What you need to know about “no-fault” insurance

Automobile insurance in the United States usually operates under a fault-based system, meaning insurance companies pay the amount based on a person’s degree of fault in an accident. But determining who is more liable is a long and tedious process involving lawsuits and costly court battles.

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To address this problem, companies in some states have adopted “no-fault” insurances. This policy, usually associated with automobile insurance, means that the insurance company will pay for damages up to a certain amount, regardless of whose fault it is. In exchange, you cannot sue the other driver for damages, nor can the other driver sue you if you’re at fault, therefore eliminating having to go to court.

A no-fault insurance policy covers bodily injury, associated medical bills (the insurer pays for your medical bills right away without having to wait for a lawsuit), and in some instances, other financial losses such as lost wages when you can’t go back to work yet because of the accident.
Even if this policy makes it difficult to file lawsuits against another person, some states do allow such legal action to be taken when the damages involved are over a certain monetary (if the plaintiff’s medical expenses go over a specified amount) or verbal (if injuries sustained are deemed “serious”) threshold. However, “pain and suffering” is not covered and cannot be used as a reason to sue.

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There are 12 states that have adopted the “no-fault” insurance policy – Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. Opting out of this policy is not even considered an alternative.
To know more about the no-fault policy, consult with a qualified insurance agent.

Louis Campisano is a fully-qualified Farmers Insurance agent from Florham Park, New Jersey. Subscribe to this blog for more discussion on automobile insurance.


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