In most states, the driver who caused a car accident is responsible for the resulting injuries and damage through their insurance. However, a dozen or so states have a no-fault policy, where you must claim through your own insurance regardless of who is at fault. You can choose which system to use in a handful of other states.
The Basics of a No-Fault Car Insurance
When you’re injured in a car accident, you can usually file a compensation claim against the driver who caused the accident. This is called a third-party claim. To file a successful third-party claim, you must convince the other driver’s insurance company that its policyholder was at fault for the accident.
Proving that another driver was at fault in an accident can be lengthy, requiring police reports, witness statements, photographs, and other evidence. Even after that, the other driver’s insurance company may deny the claim, forcing you to file a lawsuit.
Making a No-Fault Car Insurance Claim
In states with no-fault car insurance, filing an insurance claim is simpler. You file your claim with your own insurance company instead of the negligent driver’s insurance company or by suing the at-fault driver. Your insurance company will compensate for certain financial losses related to your car accident injuries, regardless of who caused the accident.
With a no-fault car insurance claim, you don’t have to worry about the insurance company denying your claim due to a dispute over who caused the accident. You also don’t have to prove to the insurance adjuster that the other driver was at fault.
However, you’re not guaranteed a settlement with a no-fault claim, and you’re limited in the types of compensation you can collect.
Damages Covered by a No-Fault Car Insurance
What is covered under a no-fault or PIP insurance claim varies from state to state, but generally, you can get compensation for:
- medical bills from your accident injuries
- income lost from being unable to work after the accident
- the cost of replacement services (if your injuries prevent you from doing housework or driving, for example)
- burial/funeral costs if someone died because of the accident
One key factor to remember is that if you take legal action against the at-fault driver, you may be eligible to receive pain and suffering damages in addition to reimbursement for medical bills and lost income. However, pain and suffering and other general damages are not available under a no-fault claim.
Benefits of No-Fault Car Insurance
A state might adopt a no-fault car insurance policy to reduce the number of lawsuits that people file after a car accident. Lawsuits are expensive, not just for the person filing the lawsuit but also for the insurance company that may or may not ultimately be found liable.
By limiting the time between an accident and the time you can file a lawsuit to a specific window, you help to ensure that lawsuits are only filed if there is irrefutable evidence that the other driver was at fault.
No-fault car insurance reduces the number of legal disputes over who caused an accident, which can be time-consuming, expensive, and stressful for everyone involved. But it also means that injured people are limited in the compensation they can receive and that some will have to pay for a good portion of their medical bills out of pocket.
If you’re considering a no-fault or PIP car insurance policy, you should consider whether it’s the best approach for your particular situation. Talk to your insurance agent and compare it to the third-party claim procedure in your state.
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