No-Fault Vs Fault
If you're injured in a car accident, who pays? The answer depends on the state you live in AND whether you have no-fault car insurance.
In an accident, one party is typically determined to be "at fault." The type of car insurance required by state law dictates whether the at-fault party's insurer is solely responsible for covering the other driver's expenses, including those resulting from injuries.
Understanding Fault in an Accident
Unfortunately, determining who is at fault in the event of a collision isn't always black and white. Some circumstances are straightforward, such as:
- Running a red light
- Rolling through a stop sign without looking for oncoming traffic.
- Speeding and failing to stop in time when the vehicle in front of you slows down.
Other situations may put you and the other driver at varying degrees of fault. For example, if you're speeding and a car next to you changes lanes without a turn signal, you both violated traffic laws and are responsible for the accident. However, it's up to the car insurance companies to determine the degree of fault for each driver involved.
No-Fault vs. Fault Auto Insurance
The driver who is the primary cause of the collision is at fault in an accident and is responsible for the outcome. In most states, this means their insurance company is required to pay for damages.
However, some states use what's called a "no-fault" system in which drivers carry personal injury protection coverage, or PIP, in addition to standard auto insurance.
No-fault car insurance makes insurance carriers responsible for handling the injury expenses of their own policyholders, regardless of fault in the accident. Laws in no-fault states require motorists to have this type of insurance and set minimums for coverage amounts.
What No-Fault Insurance Covers
This coverage reimburses you for expenses incurred due to injuries, including:
- Medical bills.
- Lost wages.
- Funeral costs.
This policy type was established to minimize disputes over payments after car accidents. By providing a clear-cut system for compensation, no-fault coverage keeps injury claims out of courts and ensures both parties can start receiving the money they need without delay.
No-fault states (only a handful of states requires no-fault insurance) set caps on how much a no-fault policy covers. You can use no-fault insurance in tandem with health coverage to split up costs and cut down on the amount your auto insurance provider has to pay.
Some people believe no-fault states prohibit them from suing the other driver in a collision, but if you hit the threshold for coverage OR the accident resulted in grave injury, you may be entitled to additional compensation. In some cases, the other driver's insurance provider pays without a problem. Other times, you may have to bring the case to court to have the rest of your expenses taken care of.
How Liability Insurance Works
No-fault insurance is just one part of your total auto insurance coverage, and is not a replacement for other types of insurance. You're also required to carry liability insurance, particularly in the jurisdictions still operating under an "at fault" system.
Liability coverage pays for the expenses of the other party in an accident if you're determined to be responsible. It does not provide coverage for your injuries. In no-fault states, liability coverage takes care of whatever the other driver's PIP policy doesn't pay for.
Two main types of coverage are provided by liability insurance:
- Bodily injury (i.e. medical costs).
- Property damage (i.e. costs to repair/replace the vehicle).
Limits dictate the maximum amount your insurance company will pay on a claim if you're at-fault in an accident. If you're required to take responsibility after an accident but believe the charges are false, legal action may be necessary to prove the other driver should be held liable.
Ensuring Proper Coverage
Most states (including no-fault states) require minimum liability auto insurance coverage. You'll need an additional no-fault policy if you live in a qualifying state.
Talk with your insurance agent to determine what types of coverage you need to be in compliance with state law. They'll know the minimums and be able to answer any questions you have about coverage and claims.
There's no way to predict automobile accidents, and even careful drivers may find themselves labeled "at fault" for a collision. Living in a no-fault state takes some of the burden of responsibility off you and your car insurance company by dividing injury payments between parties. Learn what's required by state law to ensure you have the proper coverage.