No-fault car insurance guide

No-fault insurance is a type of auto insurance that covers medical expenses if you’re in a car accident, no matter who is at fault.

Rachael Brennan headshotAndrew Hurst

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Rachael Brennan

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

&Andrew Hurst

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

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Depending on where you live, you may have to get no-fault insurance, also called personal injury protection (PIP). No-fault insurance pays for injuries to you or your passengers after a crash — no matter who’s at fault for the accident.

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If you’re required to get no-fault car insurance, you’ll still have to have regular liability coverage too. However, no-fault insurance laws mean you’d only file a claim with the at-fault driver’s car insurance in special cases, like a serious crash.

Key Takeaways

  • No-fault insurance, also called personal injury protection, pays for the cost of your medical bills after an accident, no matter who was at-fault for the crash.

  • After a crash, you make a no-fault claim with your own insurance company to cover your injuries — not the other driver’s.

  • No-fault insurance doesn’t cover property damage. The other driver’s property damage liability coverage or your own collision insurance would pay for your damage.

  • In places where no-fault insurance is required, car insurance is nearly $250 more expensive per year.

What is no-fault auto insurance?

Your no-fault insurance covers medical expenses and other injury-related costs for you and your passengers if you’re hurt in an accident. Instead of being covered by the other driver’s bodily injury liability coverage, you’ll make a no-fault claim with your own personal injury protection (PIP) for your injuries even if the other driver was at-fault. 

No-fault insurance pays for your injuries after an accident, but, depending on the rules where you live, you may still be able to make a liability claim with the other driver’s insurance company after they cause an accident that results in serious injuries to you.

With no-fault insurance, your insurance coverage pays for your injuries after an accident — but it doesn’t cover property damage. Just like in places that follow an at-fault system, the driver who caused the accident will cover the cost of the other driver’s property damage.

Why is no-fault insurance sometimes required?

No-fault insurance allows injured drivers to receive a settlement more quickly after an accident because insurance companies don’t need to spend time determining fault. No-fault insurance is also meant to lower the amount of money insurance companies spend litigating claims, which is supposed to lower rates.

Who pays for car damage in a no-fault state?

Whether you have at-fault or no-fault insurance, the at-fault driver still pays for car damage. If you live somewhere where you have to have no-fault insurance, drivers still have to carry a minimum amount of property damage liability coverage. If you’re in an accident caused by another driver, you would make a claim with their insurance company for the property damage they caused.

However, if you were the at-fault driver and you damaged your own vehicle, you would have to make a collision claim to pay for the cost of repairing your car. This is no different than the process in at-fault states.

How does no-fault auto insurance work?

After you’re in a car accident, your no-fault insurance is what pays for the cost of any injuries to you or your passengers. Even if someone else was responsible for the accident, you’ll make a claim with your own insurance company for any medical bills, lost income, funeral costs, and other injury-related expenses with your own car insurance.

Depending on the no-fault liability laws where you live, you may also be able to make a bodily injury claim with the other driver’s insurance to pay for the cost of serious injuries they might have caused.

Under no-fault insurance laws, your injuries may be considered serious if treatment costs a certain amount or caused a specific outcome. For instance, your injuries may be serious if you were permanently disfigured after an accident. If your injuries are considered serious, you may be able to make a third-party liability claim for damages.

Let’s say you’re in Minnesota and you’re in a crash that wasn’t your fault. The other driver causes $50,000 worth of injuries to you and your passengers. 

In Minnesota, the state requires you to have at least $40,000 of personal property protection, but you’re also allowed to make a third-party claim there as long as the cost of the injuries the other driver caused exceeds $4,000. In this situation, you’d be allowed to make a third-party claim for the damage.

Types of no-fault insurance laws

There are a couple of different types of no-fault insurance laws that drivers should know. The type of no-fault insurance system where you live affects what type of coverage you need to buy and how your coverage works after an accident. The forms of no-fault insurance are:

  • No-fault insurance: The broadest and most common form of no-fault system, no-fault insurance is when the state requires you to get personal injury protection for your own injuries and restricts when you can sue for injuries after an accident.

