What is No-Fault Automobile Insurance?
No-fault automobile insurance – also known as personal injury protection – pays for expenses no matter who was at fault in an accident. Such policies also limit the allowed litigation between parties. Some states require no-fault insurance, while others allow it as an option, so you should check on your state’s policies.
Basics of No-Fault Automobile Insurance
No-fault coverage generally has limits on coverage. It only covers medical expenses and lost wages up to the policy’s limits. Expenses above the limits are not covered. No-fault policies often limit litigation allowed between injured parties. The goal is to reduce overall premiums by limiting the expensive litigation that often accompanies traditional insurance while also allowing for quick expense payments.
Expenses Above Policy Limits
If your medical expenses are greater than the amount of your policy, you may be able to sue the at-fault driver, depending on the state’s policies. Some states require that your medical expenses reach a certain amount before you are able to sue the other driver. Other states allow you to sue for “serious injuries,” which is defined differently by different states. You should check on the policies of your state.
Hybrid Systems
Some states, like Pennsylvania and New Jersey, have a hybrid system. In this system you may choose to buy no-fault automobile insurance, but you are unable to sue the at-fault party if your expenses exceed the policy limits. You, in turn, cannot be sued. You may also choose not to purchase a no-fault policy and instead opt for a more traditional policy.
Criticisms of No-fault
Many are critical of no-fault automobile insurance policies, for a variety of reasons. At least in some states, no-fault policies have led to higher premiums, not lower ones. In other states, no-fault fraud has become commonplace. Some also argue that no-fault policies do not adequately punish negligent drivers or insulate them from the consequences of their actions.
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- What Types of Car Insurance Are There?
- What is the Cheapest Car Insurance?