When a collision between two vehicles occurs, who pays for the damages? You might think the one who caused the damage must pay, but that’s not always true in certain U.S. states.
You may have heard “at-fault” and “no-fault” regarding auto insurance. What do they mean, and how do they affect your ability to seek additional compensation?
At-fault auto insurance
Most U.S. states operate with an at-fault auto insurance model, which means the person who caused the accident (determined by insurance adjusters based on police reports and evidence) must pay for damages. The liable individual’s bodily injury insurance will pay for the other driver’s medical treatment, while their property damage liability insurance pays for the other’s auto repairs. Drivers can file a lawsuit if they believe the at-fault driver’s insurer isn’t offering fair compensation, and there are no limits to your ability to sue in these states.
No-fault auto insurance
In a no-fault model, state governments require drivers to carry personal injury protection (PIP) insurance. PIP will cover an individual’s medical treatment following a car accident regardless of who’s at fault, hence the “no-fault” term. But while PIP will cover medical expenses, the at-fault driver still pays for the property damage caused. Drivers can only sue for additional recompense if their medical expenses reach a certain threshold.
Choice no-fault insurance
But among the 12 no-fault states, three of them – Kentucky, New Jersey and Pennsylvania – have a system called “choice no-fault insurance,” which allows drivers to choose between no-fault insurance or the capability to sue regardless of the severity of their injuries or the damage to your car. Remember that if you opt for entire tort liability over no-fault, you’ll lose access to PIP coverage.
Understanding the differences between at and no-fault auto insurance systems is crucial if you seek payments to cover your medical and auto repair expenses following an accident. If you live in a choice, no-fault state, weigh your options wisely before calling on an attorney.