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  • Writer's pictureRobert Schuerger II

How Does a No-fault Car Insurance Claim Work? Everything One Should Know

Every state has different car insurance laws, and some might use the no-fault insurance system. The primary difference between a no-fault insurance claim and an at-fault insurance claim is how the victim gets reimbursed for their injuries after the covered accident.

Typically, no-fault states use personal injury protection (PIP) to pay, regardless of who's at fault. This car insurance coverage will financially assist injured drivers in receiving immediate medical care after the accident by avoiding lawsuits and delayed settlements.

Drivers must be aware of whether or not they're in a no-fault state when buying car insurance to ensure they're properly covered. This article will help people understand what no-fault means for auto insurance claims.

After being injured in an accident, it's wise to contact an Indianapolis accident lawyer for assistance. Schuerger Shunnarah Trial Attorneys goes to war for Indy and can help with claims. Call today!

What Is No-fault Insurance Coverage?

What Is No-fault Insurance Coverage?

Many drivers wonder what "no-fault car insurance" is. No-fault coverage, also called PIP coverage, was created to reduce the cost of auto insurance. It did this by keeping the court systems free of small-dollar claims.

PIP offers coverage for injuries sustained in a car accident, regardless of who was at fault. This only goes up to the PIP coverage limit the person carries and immediately pays out. Overall, the goal is to reduce the chances of a party bringing up a lawsuit against another person.

There are some situations where a victim could still sue in the no-fault state. For example, if the accident led to high-cost or serious injuries, they could create a claim. However, those are quite limited. PIP could also pay for all medical-related expenses. These include lost income, funeral expenses (this often applies to the passengers, as well), and housekeeping services.

Personal injury protection insurance is mandatory for all no-fault states. However, every state sets guidelines requiring the person's own car insurance coverage limits. For example, Michigan's no-fault insurance is very robust. One can choose an unlimited personal injury protection limit, so there's no cap on the amount PIP will pay out for covered accidents.

Some states allow a person to choose the options they want for PIP coverage. For example, Florida lets people waive their work loss portion. This often results in a lower premium, but it could mean that the PIP insurance won't pay for lost wages after injuries from a car accident.

New Jersey also has many PIP options. The Garden State allows drivers to choose medical expenses coverage only, medical/additional costs, or lower the full amount of PIP coverage based on available medical insurance coverage.

PIP options can be quite complicated and differ based on the state. Therefore, it's wise to work with a licensed agent who can answer any questions and ensure there's an appropriate amount of coverage.

How No-fault Coverage Works

Let's say a victim was in a car accident and suffered a broken leg. They live in a no-fault state. Regardless of who was to blame for the accident, the victim gives their own insurance company information when at the emergency room for the examination.

The hospital bills the insurance company for the medical treatment costs. Alternatively, the victim can pay for everything upfront and get reimbursed from the insurer by check for the amount paid. However, this is only up to that personal injury protection limit carried.

If the victim in the car accident has no-fault insurance, they are typically covered for some of their medical expenses and pay. However, certain no-fault states will limit how much money a person can collect through personal injury protection (PIP) insurance. Others don't, so it depends on the no-fault car insurance system in place.

Can Drivers Still Be Considered At-fault in No-fault States?

If one is injured in an accident and lives in a no-fault state, that doesn't mean the involved car insurance companies won't determine fault. Instead, it means that PIP insurance is required and is used first to pay for any injuries.

For example, let's say that a driver was in a no-fault accident and sustained severe injuries. The PIP coverage would trigger first and pay for the applicable medical expenses and injuries. If the person's PIP limits were exceeded, they would turn to the at-fault driver to pay through their bodily injury liability coverage to take care of the rest of the balance. However, this only goes up to the bodily injury coverage available on that policy.

The opposite will apply, as well. If one is the at-fault party in a car accident that caused injuries to another driver, their insurance would cover the injuries first. Then, the bodily injury coverage the at-fault driver had would cover medical expenses above that up to their limits.

