No Fault Coverage vs. Traditional Tort Coverage

Most people do not have a full understanding of exactly what no fault coverage really is and how it can differ from traditional or standard liability (tort) car insurance coverage. Plus, drivers relocating to states where no fault is required from one where it was not, may have a greater challenge understanding the differences.

Gain an Understanding

If faced with a need to purchase no fault insurance, first make sure you understand what it is and what your state requirements are as well as how it affects you own personal needs.

What Is No Fault?

If you live in  a state that requires no fault--Utah, North Dakota, New York, New Jersey, Minnesota, Michigan, Massachusetts, Kansas, Hawaii and Florida--than you'll need to do a little self-education. The standard liability insurance model provides for recovery of damages based on provable negligence which means that one party to an accident is deemed to be the cause, or the fault. Under the no fault system, however, that same ability is limited when attempting to recover damages from another driver when involved in an accident. The state requires you purchase a no fault insurance policy that in the event of an accident will pay damages regardless who caused the accident, or whose fault it was.

File a Lawsuit

Although a pure no fault system would prevent lawsuits from ever being filed, there is no such system in effect. All states employing no fault also use standard liability insurance as well which means that lawsuits can still be filed under certain situations. No fault states require drivers to still be responsible for damages if these go beyond a predetermined amount. Therefore, if the damages go beyond this level, a lawsuit could be filed. Some situations allow for additional tort action like death, disfigurement or dismemberment. This makes it important to still carry enough liability coverage even if you live in a no fault state.

What Is PIP (Personal Injury Protection)

The PIP is that part of your insurance policy that is your no fault coverage. The actual specific requirements for PIP vary from state to state so make sure to check these carefully. Your personal injury protection is designed to meet the expenses that your medical insurance doesn't, like deductibles, co-payments along with lost wages and even replacement costs for certain activities you would need to now pay someone to perform that before injured you did yourself. However, remember PIP is not intended to replace medical insurance.

No Auto Damage Covered

No fault insurance only covers personal injury. You will still need liability insurance. If you do not carry liability, or damages exceed your limits, you can still be sued for recovery of damages not included. If you are at fault without collision insurance, you will be responsible for your own auto repairs.

Tips to Remember

• Know your local rules and regulations.
• Make a list of your vehicles, safety features, driving records, where driven, area where you live and what premium you can afford and what assets you need to protect before buying a no fault insurance policy.