What is No-Fault Insurance?
An auto insurance system where each driver's own insurance pays for their medical expenses and lost wages regardless of who caused the accident.
Understanding No-Fault Insurance
No-fault states limit lawsuits against at-fault drivers except in cases of serious injury exceeding certain thresholds. Personal Injury Protection (PIP) is the primary coverage in no-fault states. Currently, 12 states plus Puerto Rico use no-fault systems.
Examples
- 1Michigan driver's PIP covering unlimited medical expenses
- 2Florida driver filing claim with own insurer after accident
- 3Meeting serious injury threshold to sue at-fault driver
Related Terms
Uninsured Motorist Coverage
Insurance coverage that protects you if you're injured by a driver who has no liability insurance or insufficient coverage to pay for your damages.
Total Loss
When a vehicle is damaged to the extent that the cost of repairs exceeds the vehicle's actual cash value, or when the vehicle cannot be safely repaired.
Bad Faith Insurance
When an insurance company unreasonably denies, delays, or underpays a valid claim, or fails to properly investigate or defend its insured.
Subrogation
The right of an insurance company to pursue a third party who caused the loss to recover the amount paid on a claim.
Policy Limits
The maximum amount an insurance company will pay for a covered claim under an insurance policy.
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