Understanding No-Fault Insurance Systems

November 8th, 2011
No fault insurance

No fault insurance at a glance simply means, no matter who’s fault the accident may be, you need you have your insurance cover the costs. Knowing the ins and outs of insurance can be confusing, understanding no fault insurance can be especially confusing.  There are 12 states that honor the no fault auto insurance practice but unfortunately each state carriers out the law differently.

The basics of no fault insurance surround the concept of drivers who are involved in a motorist accident, neither party would be eligible to sue the opposing party for damages. If involved in an accident each driver’s own auto insurance would cover the cost of the damages. After the damages have been paid, the insurance companies can than go forward with trying to determine the blame for the accident and try to recover the cost of the damage through the opposing parties insurance.  Many of the no fault states operate on a slightly modified system, allowing injured people to seek compensation for damages if certain conditions are met.

  1. Those injured or surviving family members can seek compensation for damages such as pain and suffering.
  2. When a person reaches a certain dollar amount in losses, they can then sue.

No fault insurance laws and practices were adopted to speed up the compensation time period for losses and can eliminate the long legal process other traditional insurance systems can take.

States with no fault insurance:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Michigan
  • Minnesota
  • New York
  • Pennsylvania
  • New Jersey
  • North Dakota
  • Utah
  • Washington, DC


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