Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • No-fault insurance plans were designed to limit lawsuits
  • With a no-fault insurance system, your medical expenses and losses are covered by your own insurance
  • Additional insurance can still be purchased so that you can have the exact coverage you require

States across the country have made the switch to no-fault insurance. Rather than relying on the tort system in an accident, this type of coverage puts the burden of coverage on each person’s individual insurance plan.

When you know how these plans work, you can invest in the right coverage in order to properly protect yourself and your assets.

Enter your zip now to compare no-fault auto insurance quotes from local companies!

Fault is Irrelevant

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As the name of this coverage implies, it doesn’t matter who causes the accident. Under the law, both parties will be entitled to certain benefits through their insurance company. This typically includes:

  • Lost wages
  • Medical expenses
  • Mileage for medical appointments
  • Replacement services such as child care or a temporary maid
  • Home and vehicle modifications in case of disabling injuries

In states like Michigan, the insurance companies only have one year to pay the claims. Likewise, if you are able to file a lawsuit for certain expenses, this step must be taken within one year of the accident.

If you’ve been dissatisfied with your insurance company’s performance following a no-fault claim, then you may want to shop around for a new provider.

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Property Damage May Not Be Covered


Note that damage to the car is not always covered in the list above. in many no-fault states, the damage to a vehicle is not included in the no-fault plan. Drivers will have to go through the traditional tort system to be compensated for this type of material losses.

When buying an insurance policy, read the fine print to determine whether your own vehicle will be protected. If your state does not require that your car is covered under no-fault insurance, then you’ll want to invest in comprehensive protection.

This can bump up your rates slightly, but it’s possible to find a better premium by shopping around.

Your Insurance Covers Your Expenses up to State Thresholds

Your own insurance company will cover medical treatments and the lost income that you may face after an accident. It’s important to note that some states have thresholds in place regarding these expenses.

Once you surpass that threshold, you can file a claim against the responsible party and let the court system take over.

You typically will not be allowed to pursue any additional non-economic damages such as pain and suffering.

Cooperation is Required

When you file a no-fault claim, you’re required to cooperate with the insurance company. You’ll need to give a recorded statement to your provider and attend required medical examinations.

If you decide not to cooperate with the process, then your claim can be denied and the insurer will not be legally required to cover any expenses.

In some cases, you may believe that your insurance company was not as responsive as they should have been. If you cooperated fully and still did not have all your expenses covered, then you can look for a new carrier.

Take the time to compare quotes, satisfaction ratings, and average payout information before making a final determination.

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Invest in Uninsured Motorist Coverage

Some people automatically assume that they will be covered in every accident regardless of fault, but there is an important exception to this rule.

If you’re hit by an uninsured driver, then you’ll be limited to your own policy amounts. If the damages exceed those amounts, it will be difficult to collect the difference from an uninsured driver.

Insurance companies offer uninsured and underinsured motorist coverage so that you can be protected even when someone else breaks the law.

Damages in at-fault states may be at risk if the other party has chosen to drive without proper coverage.

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No-Fault States

There are currently a dozen no-fault states that choose to follow this type of insurance plan. They are:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

The territory of Puerto Rico is also no-fault. In New Jersey, Pennsylvania, and Kentucky, motorists have the right to opt out of no-fault plans and retain the right to sue for auto-related injuries.

The Goal of No-Fault States

In states where this type of insurance has been instituted, the goal is to provide consumers with quick payouts for property damages and comprehensive reimbursement levels for personal injuries.

By limiting the options to sue and requiring insurance companies to take care of their customers regardless of fault, lawmakers hope to simplify the system and lower the cost of insurance for everyone.

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The Failure of No-Fault Plans


The best intentions don’t always produce the desired results, and this is a perfect example. States wanted to cut back on frivolous lawsuits, but they are now facing a host of new problems, including:

  • Rising fraud levels
  • Higher medical fees
  • Generous benefits
  • Increases in lawsuits

The result is that the cost of insurance is rising fast even in no-fault states. However, you don’t have to settle for higher premiums.

With the power of comparison sites, you can easily look at quotes from competing companies to see if another agency can provide you with a budget-friendly alternative.

Requirements for Filing


Before a no-fault claim can be filed, there are certain requirements that must typically be met. These are:

  • That a motor vehicle was involved in an accident
  • That someone has sustained an injury in the accident
  • That the motor vehicle was being used as such when the incident occurred
  • That there is a sufficient connection between the claimed injury and the vehicle in question

The insurance plan will cover direct insureds — the people who are specifically listed on the plan. They will also typically cover indirect insured, or the people who may be in the car with the primary insured, including relatives living in the house, a spouse, and other passengers.

Protect your assets and your own family by investing in the right type of insurance plan. Even in a no-fault state, you may still need to purchase additional coverages like uninsured motorist, collision, and comprehensive.

However, you can keep your rates within your budget by shopping around for the most attractive pricing and plan.

Enter your zip code below now to find affordable auto insurance coverage near you!