What is No-Fault Insurance?

No-Fault Car Insurance

No-fault car insurance requires every driver to file a claim for their own bodily injury and medical expenses after an accident, regardless of who is at fault. The purpose of no-fault insurance is to reduce the number of lawsuits in small claims court, which can slow the reimbursement process for the injured party.

In theory, no-fault insurance makes a lot of sense. In practice, it can lead to high premiums, fraud, and inconvenience for insurance companies and drivers alike.

No-fault insurance definition

At-fault car insurance requires each insurance company to cover their clients' medical expenses after an at-fault crash. There are currently 12 at-fault states in America:

• Florida
• Hawaii
• Kansas
• Kentucky*
• Massachusetts
• Michigan
• Minnesota
• New Jersey*
• New York
• North Dakota
• Pennsylvania*
• Utah

*No-fault is optional in these states — a driver may choose no-fault or liability coverage. Drivers in these states are required by law to carry Personal Injury Protection and liability property damage coverage. Personal injury protection (PIP) provides medical cost reimbursement and work loss coverage for a driver and their passengers after a car accident. This coverage applies regardless of fault.

No-fault insurance versus at-fault auto insurance

The remaining states in the US operate on a tort liability system — or an at-fault system. A tort is an action that results in injury to another person or their property, leaving the afflicted party entitled to compensation.

In states using the tort system, responsibility for damages paid to an injured party is assigned to the at-fault driver and their insurance carrier. If anyone involved in the accident disagrees about where fault should be placed, they — or their insurance company — can sue for monetary compensation to cover damages.

With no-fault insurance, each driver uses their own auto insurance coverage to pay for their damages, regardless of who caused the crash. This precludes drivers from suing another party — with some exceptions, depending on the severity of injuries — in civil court. This also eliminates the wait for the resolution of a lengthy and potentially costly lawsuit before being reimbursed.

No-fault coverage only applies to medical expenses. Property damage is covered through property damage liability protection or collision insurance.

How much does no-fault insurance cost?

This varies, depending on personal characteristics and location. Because each state has certain requirements, insurance premiums will vary by location. Insurance premiums reflect a driver's personal attributes, including their driving record, age, and vehicle. We created a generalized profile and outlined how much car insurance costs in no-fault states.

How much does personal injury protection coverage (PIP) cost?

A state’s no-fault insurance laws determine how much PIP a driver needs and what their premium will be. Below are average rates for state-minimum PIP requirements.

Michigan has the highest overall PIP requirement because of its no-fault insurance laws. Michigan requires unlimited PIP and Property Protection Insurance (provides coverage for other drivers’ vehicles) of $1,000,000. These high limits cause Michigan’s rates to be 70% higher than the national average.

If your state requires no-fault coverage and you'd like to see quotes from local and national companies, click here to see personalized results.