If you live in Washington DC, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, or Utah, you live in a no fault state. This impacts what you pay and how you’re covered by your automobile insurance.

No Fault Defined

No fault insurance refers to an auto insurance system that requires drivers to carry insurance for their own protection. It also limits the ability to sue other drivers for damages. This means that your insurance company will pay for your damages (up to your policy limits) no matter who was at fault for the accident. Any other drivers involved will also be covered by their own auto insurance policies.

The bottom line purpose of no fault insurance is to provide basic medical coverage to those injured in car accidents so they don’t have to wait to get medical treatment.

No Fault Policy

No fault doesn’t mean that your entire policy is that way. The actual no fault part is usually called personal injury protection or PIP. Parts of the policy might also be called optional basic economic loss (OBEL).

The benefits vary but in general, they will include most expenses related to injuries. These include medical costs, wage loss, compensation for loss of services, funeral expenses and death benefits.

No fault policies are not pure. If they were, drivers would be completely covered by their own policy and would not be able to sue another driver.

In all states, lawsuits are permitted in certain cases.

No Fault Example

In Michigan, each driver must carry two no fault policies—personal injury protection (PIP) and property protection insurance (PPI). They must also carry standard liability coverage.

PIP includes coverage for all medical expenses and up to three years of compensation for lost wages or services.

The PPI coverage pays for property damage you cause in Michigan for up to $1 million.

Also, in Michigan, drivers have to buy the liability insurance minimums and can buy the optional collision, comprehensive and uninsured/underinsured motorist bodily injury coverages.

No Fault Premiums

In addition to the guarantee that every driver will receive immediate medical attention, the intention of no fault insurance was to reduce the legal and administrative fees of insurance claims and reduce premiums.

Unfortunately, this hasn’t always happened. So, as with all insurance make sure you shop around for the best quote even if you’re in a no fault state.