What Is No-fault Insurance?

No-fault insurance is also known as personal injury protection (PIP) insurance. It is car insurance coverage. It pays for medical expenses, lost wages, and other damages incurred following a car accident, regardless of who was at fault. 


It provides financial assistance to policyholders and their passengers following an accident. It does so without the need to go through the lengthy and often contentious process of determining fault.




No-fault insurance was introduced in the United States in the 1970s to reduce the number of lawsuits resulting from car accidents. Before its implementation, drivers were to file a claim with the insurance company of the driver deemed at fault in an accident. It often led to lengthy legal battles and higher premiums for policyholders.

Under this insurance, policyholders can file a claim with their insurance company. They can do so regardless of who was at fault in the accident. It allows for quicker settlement of claims and helps reduce the burden on the legal system.


Types of No-fault Insurance


There are two main types: pure no-fault and choice no-fault.


The first type mentioned is also known as mandatory no-fault. It requires drivers to carry a certain amount of personal injury protection (PIP) coverage. Drivers cannot sue the other party for damages unless their injuries meet a certain threshold in the states with it.


Choice no-fault insurance is also known as optional no-fault. Drivers can choose between carrying traditional tort-based car insurance or no-fault insurance. Drivers can choose to have either type of coverage, depending on their preference in the states.




  • Quicker settlement of claims - No-fault insurance allows for quicker claim settlement. Policyholders can file a claim with their own insurance company regardless of fault. It can be especially beneficial for the injured in an accident—and those who need financial assistance to cover medical expenses and lost wages.

  • Reduced legal costs - No-fault insurance helps reduce the burden on the legal system. It eliminates the need for lengthy and costly lawsuits to determine fault. It can save policyholders money on legal fees and court costs.

  • More predictable premiums - Premiums are generally more predictable. No-fault insurance can be especially beneficial for those who live in areas with a high incidence of accidents. It also benefits drivers who have a history of getting involved in accidents.


Drawbacks of No-fault Insurance


  • Limited coverage - No-fault insurance generally covers medical expenses and lost wages alone. It does not compensate for damages to a policyholder's vehicle or other properties.

  • Higher premiums - No-fault insurance may have higher premiums than traditional tort-based insurance. 

  • Inflation of medical costs - Some critics argue that no-fault insurance has led to an inflation of medical costs. Providers may charge higher fees knowing that insurance companies will reimburse them.

No-fault Insurance in the United States


No-fault insurance is currently in place in 12 states—Massachusetts, Hawaii, Florida, Kansas, Michigan, Kentucky, New Jersey, Minnesota, New York, North Dakota, Utah, and Pennsylvania. In these states, drivers must carry a certain amount of personal injury protection (PIP) coverage.


In states with a choice of this insurance, drivers have an option. They can choose between traditional tort-based insurance and no-fault insurance. States with this type of insurance choice include Arkansas, Delaware, Maryland, and Oregon. In the remaining states, traditional tort-based insurance is the default option.


Under traditional tort-based insurance, drivers are to carry liability insurance. It covers damages and injuries caused to others in an accident where the policyholder is to be at fault.


For more on no-fault insurance or to seek care, visit Well Adjusted at our office in Brooklyn, New York. Call (718) 568-6228 to book an appointment.

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