Accidents can happen at any time to anyone. With about 289 million vehicles on U.S. roads, there’s a chance of you or your passengers suffering injuries. According to the National Safety Council, an estimated 4.8 million roadway users were seriously injured in crashes in 2020, costing society roughly $474 billion. No-fault insurance covers medical expenses resulting from an accident, regardless of who is at fault. At least 12 states require drivers to have no-fault insurance, while others make it an optional add-on, or waive it. By having no-fault insurance, your car insurance coverage will pay for at least some of your out-of-pocket expenses if you get in a car accident. The goal is for no-fault insurance to provide quick payment for accident-related injuries since the claims are paid regardless of who caused the accident.
No-Fault Insurance Covers:
- Medical bills related to your car accident injuries
- Rehabilitation costs
- Lost wages from being unable to work because of an accident-related injury
- Substitute services like child care or housecleaning
- Funeral expenses if the accident-related injury results in death
- Small death benefit if the accident results in your death while leaving behind surviving dependents
- Injuries like disfigurement, fractured bones, dismemberment, loss of a fetus
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How does no-fault insurance work?
No-fault insurance coverage pays out differently depending on the state you live in. In Florida, for example, no-fault insurance covers about 80% of accident-related injuries up to a $10,000 limit. In New York, no-fault insurance covers up to $50,000 of your and your passengers’ injury bills, but only 80% of your wages lost will be paid for. Besides Delaware, drivers in no-fault states can’t sue an at-fault driver unless their injuries are very serious, like paralysis or losing a limb.
If you’ve been in a car accident and have no-fault insurance, you’ll need to decide if you want to file a claim at all. You might need to file a claim if you or a passenger in your vehicle suffered injuries from an accident. To do this, you would contact your insurance company to file the injury-related claim. You’ll have to provide details about the accident and related injuries, as well as medical expenses and lost wages documentation. Your insurance company will then process your claim, which can be paid much faster since you won’t need to prove fault. The point of no-fault insurance is to eliminate the costs associated with litigation when trying to prove who was at fault for an accident.
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No-Fault States
| State | Minimum Required |
| Florida | $10,000 |
| Kansas | $9,000 |
| Hawaii | $10,000 |
| Kentucky | $10,000 |
| Michigan | $250,000 or opt-out |
| Massachusetts | $8,000 |
| Minnesota | $40,000 |
| New Jersey | $15,000 |
| New York | $50,000 |
| North Dakota | $30,000 |
| Pennsylvania | $5,000 |
| Utah | $3,000 |
Drivers in Kentucky, New Jersey, and Pennsylvania can decide to maintain full tort rights when they buy car insurance. These three states allow drivers to keep the right to sue for medical expenses. Many states where no-fault insurance isn’t mandatory still offer it. Michigan drivers can choose a no-fault insurance coverage limit from several options like:
- Unlimited coverage
- Up to $250,000 or $500,000 in coverage
- Up to $50,000 in coverage if you’re enrolled in Medicaid or if a member of your household has insurance that can cover injuries from a car accident
- Opt out of no-fault insurance coverage if you have Medicare or if a member of your household has a car insurance/health insurance policy that pays for car accident-related injuries
If you don’t live in a no-fault state, you’ll still be able to purchase no-fault insurance since most car insurance companies provide it. You’ll most likely be given the option of purchasing no-fault coverage on top of traditional liability-based coverage.
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How much does no-fault insurance cost?
Costs vary based on the no-fault insurance provider, coverage limits, and location. Rates are typically higher in no-fault states compared to at-fault states partly because no-fault states require drivers to purchase more coverage. Since all states require liability insurance, drivers in no-fault states will end up paying more when purchasing no-fault insurance. No-fault insurance could end up being a significant portion of your monthly premium. Premiums can be 19% higher in no-fault states than in at-fault states.
For example, you can be looking at the cost of no-fault coverage to be $277 per month for $50,000 of PIP with a $200 deductible, or over $300 per month for $100,000 of PIP with $2,000 monthly work loss. Rates highly vary. You should ask your insurance providers about discounts to make no-fault insurance more affordable. Some providers offer safe driving discounts or bundle your car insurance with other policies at the same company.
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Is no-fault insurance worth it?
If you have a good health insurance plan and live in a state where no-fault insurance isn’t mandatory, you could opt out of buying no-fault insurance. Still, no-fault insurance has some perks that health insurance doesn’t offer, like reimbursement for lost wages and payments for services you can’t due because of accident-related injuries.
| Pros | Cons |
| Quick payouts – Drivers can have their medical claims paid quickly after an accident because fault doesn’t matter with no-fault insurance | Limited legal options – Drivers in no-fault states have few options to sue at-fault drivers. They can sometimes sue if the accident caused serious injuries or significant expenses. |
| Fewer lawsuits – Insurers in no-fault states spend less time and money on litigation | Higher premiums – More coverage is required in no-fault states, so insurance premiums are typically higher than in at-fault states |
| Broad coverage – No-fault insurance covers a variety of expenses besides medical bills, household services, and child care | Fewer penalties for at-fault drivers – At-fault drivers can face less of an insurance penalty when they injure someone |
Here’s a list of other disadvantages of no-fault insurance that you might want to consider:
- Property damage isn’t covered
- High medical bills – No-fault insurance policies pay up to your policy limits. If you want to make up for what the benefit doesn’t cover, you’ll have to file a car accident claim against the driver at fault
- Doesn’t cover pain and suffering – You’ll have to file a personal injury claim if you meet your state’s injury threshold to make up for this limitation
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