How the Insurance Company Determines Negligence

State law dictates how fault or negligence is determined. This is a crucial step for the claims process, even in no-fault accidents. The car insurance company knows which coverages apply.

For example, liability insurance will always pay for the other person's medical bills and any property damage up to the limit for the at-fault driver. However, the car insurance company must know if that liability coverage should kick in and when. Therefore, they must determine who caused the accident.

Witnesses can be good here, but anecdotal evidence isn't enough to establish blame. Therefore, police reports are generally the top evidence choice.

If one has no-fault insurance, they can expect to see these types of fault determinations:

Pure Contributory Negligence

Drivers in states using the pure contributory negligence option can only settle if the car insurance company determines that they were 100 percent not at fault (non-negligent) for the accident. Therefore, if the victim was even partly responsible for the incident, they cannot recover any damages in their at-fault state.

Pure Comparative Negligence

If the state uses the pure comparative negligence option, the insurance payout will be based solely on the percentage of fault the victim carries. Schuerger Shunnarah Trial Attorneys can explain contributory vs comparative negligence. For example, the insurer finds that the victim was 70 percent at fault, but the other driver was only 30 percent at fault. Therefore, the victim would cover 70 percent of their damages, while the other driver would be expected to pay the rest.

Likewise, if the liability limit isn't high enough to cover that percentage of damage, the person would be expected to pay the rest out of pocket.

Modified Comparative Negligence

Indiana uses the modified comparative negligence option. In this case, there's a threshold for fault, which is about 50 percent. Therefore, if the victim was 50 percent or less responsible for the accident, they can receive a payout. If they're 51 percent responsible, they cannot sue the other party.

States That Require No-fault Coverage

Here are the no-fault states that require drivers to have no-fault insurance:

  • Florida

  • Delaware

  • Kansas

  • Hawaii

  • Kentucky

  • Minnesota

  • Michigan

  • New York

  • New Jersey

  • Oregon

  • North Dakota

  • Utah

  • Pennsylvania

In these states, no-fault car insurance is available, but it's not mandatory:

  • Washington, D.C.

  • Washington

  • Texas

  • Maryland

  • Arkansas

It's wise to speak to an insurance professional if there are questions about no-fault insurance availability and whether or not it's required.

What's No-fault Insurance Cover?

The regulations about what no-fault insurance covers will vary based on the state. However, these expenses are often paid by the no-fault car insurance in no-fault states:

  • Medical Bills and Other Expenses - These can include rehabilitation, hospital fees, ambulance services, dental costs, prosthetic devices, surgery, and prescriptions.

  • Funeral Costs - If the accident results in a death, the insurance will likely help to pay for the costs.

  • Lost Wages - If one loses their job or cannot work because of their injuries, lost wages will likely be included in the settlement.

  • Essential Services - Sometimes, PIP will cover the cost of household tasks if one has to hire someone to do the work. This typically occurs when the injuries happen to a homeowner.

What Doesn't No-fault Insurance Cover?

What Doesn't No-fault Insurance Cover?

No-fault car insurance probably won't cover these expenses:

  • Injuries to Other Drivers and Passengers - In most cases, the other driver's no-fault car insurance would cover these things, at least partially. If the policy covers such costs, it comes from the bodily injury liability insurance part.

  • Medical Bills Over the Coverage Limit - One can't get more coverage than the policy limit. However, some states will allow victims to sue the other driver if they were at fault.

  • Injuries to Pedestrians - If a pedestrian is hit by a vehicle, their PIP insurance will generally cover them. The same applies if they're in the car and hit someone riding a bike or walking.

Why Work with a Car Accident Lawyer Even with Auto Insurance

Though Indiana isn't a no-fault state, it's still important to understand what no-fault car insurance coverage does and how it works. It is possible for a victim to get into a car accident with a person from one of the states that use the no-fault system. Schuerger Shunnarah Trial Attorneys can also help with disputing fault in a car accident case.

After being in an accident, it's wise to work with a lawyer. Schuerger Shunnarah Trial Attorneys can assist. Please request a free consultation by calling or using the online form.


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