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How Does a Claim for No-Fault Auto Insurance Work?

No matter who was at fault for the collision, if you are hurt in a car accident and live in a no-fault insurance state, you will probably file an injury claim with your own insurance provider. What you need to know right away is as follows:

No-fault auto insurance can speed up the claims process and payment, but “pain and suffering” and other non-economic consequences of the collision are not covered. If your injuries meet the statutory threshold in a state with no-fault auto insurance, you can opt-out of the no-fault system. Around a dozen states require some kind of no-fault auto insurance, but it can be added to your auto insurance policy in every state.

What Does No-Fault Auto Insurance Entail?

No-fault insurance means that regardless of who was at fault for the collision, your own auto insurance policy will cover some or all of your out-of-pocket expenses or economic losses if you are injured in a car accident. A no-fault claim is made through a car insurance policy’s “personal injury protection” or “PIP” provisions (this kind of coverage is mandatory in no-fault states.

What Exactly Is a “No-Fault State”?

The term “no-fault state” is most frequently used to describe a state whose laws mandate that the default auto insurance system be one in which injured drivers turn first (and frequently exclusively) to their own auto insurance coverage to recover compensation for specific losses following an accident.

The laws in each no-fault state are unique. In some states, purchasing no-fault insurance is required, and for injured drivers, passengers, and others, filing a claim under the no-fault system is their first (and occasionally their only) choice. Vehicle owners essentially have the option to “opt out” of the no-fault system and choose liability-based coverage in the few “choice” no-fault states, either when buying a car insurance policy or when filing an injury claim following an accident.

What Is Insurance for “Personal Injury Protection” (PIP)?

As we mentioned above, personal injury protection, or “PIP” coverage, is another name for no-fault auto insurance. PIP can be added to any auto insurance policy in any state, but it is only required in so-called “no-fault states.” It doesn’t matter who caused your car accident when you’re filing a claim under PIP coverage, whether it’s required or optional in your state.

States with No-Fault Auto Insurance

Depending on how you define a “no-fault state,” the answer may vary. Ten states use the traditional “no-fault” system of auto insurance, which requires anyone hurt in an accident to first seek out their own auto insurance coverage:

  1. Florida
  2. Hawaii
  3. Kansas
  4. Kentucky
  5. Massachusetts
  6. Michigan
  7. Minnesota
  8. New York
  9. North Dakota, and
  10. Utah

Three states have a “choice no-fault” or “hybrid” system, which means that when you buy auto insurance there, you can choose whether you want to be covered under no-fault or a conventional liability-based system (and even after you’ve made your choice, you might be able to later decide whether to continue with no-fault before making a claim after an accident):

  1. District of Columbia
  2. New Jersey
  3. Pennsylvania

There are a few states that require no-fault coverage as an add-on to your auto insurance policy, including Delaware and Oregon, but in these “required add-on” states, there are typically no restrictions on your options for holding another driver accountable for your damages following an accident.

What Is Covered by No-Fault Auto Insurance?

You can typically receive reimbursement for a range of monetary or out-of-pocket losses brought on by a car accident when filing a no-fault insurance or PIP claim, including:

  1. medical bills related to your car accident injuries
  2. lost earnings (up to a certain limit) resulting from your injuries
  3. cost of replacement services (for chores you can’t do because of your injuries, for example), and
  4. burial/funeral costs if someone died as a result of the accident.

A key feature of the no-fault system is that you cannot receive compensation for pain and suffering as part of your claim.

You can only file a liability claim (or personal injury lawsuit) against the at-fault driver if your medical bills exceed a certain amount or if your injury is deemed sufficiently serious under your state’s threshold. For example, after a car accident in Massachusetts, you can file a liability claim or a lawsuit.

  1. The injured person’s medical bills must add up to at least $2,000.
  2. Accident injuries must include permanent and serious disfigurement, fractured bone, or substantial loss of hearing or sight.

Let’s examine one more illustration. Imagine you were involved in a car accident in New York. You broke your right leg in the collision, the other driver was at fault, and you racked up $7,500 in medical expenses. Your claim must satisfy the “serious injury” standard set forth by state law in order to exit the no-fault system in New York and file a claim directly against the at-fault driver. That means that as a result of the automobile collision, you have gone through any of the following:

  1. significant disfigurement
  2. bone fracture
  3. permanent limitation of use of body organ or member
  4. a significant limitation of use of body function or system, or
  5. Substantially full disability for 90 days.

You can file a third-party liability claim or personal injury lawsuit against the at-fault driver and demand compensation for all categories of losses, including pain and suffering (which, once more, isn’t available in a no-fault or PIP claim), since your injuries fall under this definition (because of your broken leg). However, you are only allowed to file a claim under your own PIP coverage if you only sustained minor injuries that don’t meet New York’s definition of “serious” injuries.

Who Covers Car Repair Costs in a No-Fault State?

Only injuries sustained in auto accidents are covered by no-fault and PIP insurance; if you sustain vehicle damage as a result of an accident, you are free to file a claim against the at-fault driver or under your own collision coverage, if you have it.

Work With Your Insurance Company If You Have a No-Fault Claim

The customary guidelines for interacting with an insurance company in a personal injury case should typically not be followed in a no-fault claim. However, state law generally requires you to work with your insurer in a no-fault claim. According to your policy, you might be required to provide a recorded statement to your insurer and go to a doctor’s appointment the insurance company chooses. Your insurance provider might have a reason to reject the claim if you refuse to cooperate with the process.

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