  • Choice no-fault: Unlike regular no-fault insurance laws, choice no-fault insurance is when you can choose between a no-fault or standard liability insurance policy. The systems you can choose will have different rules for lawsuits and insurance requirements.

  • No-fault add-on: This type of coverage is available in states that don’t require drivers to get no-fault insurance. If you choose to add personal injury protection, you can use your own insurance to cover your injuries after a crash and make third-party claims, too.

→ Read about how insurance laws work in no-fault states 

How does no-fault insurance work with your health insurance?

Your no-fault insurance provides coverage that your health insurance doesn’t. When you make a no-fault claim, you can receive coverage for your medical bills and economic losses, like lost wages. Your health insurance doesn’t offer this same protection.

Even if you have health insurance, using your personal injury protection could be a more affordable way to pay for your expenses after a crash, and it may pay out faster. After you’re injured in an accident, your health insurance deductibles may be too high to offer any coverage. Your no-fault insurance, however, wouldn’t require you to meet a deductible before you could make a claim. But drivers with robust health insurance 

What is the cost of no-fault insurance?

On average, a no-fault insurance policy that includes the required limits of personal injury protection costs $1,907 per year for drivers without a prior accident on their records. After an accident, no-fault insurance is $2,825 per year — an increase of 48%. 

While no-fault insurance was designed to lower the cost of insurance, a no-fault insurance policy is actually more expensive than at-fault coverage.

Cost of no-fault auto insurance - Graphic

We found that the average cost of no-fault insurance is 15% more expensive than at-fault coverage for drivers without an accident.

Drivers with no-fault insurance pay an average of $242 more per year for coverage than a similar driver living in an at-fault state. Also, adding more personal injury protection tends to be more expensive than adding more liability coverage.

Insurance type

Cost

Cost after an accident

No-fault

$1,907

$2,825

At-fault

$1,665

$2,470

If you’re finding that the cost of no-fault insurance is too expensive for you, you should compare rates from multiple companies before picking a policy. This way, you can find the lowest car insurance rates for your coverage needs.

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Frequently Asked Questions

What does no-fault insurance cover?

No-fault insurance covers the cost of your own injuries after a crash, even if the other driver was responsible for the accident. Following an accident, your no-fault insurance would pay for your medical bills, lost wages, and more depending on where you live.

Is no-fault insurance mandatory?

Most states don’t require no-fault insurance. However, if you do have to get personal injury protection, you have to purchase enough to meet your state’s minimum requirements. You’d also have to get any property damage liability coverage, uninsured, and underinsured motorist coverage that’s required, too.

Can you sue if you have no-fault insurance?

No-fault insurance laws do limit your ability to sue. If you have no-fault insurance, you’ll usually only be able to sue if your or your passengers injuries are very serious or exceed a certain monetary limit.

What’s the difference between no-fault insurance and MedPay?

While MedPay and no-fault insurance or personal injury protection are similar, they aren’t the same thing. Unlike personal injury protection, MedPay is usually an optional coverage. After an accident, MedPay also covers the cost of your injuries whether or not you were responsible for the crash. However, it doesn’t offer coverage for lost wages, and it usually has lower limits than PIP.

Methodology

To compare the cost of car insurance in no-fault and at-fault states, Policygenius analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states plus Washington, D.C.

The following coverage limits were used:

  • Bodily injury liability: 50/100

  • Property damage liability: $50,000

  • Uninsured/underinsured motorist: 50/100

  • Comprehensive: $500 deductible

  • Collision: $500 deductible

Rates for overall average rate, rates by ZIP code, and cheapest companies determined using averages for single drivers ages 30, 35, and 45. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles/year.

Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of costs. Your actual quotes may differ.

Authors

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

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Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

gray linkedin icon link

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

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