No-fault auto insurance is also known as Personal Injury Protection (PIP), and it’s a requirement for drivers in several states. This type of insurance is designed to cover medical expenses in the event that you or your passengers are injured in a car accident, whether or not you are at fault for the accident.
With no-fault insurance (sometimes called personal injury protection, or PIP), your medical and hospital bills and those of your passengers are covered within the limits of your policy, less any applicable deductibles. It may also include coverage for lost wages, burial and funeral expenses, etc., depending on the insurer and the state you live in.
No-fault insurance does not compensate you if your vehicle is stolen or vandalized, nor does it cover damage to your automobile or the personal property of others in the event of a collision. However, this limits your ability to sue for damages in most cases.
Bodily injury protection or no-fault coverage is required in a dozen states and optional in several others. Minimum coverage amounts vary by state, but range from less than $5,000 to $50,000, and you may be able to increase this amount up to a certain limit.
Let’s say your car collides with another vehicle and you and the other driver sustain minor injuries. In a state where no-fault insurance is required, you would file a claim with your own insurer to receive compensation for your medical expenses. The other driver will have to do the same with his insurance company. It doesn’t matter who may have been responsible for the accident, because with no-fault insurance there is no need to file a claim against the other person’s insurance.
Coverage levels for Personal Injury Protection (PIP) vary from state to state. In Kansas, one of 12 “no-fault” states where such insurance is required, the minimum amount of coverage required is $4,500. Contrast that with Michigan, another “no-fault” state. Drivers in this state must have minimum coverage of $50,000.
If you or your passengers are seriously injured in an accident and want to sue the other driver for damages, certain standards apply. Your medical expenses will either have to exceed a certain dollar limit (this is called a monetary limit) or reach a certain level of severity, such as being disabled, disfigured or killed (this is called a threshold verbal). This varies by state. Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah use a monetary threshold. The other five no-fault states use a verbal threshold, according to the Insurance Information Institute (III).
Details vary by insurer and policy, but no-fault insurance coverage may include:
- Medical bills: This includes hospitals, doctors and other related expenses for anyone in the vehicle who was injured.
- Housekeeping services: Your policy may reimburse you for the cost of hiring someone to take care of household chores that you cannot do yourself due to an injury.
- Lost salary: Some insurers can compensate you with a fixed percentage of your salary or a fixed amount if you are unable to work.
- End of life costs: Cremation, funeral or burial costs may also be included.
Although no-fault auto insurance is a form of vehicle coverage, you do not have to be driving at the time of the incident to be eligible for compensation. In most cases, no-fault insurance cover also includes medical costs if you were hit by a vehicle while cycling or walking, for example.
What does no-fault insurance not cover?
No-fault insurance is not a radical type of coverage. It only focuses on medical and injury-related expenses for you and your passengers. In most cases, bodily injury protection or no-fault insurance coverage does not include:
- Property damage
- Deliberate or criminal acts
- Medical expenses of other parties
Is no-fault insurance compulsory?
Unlike liability insurance — which is required in all states except Virginia and New Hampshire — only a few states mandate no-fault insurance or bodily injury protection (PIP), according to the Insurance Information Institute (III ). The minimum amount of coverage required per person varies from state to state (higher limits may be available) and are as follows:
- Florida: $10,000
- Hawaii: $10,000
- Kansas: $4,500
- Kentucky: $10,000
- Massachusetts: $8,000
- Minnesota: $40,000
- Michigan: $50,000
- New Jersey: $15,000
- New York: $50,000
- North Dakota: $30,000
- Pennsylvania: $5,000
- Utah: $3,000
In three of those states (Kentucky, New Jersey, and Pennsylvania), drivers have the option of purchasing either no-fault insurance or traditional auto insurance, which does not limit your right to sue or be sued for collision damage. .
How much does no-fault car insurance cost?
The premium for a no-fault auto insurance policy depends on a number of factors, including where you live, driving record, age and gender, desired levels of coverage, and deductible amounts. . With so many variables, the best way to find out how much no-fault insurance would cost is to get a quote from your current insurer as well as a couple of other companies.
How to buy no-fault insurance?
If you live in a state where personal injury coverage is either mandatory or optional, purchasing no-fault insurance is fairly simple. Before you buy, there are a few things to consider to ensure you get the best coverage at the lowest price.
Know how much you need
As detailed in the list of no-fault states, each has its own coverage requirements that you must have. However, the requirement is only a minimum amount. If you live in a state that requires a relatively low minimum amount of personal injury protection – and depending on what type of health insurance you have, if any – you may want to consider purchasing additional coverage if you can you afford it.
Understand what is covered
PIP insurance is not a one-size-fits-all solution for car insurance. It only covers the medical expenses of the parties in your vehicle. Most states require you to carry a minimum amount of auto liability insurance to pay for damage to other people’s property (like their vehicle) and medical expenses. Collision insurance, optional, pays for repairs to your own vehicle.
There is a deductible
When considering the cost of no-fault auto insurance, don’t forget the deductible. This is the amount you have to pay out of pocket before your car insurance steps in to pay the rest. A typical deductible amount is $500 or $1,000, but the amount varies by state.
Compare the prices
As with any type of auto insurance, getting multiple quotes is worth it. The same coverage could be considerably cheaper with a single operator.
No. No-fault insurance covers medical expenses for you and all other passengers in your automobile, regardless of who may have caused the accident. Personal injury liability insurance covers occupants of other vehicles involved in a collision in the event that you are at fault.
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