The No-Fault System
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| If you live in a no-fault state, this section
applies to you. Each state must implement either a tort system or a no-fault
system. The system your state has implemented will determine what kind of
insurance is available to you. |
| There are many variations on the no-fault system
that make it difficult to provide accurate information on a national basis.
This booklet provides a basic overview of no-fault, but for specific questions
about your state's no-fault law contact your state insurance department. |
| In a no-fault state individuals need not go
through the court system to have their financial loss paid if the loss results
from an injury. Two individuals who have a traffic accident may file claims
with their own insurance company. Each insurance company pays the claim for the
personal injury to their policyholder regardless of fault. |
| First of all, under a no-fault system your
insurance company pays you directly for your losses as a result of injuries
sustained in an accident, regardless of who is at fault. Similarly, the other
driver collects losses for his or her injuries from his or her insurance
company. Under a no-fault law there is no need to determine who is at fault to
receive payment for injury claims. |
| No-fault does not completely eliminate the risk
of your being sued. However, no-fault laws do place restrictions on when a suit
can be brought. This means that you can be sued but only under specific
conditions. Since no-fault laws do not completely eliminate a person's right to
sue, the possibility of your being sued is very real, especially in the event
that you are the driver at fault in an accident that causes serious injury to
others. |
Personal Injury Protection
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| The most basic no-fault benefit is personal
injury protection coverage (PIP). This coverage will pay you, your relative or
any other person riding in your car a minimum benefit amount per person for
injury regardless of fault. The level of benefits varies widely among states. |
The following are types of coverage's that may
be extended to you under typical personal injury protection coverage:
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Medical Expense Benefits. This benefit includes all reasonable charges for
medical, hospital, surgical, professional nursing, dental, optometric,
ambulance, prosthetic services and X-rays.
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Rehabilitation Expenses Benefit. This benefit includes charges for psychiatric,
physical and occupational therapy, and rehabilitation.
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Work Loss Benefit. This benefit includes coverage for loss of wages up to a
specific limit for a specific time period following injury.
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Funeral Expense Benefit. This benefit covers all reasonable charges up to a
specific amount for funeral services including burial and cremation expenses.
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Survivors Loss Benefit. This benefit provides a payment to your surviving
spouse or dependents up to a specific amount for a specific time period.
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Residual Bodily Injury Liability Coverage
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| Under no-fault policies, most injury claims are
covered under your PIP benefits. If there is a situation where those benefits
are not enough and there is a possibility of your being sued, many states
include residual bodily injury liability coverage. This coverage will protect
your family and anyone else while in your car with your permission in the event
you are sued because of injuries caused to others. |
| What are the situations under which you can be
sued? Again, no-fault laws will vary greatly from state to state, but each
no-fault state has defined certain thresholds that if exceeded, open the
possibility of a suit. These thresholds can be based on specific dollar
amounts, clearly defined injuries and/or a death resulting from an accident. |
What No-Fault Doesn't Cover
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| In most states, the no-fault law specifically
excludes property damage liability for damage that you cause to the property of
others. If you are at fault in such an accident, you will be held liable and
can be sued for these losses. |
| Only in a limited number of states does the
no-fault law extend some coverage to damage you may cause another driver's
automobile. Furthermore, even in these limited cases, property damage liability
coverage does not extend to your car. You must buy a separate collision
coverage to take care of this risk. |
| Once again, you should be aware that this
booklet can only give you a general overview of no-fault laws governing
insurance. For specific information about the no-fault law and insurance in
your state, contact your state insurance department. Most state insurance
departments have written consumer information that will outline the specific
limits and responsibilities for auto insurance in their state. |
