What does no-fault coverage mean?


Introduction: No-fault auto insurance, also known as personal injury protection (PIP) coverage, helps the policyholder to pay the costs of medical expenses for you and your passengers after a car accident. The coverage benefits apply to all the passengers in your vehicle, regardless of who is at fault for the collision.

No-fault insurance covers policyholder’s medical bills if he/she is injured in an accident, regardless of who is at fault. This insurance is different from other types of auto insurance, such as in liability coverage insurance company will pay only when a party is proven to be at fault in an accident.

No-fault insurance is mandatory in 18 states, for now, even some states require that medical expenses incurred in the accident are covered by medical payments insurance not no-fault insurance.

Types of no-fault coverages:

Pure no-fault: In a pure no-fault system, the insurance company will pay for all expenses such as medical bills, lost wages, etc. up to the insurance policy limit, and the insured person would be completely prohibited from suing a careless driver for “non-economic” damages. Presently, there is no state function under a pure no-fault system.

Partial no-fault: In Partially at fault, the insured person will get compensation for their losses from the other driver’s insurance company. However, the amount which the insured person will get depends on how much fault was his in the accident. For example, if the court finds you were 45 percent at fault for the accident occurring and the other driver was 55 percent at fault. Then the insurance company will pay you 55 percent of the amount of the expense.

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