States with no-fault laws require all drivers to carry personal injury protection (PIP).
A no-fault state requiring PIP coverage gives the affected parties an easy way to access health coverage for
their injuries. Unlike traditional coverage, where a driver must be absolved of fault in order to receive certain
types of financial compensation, PIP coverage takes care of eligible costs immediately. Since fault isn’t always
clear and determining fault takes time, important aspects of the claim are settled in a more expedient fashion
in no-fault states.
PIP coverage also provides disability insurance for losses related to the accident. The lost wages portion of PIP
coverage is a huge relief for those who are struggling with an injury and unable to work.
A deeper look at no-fault insurance
If you have PIP coverage, payment for any injuries would come from your policy. In other words, if you get
rear-ended and sustain a neck injury, your insurance company (rather than the person who rear-ended you)
would pay the associated costs.
Here are the essential elements of a no-fault system:
Benefits go to covered persons, regardless of who is at fault
Partial or total exemption from civil legal (“tort”) liability for those who are insured
Mandatory no-fault coverage on registered automobiles
Expenses that might be covered are:
Economic loss. PIP may cover the associated wage loss during your period of recovery after the
Medical costs and rehabilitation. Includes associated medical bills and necessary rehabilitation
resulting from the accident.
Replacement services expenses. During the recovery period, you might not be able to complete
activities that you previously could. House cleaning, yard work and other “replacement” services
may be paid under the claim.
Funeral expenses. If an insured or his or her passenger dies in an accident, the associated funeral
expenses may be covered as part of the loss.
No-fault state systems vary
A no-fault system doesn’t look the same in every participating state, and there are different types of no-fault
1. Pure no-fault. A pure no-fault system bars the injured party from suing for damages. They
collect only from their insurance policy, such as PIP. (No state has enacted a pure no-fault
structure to date.)
2. Threshold no-fault. Under this system, the injured party can sue for damages only if they meet
a certain level of severity based on dollar amount (monetary threshold) or a written standard
3. Choice no-fault. Drivers can select either no-fault auto insurance or a traditional liability policy.
4. Add-on no-fault. Some states allow the addition of PIP coverage to traditional auto insurance
without limiting the right to sue.