In the United States, each state has the ability to decide how it will handle car accident claims. The majority of states utilize a system called tort liability—more commonly known as fault states. The remaining states are either no-fault states or use a combination of both systems. In this blog, our personal injury lawyers explain how no-fault insurance works, what to expect from your auto insurance company, and how to get the best settlement possible after an accident.
What Is No-Fault Auto Insurance?
No-fault auto insurance refers to an insurance policy in which each driver files a claim with their own insurance company, regardless of who may have caused a car accident. For example, if someone rear-ends your vehicle, both you and the other driver would file claims with your own insurance companies if you were injured. Personal injury protection (PIP) coverage reimburses motorists for first-party expenses like hospital bills, lost wages, and even funeral costs if the driver or one of their passengers is killed in the accident.
Types of No-Fault Insurance
“No fault” is sometimes used to describe car insurance systems that aren’t strictly no-fault states. In a true no-fault state, there are restrictions on your ability to sue another driver for your injuries.
Another kind of no-fault insurance system called choice no-fault allows motorists to choose either a no-fault insurance policy or a fault (A.K.A. tort liability) policy. If a motorist chooses no-fault insurance, their ability to file a lawsuit is restricted.
In addition, there are also what’s known as add-on states. In some add-on states, PIP insurance is required; in others, they are an optional add-on. In either case, there are no restrictions on filing a personal injury lawsuit against other drivers in these states.
Which States Are No-Fault States?
By its strictest definition, there are 9 true no-fault states (plus one U.S. territory), 3 choice no-fault states, and 10 add-on states (plus Washington, D.C.). Any state not listed below is considered a fault or tort state.
True No-Fault States
- New York
- North Dakota
- Puerto Rico
Choice No-Fault States
- New Jersey
*PIP insurance is required in these states. In every other listed state, PIP is optional.
Who Pays for Car Damage in a No-Fault State?
Although motorists in no-fault states must usually file an injury claim with their own car insurance, the same is not true for damage to your vehicle and any possessions inside it during the accident. Even in no-fault states, property damage is covered by the liability insurance of the driver who caused the accident (unless you purchased additional insurance, such as collision coverage or uninsured/underinsured motorist coverage, in which case you may file a claim with your own policy).
Similarly, if you caused the accident, your liability insurance will not cover damage to your own car. You will have to use your collision coverage (if you have it) or pay for the damage to your vehicle out of pocket.
What If Insurance Doesn’t Cover All My Losses?
Sometimes, especially in traffic accidents that cause catastrophic injuries, auto insurance alone is not enough to cover all your losses. This may be more likely to occur in states where the minimum insurance amount is lower. For example, the state of Utah only requires motorists to purchase $3,000 worth of PIP insurance. After a serious accident, this benefit could be very quickly exhausted.
In addition, the minimum amount of property damage liability coverage required by many no-fault states is around $10,000 per accident. If your $20,000 vehicle is totaled in an accident caused by someone else, you’re still facing a $10,000 loss after an insurance payout.
Filing a Lawsuit in a True No-Fault State
If you live in one of the above listed true no-fault states, your ability to file a personal injury lawsuit against the motorist who caused the accident (or their insurance company) is limited to a certain threshold of bodily injury damages, either monetary or verbal. The monetary threshold refers to a certain dollar amount of damages that must be incurred to file a lawsuit. It may be any amount that exceeds the amount of your PIP coverage or another fixed dollar amount set by each state.
The verbal threshold refers to the nature of the injury that must be incurred in order to file a lawsuit. This often includes permanent scarring or disability, substantial total impairment lasting a certain number of days, fracture of a weight-bearing bone, serious disfigurement, dismemberment, loss of a fetus, or permanent limitation of a part of the body. Each state has slightly different definitions for what qualifies as a serious injury and warrants a personal injury lawsuit.
Filing a Lawsuit in a Choice No-Fault State
If an accident occurred in Kentucky, New Jersey, or Pennsylvania, whether or not you can freely pursue a personal injury lawsuit depends on whether you chose to purchase no-fault insurance or tort liability insurance. If you chose no-fault insurance, you’ll need to work within the confines of a verbal threshold in New Jersey and Pennsylvania and a monetary threshold in Kentucky.
If you purchased traditional fault insurance, you remain eligible to file a personal injury lawsuit regardless of any monetary or verbal thresholds.
Filing a Lawsuit in an Add-On State
If you live in an add-on state, you can utilize your PIP coverage as a first resort and then file a personal injury lawsuit if you have exhausted your coverage and/or the at-fault motorist’s liability coverage. There are no restrictions and no thresholds on filing a lawsuit in these states.
Do I Need a Personal Injury Lawyer in a No-Fault State?
In most cases, no-fault states help reduce the need for car accident victims to file a personal injury lawsuit, as they can handle the claim through their insurance company directly, saving time and money for all parties. However, if you or a loved one was severely injured in a wreck caused by another driver’s negligence, you could be entitled to far more compensation than is available through your car insurance policy.
In such cases, you will almost certainly need the assistance of an experienced and savvy personal injury attorney in order to obtain a fair settlement. The good news? Most personal injury law firms offer free consultations to help you determine whether filing a car accident lawsuit is the right choice for you and your family. Many also work on a contingency fee basis, meaning you don’t pay any upfront costs. Instead, your lawyer’s fees will come out of your final settlement.
Contact a Car Accident Lawyer at Lerner and Rowe Injury Attorneys
Lerner and Rowe Injury Attorneys is an established and well-respected nationwide personal injury law firm, with licensed attorneys in 16 states and a network of other law firms we work with in all 50 states. With over 240 years of combined litigation experience, tens of thousands of satisfied client reviews, and approximately $200 million recovered every year for the past three years, our team is committed to helping injured victims get the compensation and respect they deserve.
If you have been injured in a car crash or lost a loved one to wrongful death, we encourage you to contact us directly for a free consultation and case review. Our team of representatives is available 24/7 to take your call at 844-977-1900. You can also reach out to us online via LiveChat, or fill out this form with some case details to be forwarded to our office. The call is free, the consultation is free, and we charge no fees until we make a recovery on your behalf.