What is no-fault insurance?
No-fault is certainly an interesting name for a type of insurance. So what exactly does it mean? In states with no-fault insurance – sometimes known as PIP insurance, which stands for “personal injury protection” – victims of automobile accidents are compensated by their own insurance company, regardless of who caused the accident. No attempt is made to determine fault.
This is different from traditional insurance coverage where the party at fault is primarily responsible for paying the costs of an accident, either individually or through his or her insurance company. However, in certain circumstances, victims can sue the other party; the limitations vary among no-fault states.
No-fault programs are designed to reduce the cost of auto insurance by reducing claims and litigation. About one-half of the states have enacted some type of no-fault or auto insurance reform legislation.
The laws surrounding no-fault insurance vary widely, so you should check with your insurance commissioner’s office or an insurance agent for requirements in your state. If part of your coverage is based on no-fault laws, it might be a good idea to find out if it covers you when you drive in other states.