No-Fault Auto Insurance

No-fault automobile insurance has been mandated by a number of states. No-fault means that a driver’s own insurance will cover their damages no matter who is at fault.

Generally no-fault states mandate that personal injury insurance (PIP) also be purchased in addition to a liability policy.

While no-fault will pay for most ordinary accidents, it will not pay for extremely expensive claims. In this case, when the degree of damages exceeds a “threshold-level,” no-fault states generally allow legal remedies through the court system.

The reason for no-fault is that when law suits were allowed, no matter what the amount of damages, the price of auto insurance premiums was costly.

States that allow persons to sue for any amount are called tort states. In these states law suits are common and the driver who caused the accident is responsible for all costs.