to repair or replace another car normally or your own car if it is damaged. Therefore, if you want to have your vehicle covered if it is damaged (by you or another driver) or stolen you must purchase physical damage coverage of Collision and Comprehensive.
While there are currently 12 states with no-fault auto insurance laws in effect. These states are:
- New Jersey
- New York
- North Dakota
Depending in which of these states you reside in the definition for No Fault insurance can differ. A basic general definition is that No Fault is a type of insurance intended to provide compensation for motor vehicle accident victims regardless of who is to blame for the incident by being paid basic damages by the company that insured the vehicle in which they were driving. Damages are usually restricted to the actual medical bills and necessary expenses up to your specified limit.
Certain states have embraced the No Fault system to try and curtail lawsuits. This is done by in most No Fault states your right to sue is prevented or extremely limited unless there are serious injuries or death resulting from the accident. So non-economic damages, such as pain and suffering, are permitted to be sought after by injured parties in most no-fault systems only in cases where exceptionally serious injuries have been incurred.
To find out about your state's no-fault definition and no-fault insurance laws contact your state's insurance regulator. Get a low cost car insurance quote for any no-fault or tort state in the United States here.