No-fault car insurance is a term that can trip up insurance shoppers, because you won’t see it listed as a specific form of coverage. In a car insurance quote or policy summary, the no-fault element is usually called personal injury protection, or PIP.

If you or your passengers are injured in a car accident, PIP covers medical bills, regardless of who causes the accident. Since PIP or a related form of coverage is required in no-fault insurance states, and optional in others, here’s what you should know about no-fault car insurance.

Keep reading to learn more about no-fault car insurance, including:

Why are there no-fault car insurance states?

In the interests of reducing the time and costs of settling car insurance claims, several states adopted no-fault insurance laws in the 1970s. When your own insurance company covers your medical bills, the rationale goes, you don’t need to sue the other driver to recoup your expenses.

Most no-fault insurance states require motorists to carry PIP, which typically offers the following benefits (up to the policy’s stated limits):

  • Medical costs for the insured motorist and passengers
  • Loss of income
  • Essential services, such as housekeeping or cooking
  • A small death benefit, to help with burial or cremation costs

What states have no-fault car insurance?

The American Property Casualty Insurers Association (APCIA) notes that 12 states and Puerto Rico have “true” no-fault car insurance. These areas require motorists to carry PIP, or a similar form of coverage. And they also restrict, but do not eliminate, an injured party’s right to sue an at-fault driver.

True no-fault insurance states

No-fault coverage required; restrictions on lawsuits.

  • Florida
  • Hawaii
  • Kansas
  • Massachusetts
  • Michigan
  • Minnesota
  • New York
  • North Dakota
  • Puerto Rico
  • Utah

Source: American Property Casualty Insurers Association (APCIA)

Of these true no-fault states, however, Kentucky, New Jersey and Pennsylvania allow motorists to choose between a no-fault policy and a pricier policy that does not restrict their right to sue. APCIA calls these jurisdictions “choice” no-fault states. No-fault coverage in Pennsylvania is called medical benefits.

Choice no-fault insurance states

No-fault available with lawsuit restrictions; opting out removes lawsuit restrictions.

  • Kentucky
  • New Jersey
  • Pennsylvania

Source: APCIA

Ten other states require insurance carriers to offer PIP, without restricting lawsuits, according to APCIA. Five of these “add-on” states, including Oregon and Texas, require motorists to carry PIP. The rest require insurance companies to offer PIP — but allow motorists to decline the coverage.

Add-on no-fault coverage states

No restrictions on lawsuits; no-fault coverage either mandatory (M) or optional (O).

  • Arkansas (M)
  • Delaware (M)
  • Maryland (M)
  • New Hampshire (O)
  • Oregon (M)
  • South Dakota (O)
  • Texas (M)
  • Virginia (O)
  • Washington (O)
  • Wisconsin (O)

Source: APCIA

In the District of Columbia, motorists can choose between no-fault coverage with restrictions on lawsuits and traditional fault-based coverage. Those who choose no-fault coverage have up to 60 days after an accident to decide if they’d like to pursue legal action against an at-fault driver.

In most other states, insurers offer medical-payments coverage, aka MedPay, on an optional basis. MedPay covers medical treatment for injuries suffered in a car crash, regardless of fault. But it usually does not include PIP’s income loss and essential services benefits.

MedPay is even available in some states where PIP is also available. In these areas, you can usually choose one or the other. But in no-fault Florida, where basic PIP covers 80% of medical costs, residents can purchase MedPay to cover the remaining 20%.

How no-fault insurance works

In no-fault insurance states, an injured party’s PIP coverage will cover initial medical bills and related costs. If these costs surpass the policy’s PIP limits, which vary by state, the injured person can seek monetary damages from the at-fault driver. If the injuries meet thresholds for cost or severity, which also vary by state, the injured party or survivors can also seek compensation for non-monetary damages, aka pain and suffering.

A basic PIP policy in New York, for example, comes with a $50,000 limit. An injured person in the Empire State can only sue an at-fault driver for monetary damages if their medical-injury claim exceeds this amount. An at-fault driver can be sued for non-monetary damages if the accident results in death, dismemberment or other serious injuries, as specified in the state’s insurance law.

Other coverages required in no-fault insurance states

In addition to PIP, most no-fault states also require motorists to carry liability coverage for bodily injury (BI), property damage (PD) or both. As noted above, if an injured party’s medical expenses surpass his or her PIP limits, the individual can usually sue the at-fault driver for monetary damages. This is where the at-fault driver’s BI liability coverage would kick in. 

Meanwhile, most no-fault states require at-fault motorists to pay to repair the damage they cause to other people’s vehicles, which is what PD liability does, also up to the policy’s limit. 

Even in a no-fault state, you need to at least consider collision and comprehensive coverage to protect your own vehicle(s). Both are optional in most every state. But if you finance your car, your lender will require them. 

Collision, as its name implies, usually covers damages resulting from a collision you cause with an object or another vehicle. This works a little differently in Michigan, where collision is also offered on a no-fault basis, with limitations.

Comprehensive coverage pays for damage from any cause other than a collision, including vandalism, fire or falling objects. Comprehensive also covers theft.

Some no-fault insurance states also require motorists to carry uninsured and underinsured motorist coverage (UM/UIM), which is offered as optional coverage most everywhere else.

An injured person’s UM/UIM coverage kicks in when an at-fault driver either does not have any liability coverage or does not have enough liability coverage. Most insurance companies further slice and dice UM/UIM into separate coverages for bodily injury and property damage.

Other required and optional coverages in no-fault states
Type of coverage What it protects How it’s offered Required or optional
Bodily injury (BI) liability Other people. Usually with split limits.* Required in most states.
Property damage (PD) liability Other people’s vehicles/property. Usually with a single limit.* Same as above.
Collision Your car. With a deductible. Optional, but usually required by a lender.
Comprehensive Your car. With a deductible. Same as above.
Uninsured/underinsured motorist BI You and your passengers. Usually matches BI liability. Required in some states, optional in most others.
Uninsured/underinsured motorist PD Your car, including  from hit-and-run. Usually matches PD liability. Usually optional.
*Insurers sometimes fold BI and PD liability into a combined single limit (CSL).

Reasons to consider optional no-fault coverage

In all, APCIA reports that 14 states and Puerto Rico require that motorists carry PIP or similar no-fault coverage. If you live outside one of these areas, there are important reasons to still consider PIP or MedPay, depending on what’s available in your state. For starters, if you cause an accident, the medical bills for you and your passengers are your responsibility. Here are a few more things to consider:

  • The out-of-pocket costs for emergency medical treatment, hospitalization and surgeries can be astronomical. Even if you have health insurance, your deductibles and coinsurance costs can add up fast.
  • PIP or MedPay usually kick in when your bills arrive, up to your policy’s limit. It’s then up to your car insurer, not you, to figure out how much to recoup from the other driver’s insurance and your health care plan. 
  • Any non-family passengers injured in your car might not have adequate insurance to cover their medical costs.

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