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What is No-Fault Car Insurance and How Much does It Cost?

No-Fault Car Insurance covers you and your passengers’ personal injury expenses resulting from an accident.  This insurance covers your medical bills and those of your passengers regardless of fault. Some people refer to no-fault car insurance as PIP Insurance.  PIP Insurance is short for Personal Injury Protection Insurance. Some states require that you have this type of coverage. Some other states offer it as an option.

What Is No-Fault Car Insurance and Is It Required?

No-fault car insurance is insurance that covers your medical bills and expenses if you are in an accident.  It covers these expenses for your passengers as well. This is true regardless of whether you or the other driver are at fault in the accident.  If you have no-fault automobile insurance and you are injured in an accident, you file a claim with your insurance company. Thus, you do not have to wait for the other party’s insurance company to compensate you.  You especially benefit from this coverage if a driver without insurance hits you and he is at-fault.

Some states require drivers have no-fault auto insurance. These states require drivers obtain PIP Insurance coverage.  They include: Arkansas, Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah.

Six states and the District of Columbia offer no-fault insurance as an option; however, it is not mandatory.  These states include: New Hampshire, South Dakota, Texas, Virginia, Washington, and Wisconsin

It is important for you to realize that many states that have no-fault or PIP Insurance coverage do not offer medical payments coverage.  Therefore, obtaining the no-fault insurance is the primary way you insure yourself for medical expenses stemming from an accident.

What Does No-Fault Car Insurance Cover?

In addition to you and your passengers’ medical bills, no-fault car insurance may pay your health insurance deductible.  Furthermore, it covers expenditures over and above your health insurance coverage. It may compensate you for some of your lost wages as a result of the accident as well.

What No-Fault Car Insurance Does Not Cover?

No-fault insurance does not cover the other driver’s injuries even if you are at fault.  In states where no-fault insurance is required, the other driver’s insurance company compensates him and his passengers for their injuries.  No-fault vehicle insurance also does not cover damage to property. Furthermore, it does not cover any medical expenses that exceed the limits of your coverage.

Do You Need No-Fault Car Insurance?

Yes, you need no-fault automobile insurance protection.  In the states where it is optional, drivers would be wise to purchase this insurance.  Your own insurance company is often easier to deal with than that of the other driver. Furthermore, since you do not have to prove fault, claims move through more quickly.

Some typical auto insurance plans include comprehensive, collision, and liability insurance.  Comprehensive and collision insurance only pay your car repair or replacement expenses. Liability insurance covers the medical bills of the driver of the other car and his passengers if you are at fault.  You are left to rely on your health insurance to cover your medical bills. Your health insurance may have a significant deductible and insufficient limits. Thus, you benefit from having no-fault insurance if you are injured in an accident.

How Much does No-Fault Car Insurance Cost?

Similar to that of other car insurance types, the cost of no-fault car insurance depends on several factors such as age, gender, location, credit score, driving history, the insuring car, and the insurer. For a 30 year-old male with good credit, good driving record, and driving a  2016 Honda Camry, the average cost of adding no-fault car insurance in states where it is optional is $100-300/year, accounting for 15-25% of the total car insurance cost.

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