What Is A No-Fault State?

A common misconception about no-fault insurance is that no party will be found at fault. In every claim situation where two drivers are involved, the insurance companies will always determine who is at fault. This article will help you understand how claims are handled after an accident in a no-fault state.

What Is A No Fault State?

Automobile liability insurance is mandatory in America, and states have different laws that affect how auto insurance claims are handled. Massachusetts is one of the 12 states mandates no-fault auto insurance.

What Does No-Fault Mean?

After an accident, the involved insurance companies will investigate and determine who’s at fault.

No-fault insurance affects how compensation is handled when those affected by the accident are physically injured. If you’re injured in a car accident, your personal insurance provider covers damages you incurred in an accident, regardless of who’s at fault. You don’t need to go to the other party’s insurer to be compensated for damages they caused. Any “bodily injury coverage” you may have purchased only extends to you – not to anyone you may have injured in an accident.

What Happens in Fault States

In the tort system, the company whose insured driver was found responsible would pay for all repairs and damages incurred because of the accident. If you are injured, you may have to pay medical expenses out of pocket before filing a lawsuit and waiting to be reimbursed. There’s also no limit on the amount an injured party can sue for in civil court.

In you live in a “full tort” state, you can take out liability coverage to pay for bodily injury claims from anyone injured in an accident in which you have been deemed at fault. The person found to be partially or completely at fault in the accident will probably see an increase in their insurance rates on renewal.

What Does No-Fault Insurance Cover?

For minor injuries and related loss-of-wages, you use your own insurance policy (Personal Injury Protection) for compensation up to a certain threshold.  Your insurer will pay your medical bills and will reimburse you for lost earnings related to the accident (up to the amount of your claim or your state’s no fault limit, whichever is lower). You won’t receive compensation for non-economic damages like pain or suffering.

For serious injuries or financial losses above a certain threshold:

• $2,000 in reasonable medical expenses as a result of the car accident
• Injuries include permanent and serious disfigurement (like loss of loss of hearing or sight)

You can file liability insurance claim or personal injury lawsuit against the at-fault driver within three years from the date of the accident. Massachusetts is one of the seven states in which the threshold is quantitative, but it can be increased to reflect inflation.

If you’re found partially or completely at fault, just like in a fault state, you will probably see an increase in your insurance rates on renewal.

What Isn’t Covered by No-Fault Insurance? 

The term “no-fault” usually pertains only to coverage relating to personal injury, and does not include coverage for property damage. When it comes to vehicle damage claims in both types of states, the liability coverage in your auto insurance policy covers you for damages to another person’s car. Each driver’s collision insurance, if any, will cover the damages they’ve inflicted to their own car. Collision insurance always covers damages to your own car – not the other driver’s car or property.

Read more on our blog about what to do after an accident. If you have any further questions about no-fault insurance or how claims are handled after an accident in a no-fault state, please contact H&K Insurance Agency. We can help you review what is covered in your auto policy and determine what coverage is right for you.