There are many different types of car insurance. Being familiar with every type and clause comes with time and experience, but there are some car insurance coverage options that you may not have ever heard about before.
One type of insurance that not everyone is knowledgeable about is called no fault car insurance. This type of car insurance is not applicable in every state, so a lot of drivers will never come across this coverage in their lifetime.
Today, we will introduce the specifics of how no-fault car insurance works, which states allow no-fault insurance claims, and how you should handle this type of insurance claim if you are involved in an accident.
What Is No Fault Car Insurance?
No-fault insurance is sometimes called PIP insurance or personal injury protection insurance. It is a specific type of auto insurance which covers medical bills for you and your passengers regardless of who is found liable for the accident. This type of coverage may also include your income or other expenses in cases where an accident renders you unable to work for a short period.
Having this type of insurance is beneficial because it will help offset the financial impact that comes from being injured in a car accident even if you are found liable for that accident. Apparently, even if an accident is your fault, that doesn’t mean that you cannot be injured in the accident. As such, having no-fault or PIP insurance will help protect you from the financial burden of a car accident injury.
What States Have No Fault Coverage?
This type of coverage is not available in all states. In others, it is required, while some leave it available as an optional type of coverage.
States Where It Is Required:
- New York
- New Jersey
- North Dakota
States Where It Is Optional:
- New Hampshire
- South Dakota
- Washington D.C.
If your state is not included on either of the two lists above, PIP insurance is not available or required in that state at this time.
How Does No-Fault Insurance Differ from Medical Payments Coverage?
No-fault coverage and medical payments coverage are two different types of insurance. Medical payments coverage is always optional, and this sets it apart from no-fault insurance which can be optional or required. Medical payments coverage includes payments for medical bills and injury-related costs in a very similar way as no-fault insurance coverage.
In states where no-fault insurance is required or optional, medical payments insurance typically is not available as they offer the same type of coverage. Medical payments insurance is largely reserved for states that do not have no-fault insurance.
What Does No-Fault Insurance Cover?
The specifics of what any PIP policy covers will depend on your auto insurance company’s regulations and rules. That being said, there some common things that this type of insurance may cover when an accident occurs, and they include:
- Health insurance deductible(s)
- Expenses not covered by your health insurance
- Income lost due to injury
- The cost to cover child care, cleaning, etc. that you cannot do while injured due to the accident.
- Cost of a funeral when applicable
Essentially, this type of insurance coverage will put money towards the expenses that occur because you are injured in an accident regardless of whether the accident was your fault or not.
Are There Limitations to How Much It Covers?
As with any insurance policy, there are limits to how much coverage the auto insurance company will settle out to. In states where no-fault insurance coverage is required, the state authorities set a minimum amount of PIP insurance that you must carry while you have car insurance. On the other hand, in states where it is an option, you can choose how much coverage you want to carry.
With this type of insurance, it is always smart to invest in a decent deductible and maximum payout. If in any case, you were to be in an accident where you and several passengers were injured, the coverage would run out very quickly if you don’t have a large enough policy.
How Does No-Fault Coverage Work?
Let’s imagine a situation where you get into an accident. You live in a state that requires no-fault coverage, and you are properly insured. You did not cause the accident, but this point is not that important for medical bill purposes.
You file a claim with your insurance company for the medical bills from when an ambulance checked you out at the scene of the accident and took you to a local hospital. Between your hospital deductible and the coverage limitations on your PIP insurance, let’s imagine that you max out your coverage option.
Now, what would happen if you still have $5,000 that you owe in medical expenses? That would depend on what your local laws state. Unfortunately, every state is a bit different on this. Generally, you cannot sue another driver for medical damages unless the damages are very severe or costly, which include:
- Broken bones
- Lost limbs
- Loss of a fetus
- Loss of wages or medical bills that exceed the state’s monetary tort threshold
If one of those situations applied to that $5,000 that is still not covered, you would be able to sue the other driver in small claims court to cover that $5,000 if you wanted to or needed to do so.
No-Fault Car Insurance Laws: Yay or Nay?
Many drivers have mixed feelings about no fault car insurance coverage laws. While some find them to be a great way to protect yourself no matter what the accident is, others believe that they should not be required to pay for their own medical bills if someone else caused the accident.
Regardless of personal opinion, this coverage is required by law in some states. If you live in a no-fault state, be sure to read through the specifics of your state’s laws to ensure that you know exactly what to expect in case of an accident.