What Is a No-Fault State in Auto Insurance?

A no-fault state is one in which drivers must file claims with their own insurance companies to cover their own damages or injuries, no matter which party actually caused the accident. That means if someone runs a stop sign and crashes into your passenger’s side door, your insurance company — not the other driver’s — will cover the damage to your vehicle.

States have different car insurance requirements and rules. While certain states operate using a tort or at-fault model, others operate under a no-fault system. Both systems have specific rules about which driver’s insurance coverage kicks in after an accident and whether an affected party can sue the other driver for damages.

Here’s how the no-fault model works, how it compares to the at-fault system, and what to know about claims and coverage requirements.

No-fault insurance states

The following 12 states currently mandate no-fault insurance. Required coverage levels vary by state.

• Florida

• Hawaii

• Kansas

• Kentucky

• Massachusetts

• Michigan

• Minnesota

• New Jersey

• New York

• North Dakota

• Pennsylvania

• Utah

No-fault vs. at-fault states

The no-fault system is intended to help reduce lawsuits and streamline the process of determining who’s at fault in an accident.^[1] In a no-fault state, drivers are required to carry personal injury protection (PIP) coverage. This insurance covers medical expenses after a crash, regardless of who’s responsible. So if both parties are injured after an accident, each driver’s own PIP coverage will pay for their healthcare costs, regardless of fault.

In an at-fault state, also called a tort state, the at-fault driver’s liability coverage compensates for costs related to the other driver’s medical costs and damage to their vehicle. So if you’re not responsible for a crash, the other driver’s insurance should cover your medical bills and other necessary costs.^[2]

It’s important to note that insurance premiums in no-fault states can be higher than those in at-fault states, as drivers may be required to purchase more coverage.

At-fault state

Apart from the difference in responsibilities for medical costs in at-fault versus no-fault states, there are also legal implications. If you live in an at-fault state and are hurt in a covered incident, you can generally sue the other driver. Unlike in no-fault states, your medical bills or injuries won’t need to meet a certain monetary or verbal threshold before you’re eligible to file suit.

See More: Personal Injury Protection (PIP) Coverage

Insurance required in no-fault states

Find the minimum insurance required in each no-fault state in the table below, sourced from state government websites and the Insurance Information Institute. Minimum insurance may include bodily injury (BI) and property damage (PD) liability, personal injury protection (PIP) coverage, and uninsured or underinsured motorist coverage (UM/UIM).

Learn More: Minimum Car Insurance Requirements by State

States with optional PIP coverage

Certain states offer optional PIP coverage without being considered true no-fault states. In these states, drivers not at fault can sue at-fault drivers for damages without needing to meet a specific monetary or verbal threshold. States (and one district) with optional PIP coverage include the following:

• Arkansas

• Delaware

• Maryland

• Oregon

• South Dakota

• Texas

• Virginia

• Washington

• Washington, D.C.

“Choice no-fault” states

Three U.S. states operate as “choice no-fault” states that use a full or limited tort system, which we’ll explain in the next section. In these states, specifics regarding coverage requirements and your ability to sue an at-fault driver become more complicated.

• Kentucky

• New Jersey

• Pennsylvania

Difference between no-fault and tort insurance

At-fault states operate with a tort insurance system, which requires the at-fault driver’s insurance company to compensate the other driver for vehicle damage or injuries. In most cases, states that use a tort system don’t restrict a driver’s right to sue for damages after an accident.

Tort insurance

Tort insurance exists in two common types, limited and full. With limited tort insurance, an option in choice no-fault states, your ability to sue an at-fault driver is limited after an accident. For instance, you can sue to get reimbursed for medical costs, but you can’t sue for pain and suffering. The rules vary by state though, so it’s important to understand your state’s requirements when considering litigation.

Read More: What to Do After a Car Accident: 7 Steps to Take

Fault and damages

Drivers can still be responsible for a crash in a no-fault system. Fault is still determined in no-fault states, even though insurance works differently than it does in at-fault states.

Determining fault

The process of determining who’s at fault in an accident doesn’t change, whether you live in an at-fault or no-fault state. In general, the process involves the following steps:

1. The police will ask both drivers questions at the scene and compile a police report.

2. Each driver will contact their insurance company and explain the incident in detail, and the insurer will request and review the police reports.

3. Both drivers’ insurance companies will communicate and determine fault based on the police reports and each driver’s statements.

Check Out: 10 States with the Most Car Accidents in 2022

Who pays for damages?

While your personal injury protection insurance will cover your own medical costs in a no-fault state, the at-fault driver may still be liable for other costs, like damage to your vehicle. In this case, their property damage liability insurance would help pay for your car repairs.

No-fault claims

In a no-fault state, each driver is required to submit a claim with their insurance company, even if it’s clear one driver caused the crash. The claims process can vary depending on your insurance company, but in general, the following steps take place:

1. You’ll collect the other driver’s information, including their license and registration.

2. The police may file a report that describes the scene of the accident and includes both drivers’ information.

3. You and the other driver will contact your respective insurance companies and explain what happened.

4. Your insurance company and the other driver’s insurance company may disburse up to the total of your PIP coverage to pay for medical expenses.

5. Both insurance companies will obtain copies of the police report, review your descriptions, and determine who’s at fault. If the other driver is deemed at fault, their property damage liability coverage should compensate you for damage to your vehicle.

Personal injury claims

Your PIP coverage should kick in if you live in a no-fault state and you’re hurt in an accident. For instance, if another driver hits your car and you dislocate your shoulder in the accident, your PIP coverage may pay for your medical bills, but it won’t cover the other driver’s medical expenses. In certain cases, it may also cover things like lost wages or funeral costs for affected parties.

Property damage claims

Property damage liability can cover damage to your vehicle if another driver is found at fault in an accident. For instance, if another driver runs a red light and hits your passenger door, that damage may be covered by their property damage liability insurance.

Learn More: Car Insurance After an Accident

Shopping for affordable insurance in a no-fault state

Whether you live in a no-fault or at-fault state, comparing policies from different insurers is the best way to find affordable coverage. Consider using a reputable car insurance comparison tool to simplify the process and save time.

No-fault states FAQs

Here are answers to some commonly asked questions about no-fault insurance.