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.
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.
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.
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.
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.
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.
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.
Cost after an accident
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.
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.