What does it mean to live in a no-fault auto insurance state?

Written by  //  February 10, 2012  //  Answer Financial Auto Insurance Articles, Articles, Auto Insurance  //  5 Comments

You are moving to a new state and while going through your moving checklist, you contact your auto insurance company about your car insurance. Your auto insurance agent tells you that you are about to move to a state that has “no-fault insurance”, something you’ve never heard of before. Here’s an in-depth explanation.

No-fault auto insurance was adopted by a number of states a few decades ago, with the idea that it would save people, auto insurance companies and the courts the hassle of too many lawsuits for minor injuries and damages. In states with no-fault auto insurance, your auto insurance company pays for your medical payments as well as possibly other benefits (partial loss of wages, childcare, funeral benefits, etc) following an accident, regardless of which party is eventually found to be at fault. Each state has set coverage minimums, anywhere from $10,000 to a few hundred thousand dollars in some states.

What this means is that if you live in one of these states, you can pay your medical and other bills up to the limit of your no-fault coverage and your auto insurance company is required by law to cover it – even if you drive yourself off the side of the road (but please don’t do that). As such, especially for people that do not have medical insurance, it provides a level of security while driving. Also, no-fault auto insurance is not limited to automobiles – all types of motorized vehicles are generally covered.

All of this guaranteed coverage does, however, mean that in general, rates in no-fault auto insurance states are higher. In some states you are allowed to buy extra no-fault coverage over the standard (required) coverage if you do not have any other form of medical coverage, but not all states allow for this option. Either way, if you exceed your limits, you will then have to turn to your medical insurance, pay out of your own pocket, or – if another party is found to be at fault – pursue a lawsuit.

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5 Comments on "What does it mean to live in a no-fault auto insurance state?"

  1. David Resnick June 9, 2014 at 11:12 am · Reply

    Great post Chad. I put together a car accident checklist that has an answer about no-fault with respect to NY residents.

  2. holly August 23, 2013 at 12:53 pm · Reply

    Good explanation of no-fault. This is not the US government picking up the tab. This is a way to control ridiculous lawsuits for minor injuries. Is it a perfect system — probably not — but, it does make available to the accident victim medical dollars for treatment.

  3. Ellen March 7, 2012 at 4:20 am · Reply

    Thanks for the article, this does help to explain why my insurance in NY is almost double what it was in Vermont for the same car and same driving record.

    • Chad Catacchio March 7, 2012 at 9:52 am · Reply

      You are most welcome, and thank you for reading and commenting!

  4. Putra February 28, 2012 at 1:44 am · Reply

    First of all in the state of Missouri they check to see who even lives in the reecdsnie and I have had to pay higher premiums because of roommates that did not even drive my car. Who is this agent? yes I disagree that married people are safer drivers as are women. How often do you see a woman driving a SUV while talking on the phone, putting on makeup with a busload full of children is that safer??? Also I have known of several couples getting into arguments and one storms out and is mad and then ends up in an acident and even getting killed. Even thought this os not legal I dont think what they the insurance providers are doing are so legal either. We all need to ban together against them!

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