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In most states, an auto insurance claim after a car accident requires a determination of fault, since the at-fault driver is typically financially responsible for damages.
However, 12 states and Puerto Rico have no-fault insurance laws. In a no-fault state or territory, each driver’s personal injury protection (PIP) coverage pays for their own medical costs and often lost wages, regardless of fault.
But the at-fault driver is still responsible for property damage and some other types of liability in no-fault states. This is why drivers in no-fault states usually carry liability insurance.
Here’s what you need to know about no-fault accidents and car insurance:
- What is a no-fault accident?
- What is no-fault insurance?
- Who needs no-fault insurance?
- How to file an insurance claim
What is a no-fault accident?
Assigning fault after a car accident helps determine who’s legally and financially responsible for the injuries or other damages that occurred. In these cases, insurance adjusters determine fault after you file a claim. They may base their determination on police reports, evidence, witness accounts, and state laws.
Sometimes, more than one party may be to blame for the conditions that caused the accident. When that happens, fault may be assigned to multiple parties and expressed as a percentage of blame.
The difference between “fault” states (also known as tort states) and no-fault states generally has to do with who’s responsible for the cost of medical expenses and lost wages after an accident.
If you get into an accident in a tort state, the at-fault driver’scar insurance pays for the other party’s expenses — including medical costs and property damage. In no-fault states, on the other hand, fault is still assigned for the accident, but each driver’s personal injury protection coverage will pay for their own medical costs.
Which U.S. states and territories require no-fault insurance?
The following U.S. states and territories have no-fault insurance laws:
- New Jersey
- New York
- North Dakota
- Puerto Rico
What is no-fault insurance?
PIP coverage is also known as no-fault insurance. That’s because this kind of insurance coverage will pay for a driver’s own medical costs and lost wages, regardless of fault. In addition, PIP coverage will also pay for the medical costs and wage losses of any passengers in your car during an accident, no matter who’s at fault.
This makes PIP insurance different from comprehensive, collision, and liability coverages, which only pay out after a covered accident depending on who’s determined to be at fault.
What is negligence?
Things can get a little confusing if more than one driver is to blame for an accident. For instance, if you were speeding and rear-ended a driver who suddenly changed lanes in front of you without signaling, your insurance carriers may determine both you and the lane-changing driver are partially at fault. You may be found to be 70% responsible because of how fast you were going and the lane-changing driver may be 30% responsible because they neglected to signal their lane change and swerved suddenly.
Your level of fault is described as your degree of negligence. The amount of money you can expect to receive from your claim depends on your degree of negligence, although laws governing negligence can vary from state to state. Your degree of negligence can also affect your future premiums, as your insurer may consider you to be a higher risk if you’re determined to be mostly at fault in an accident.
Different states follow different guidelines for determining whether or not a negligent driver will receive any kind of insurance settlement. And determining your level of negligence can affect your auto insurance claim whether you live in a tort state or a no-fault state.
The three tiers of negligence laws are:
- Pure contributory negligence: Under pure contributory negligence laws, only a 100% non-negligent driver will receive an insurance settlement from the other party’s insurer. Even if you’re only 5% to blame for an accident, you won’t receive reimbursement for your claim. The states with pure contributory negligence laws are Alabama, Maryland, North Carolina, and Virginia, as well as the District of Columbia.
- Pure comparative negligence: Pure comparative negligence laws allow drivers to receive compensation equal to the degree of the other driver’s negligence. For example, if you were deemed 70% negligent in a rear-end collision, the other driver would be able to recover 70% of their damages from your insurance policy. That driver (or their insurance policy) would have to pay for the remaining 30% of costs. The states with pure comparative negligence are Alaska, Arizona, California, Florida, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, New York, Rhode Island, and Washington.
- Modified comparative negligence: In states with modified comparative negligence laws, a driver who’s at least 50% to 51% negligent (it varies by state) can’t receive compensation from the other party, even if the other party is partially at fault. With one exception, the remaining 34 states have modified comparative negligence laws. The exception is South Dakota’s slight/gross negligence law, which only allows a driver to recoup compensation if their negligence is “slight.”
Learn More: How Long Do Car Accidents Stay on Your Record?
Who needs no-fault insurance?
Anyone who lives in a no-fault U.S. state or territory should carry PIP insurance. Not only is PIP insurance generally mandated in no-fault states, but it’s also the only way drivers in those locations can guarantee they’ll receive compensation for their own medical expenses and lost wages.
Drivers in tort states may also want to add no-fault coverage to their auto insurance. PIP coverage can save time and money, since it kicks in no matter who’s at fault. You don’t have to wait around for the other driver’s insurance adjuster to determine fault to receive your settlement. Additionally, PIP coverage can reduce the likelihood of additional lawsuits, since drivers are covered for their own medical costs and don’t need to sue for damages.
Drivers in pure contributory and comparative negligence states
PIP can also help you save money if the negligence laws of your state make it difficult to recoup medical costs after an accident. This is especially true for those in pure contributory negligence states, since drivers who are found to be even 1% negligent in those states can’t receive any settlement from the other party’s insurance.
However, even drivers in states with comparative negligence laws may benefit from carrying PIP insurance. If you live in a state with modified comparative negligence, you can’t receive a settlement from the other driver’s insurance if you’re 50% to 51% negligent, which could leave you vulnerable. And though pure comparative negligence ensures that you can receive compensation equal to the degree that the other driver is negligent, that could still leave you on the hook for more money than you can comfortably afford.
How to file an insurance claim
If you’re in an accident, whether you’re in a no-fault state or not, you’ll typically need to follow these steps to file a claim:
- Alert your insurance agent of the accident. The sooner you contact your insurer, the sooner you can determine if your policy will cover your losses, and the sooner you can get compensation for your losses. You can get in touch with your insurer from the scene of the accident, even if it’s not clear who’s at fault or if the damage appears minor.
- Determine the claim deadline. There are no industry-wide deadlines for submitting auto insurance claims. But no-fault states often have explicit rules about claim deadlines, and rules can vary from one insurer to another. In New York, for example, you generally must notify your insurance carrier within 30 days of the accident. Ask your insurance agent what claim deadline you’ll need to meet to ensure your claim is filed in time.
- File your claim. Many insurance providers offer mobile apps that allow you to begin the claims process, even from the scene of the accident. These apps typically allow you to take photos of the damage, schedule an appraisal, reserve a rental car, and request reimbursement. Filing a claim as soon as you can after the accident will help the process go as smoothly as possible.
- Gather and submit the necessary documents. To approve your claim, your insurance carrier may request a number of documents, such as a copy of the police report, photos of the damage, contact information of other drivers or witnesses, bills for repairs, and a proof of claim form.
Car accidents are stressful and sometimes frightening. While it’s impossible to completely prevent accidents from happening, having full auto insurance coverage, including no-fault insurance, can give you peace of mind and ensure you’re financially protected if you get into one.