What Does No-Fault Insurance Mean?

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You may have heard the term “No-Fault insurance”, or perhaps you live or have been in an auto accident in a state where the No-Fault law applies. What does this term mean? A common misconception when it comes to no-fault insurance is that an insurance carrier won’t assign fault after an accident. The truth is that in every accident involving multiple drivers, insurance companies must always assign a percentage of fault to each driver involved in the collision. What no-fault insurance means is that your insurance company will handle your claim and pay your damages regardless who is determined to be at fault for the vehicle accident (e.g., medical bills, wage loss, replacement services claims).

These benefits are first-party or policyholder benefits and may also be referred to as Personal Injury Protection coverage or “PIP” for short. This coverage is mandatory in most No-Fault states.

As of 2021, there are currently 12 states and one U.S. territory that have No-Fault insurance with benefits ranging from $3,000 in medical expense (Utah) to unlimited medical benefits (Michigan).

No-Fault benefits typically include a set amount for payment of reasonable expense of necessary medical treatment, in addition to benefits available for wage loss, replacement services, funeral and burial expense, and survivors’ economic loss benefits. Depending on the state law, there may be additional, or fewer benefits available to the injured party.

If you have any questions about your insurance coverage, contact your Independent Insurance Agent.

Source: Insurance Information Institute