What is "No Fault" Insurance?

In a perfect world, everyone behind the wheel of every car would be 100% committed to safety 100% of the time.

Unfortunately, attention spans lapse. Environmental conditions affect driver performance. Cars break down without much warning. Severe weather can strike – and damage your car even when it's parked. In short, accidents happen.

Even when everyone on the road is acting responsibly, accidents will still occur. That's why we have car insurance, so when damage does occur to property or persons, settlements can be awarded and hopefully problems can be fixed.

One term you might have heard of is "No Fault." This sounds like some wonderful insurance loophole where you'll never be blamed for an accident!

But really this is a type of insurance law which affects who pays for what after a car accident.

We get it. Insurance is pretty boring. Insurance law? Well, that's even duller. But No Fault insurance will affect how your car insurance works on a basic, fundamental level.

In some cases, you might be legally required to purchases certain types of insurance. In other cases, you'll have to choose between No Fault coverage and the traditional tort system.

Understanding what No Fault is, and what it isn't, can help you make the best decisions about what car policy to buy.

Do You Have No Fault Insurance in Your State?

There's no federal standard requirement for car insurance. An amount of insurance coverage could be perfectly sufficient in one state but below the minimum requirement for a neighboring state.

To make it more confusing, No Fault insurance laws also vary by state. There are currently 12 no-fault states. They are:

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

Of course, insurance law just wouldn't seem right unless there were a bunch of complicated exceptions to a rule. Of the 12 states listed above, No Fault coverage is mandatory. That is, you're unable to decline No Fault coverage.

Kentucky, New Jersey and Pennsylvania are different. In those three states, you can choose between either No Fault insurance or full tort coverage .

Tort Coverage? What's That?

The Tort System is the traditional car insurance system found in the majority of states.

So, what's a tort? A tort is any action which causes personal injury or damaged property. Legally, a tort is "a civil wrong redressed by awarding damages."

In other, less legal-y words:

· Something went wrong on the road

· People were hurt or property was damaged

· Someone owes someone else financial compensation for damages or injuries

Perhaps obviously, determining fault is a huge aspect of the tort system. The party at fault is financially responsible for the damages and medical bills. In some cases, the responsible party might also be responsible for punitive damages.

In many cases, both parties will be found to be at various degrees of fault, and the financial settlement will be divided proportionally.

In almost every state, liability insurance is mandatory. This means in almost every car accident, insurance companies will be representing each individual person.

Now, insurance companies don't really like paying out large settlements. So determining fault is often settled by the courts. This is a long, costly process.

On the plus side, wrongfully injured parties can sometimes be awarded large settlements. But many tort cases aren't settled in a short period of time. For injured parties waiting to recoup medical or property damages quickly, the tort system can be maddeningly slow.

So, How is No Fault Insurance Different?

Well, there's no fault. Of course, somebody is probably more responsible for the accident than everyone else involved. But, legally, fault is not used to determine payouts.

Instead, each person's insurance company pays for the injuries of their policyholder. Your policy covers your own medical care. Other injured parties are covered by their respective insurance plans.

No Fault Only Covers Bodily Injuries

In No Fault states, all drivers must carry Personal Injury Protection. This is a type of car insurance which covers medical bills for injuries suffered in a car related accident. PIP covers three different types of injuries:

· Those suffered by you, the driver, in an auto accident

· Those suffered by any passengers in your car in an auto accident

· Those suffered by you on foot or bicycle as a result of being hit by a car

In a No Fault State, You'll Need Additional Coverage for Property Damages

Almost every state requires liability insurance. Many drivers supplement that insurance with collision and comprehensive policies. Bundled together, these are often called Full Coverage plans.

If you live in one of the nine mandatory No Fault states, you'll need the following:

· PIP coverage for your medical bills

· Liability coverage for damages to the other party's car or other property.

If you live in Kentucky, New Jersey or Pennsylvania, you can choose between full tort or No Fault coverage. Here's some info to help you decide:

The Pros:

No Fault Coverage is Faster to Award Payouts

Pay medical bills and get back on the road to health quicker

The Cons:

No Fault Eliminates the Ability to File Suit


Although exceptions are granted in the case of certain types of injuries.

Many people like No Fault coverage because typically you'll get back to your life quicker. You won't have to spend time in court, fighting with insurance companies.

Keep in mind: Accidents happen all the time, even to good drivers. In No Fault states, your liability is limited.

How to Find the Best No Fault Insurance

The car insurance experts at ChimpQuote can help you search for an insurance plan to fit your budget, needs and your state's legal requirements. Quotes from hundreds of top insurers are almost instantly displayed, each one tailored to you personally. You can choose the exact features you want and enjoy peace of mind on the road.