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Question:

What Is No Fault Car Insurance?

Answer:

If you live in Colorado, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania or Utah, you may have heard the term “no fault insurance,” but be unsure what it is.

Essentially with no fault car insurance, if you get into an accident, your car insurance company will pay for the damages to your car or your medical expenses, regardless of whether you were at fault or the other driver was.

The purpose of no fault insurance is to lower the cost of insurance to the policyholder by reducing the number of car accident related court cases. Rather than seek reparations in court, your insurance company will handle your expenses, and ideally, everyone walks away more or less happy.

Benefits to No Fault Car Insurance

There are a few great things about having no fault insurance:

  • Your claim gets paid quicker than if you had to take it to court
  • You don’t have to hire a lawyer or pay one
  • Insurance premiums may be lower, which allows more people to be able to afford

Negative Aspects to No Fault

While there are benefits, like with anything, there are drawbacks to no fault insurance:

  • You can’t sue for pain and suffering
  • Because you can’t be sued if you total someone’s car and they are paralyzed, there’s not a lot of incentive to be a good driver
  • Some people say that no fault premiums are actually higher than other types
  • There are limits on what your insurance company will pay for liability. If your expenses exceed this, you have to pay out of pocket.

    • If you live in one of the 13 states that were mentioned above, make sure you fully understand how your no fault car insurance works before you’re in the situation of being in an accident.