What is No-Fault Car Insurance?
No-Fault Insurance and What it Means
No-fault insurance consists of the theory that insurance claims from automobile accidents can be settled without going to court. It also means that no one involved in the accident is determined to be at fault. Under the “no-fault” laws, each individual will send claims to their own insurance company. No awards for “pain and suffering” or other injuries can be claimed. Currently, several states have some form of no-fault insurance, but the laws are quite different depending on the country you are in.
There is a lot of misinformation regarding these laws. Some drivers believe that with this type of law they will not be responsible for paying any more than their insurance deductible should they be involved in an accident. Other people believe that if their state has a no-fault insurance law in place that they do not need to carry a car insurance policy at all. This information can be financially detrimental to someone who is involved in an accident. It is essential to understand that, like with any insurance, there are both positive and negative aspects of this type of law.
Why No-Fault Insurance Came About
In a fair world, the person that caused the accident to happen should be responsible for the damages that occurred during the accident. After all, if you are in a wreck that was caused by the other individual, why should you have to call your insurance company to make a claim? We know that every time a claim is filed with our insurance company, our premiums are going to go up. It is true no matter whose fault the accident was.
In states that do not have any fault insurance laws, the courts are filled with accident cases as judges and juries have to decide which party was at fault. States came up with the no-fault law to avoid this back up in the judiciary system. These laws eliminate defects and set specific amounts for any lost wages or medical expenses incurred. It means that the courts are taken out of the picture, and each person involved in the accident will collect from their insurance company.
Pros and Cons of No-Fault Insurance Laws
If you are a safe driver, the thought of no-fault insurance laws may seem a bit unjust. After all, accidents that are not your fault would mean you would make fewer claims. With fewer lawsuits filed, your insurance rates would be lower. It is the theory, but in reality, it doesn’t quite work this way.
The problem with not having a no-fault insurance law in place is the fact that when a person is involved in an accident, they will end up in court. The legal fees and time consumption caused by a trial end up not saving good drivers a lot of money at all. Bad drivers usually are punished by having such high premiums that they cannot afford to pay them. Uninsured motorists create even more problems out on the road. So while no-fault insurance laws have faults and are not perfect, most insurance experts agree that they are in fact, a positive thing.
States with No-Fault Laws
When no-fault insurance laws started being enacted, 24 states had some form of this law. Currently, there are only 13 states with active no-fault insurance laws. No-fault insurance laws allow for an accident to be involved in litigation for only two types of thresholds. A verbal point is a case where severe injury has occurred during the accident. Florida, Michigan, California, New York, New Jersey, and Pennsylvania have this type of law. Kansas, Kentucky, Hawaii, Minnesota, Massachusetts, Utah, and North Dakota all rely on monetary thresholds. It states that a certain amount of money must be spent on medical expenses before a person may ask for a lawsuit.
Overall, it is essential to stay informed about insurance laws in your state. All 50 states require drivers to have some form of car insurance if they own a vehicle. It is essential to check your policy regularly to make sure that you have enough insurance. Use an online service to compare quotes every six months or once a year to make sure you are not being overcharged for your policy.