If you are a driver of a motor vehicle, it’s likely that you are required by law to have auto insurance. In some states, you will be required to have a specific type of auto insurance called no-fault insurance. In this article, we’ll explain what both of these concepts mean.
Insurance is a type of contract that an individual can enter into with an insurance company that allows them to obtain financial protection and reimbursement in the case of losses. A person can have an insurance policy for their property as well as for liability for damage or injury they might cause to somebody else.
The most common types of insurance many people have include auto insurance, home insurance, health insurance, and life insurance. Of these, most people have at least auto insurance, as it is usually required by law for drivers.
Insurance policies have three critical components:
No-fault insurance, also called personal injury protection insurance (PIP), is a type of auto insurance policy that can cover damages regardless of which party is at fault for the accident. This is different from other types of auto insurance which reimburse on the basis of who is deemed to be at fault. In contrast, all accidents covered under a no-fault insurance policy will receive reimbursement.
No-fault insurance is mandatory in 12 states and covers things like:
However, no-fault insurance does not pay for damage done to a vehicle or pain and suffering.
With other types of auto insurance, part of the process of making a claim is proving that the other party is at fault. This can be a difficult process and even sometimes leads to civil lawsuits. However, no-fault insurance does not require this step.
The procedure for submitting a claim is easier and quicker. Instead of filing a claim against the at-fault driver’s insurance or filing a lawsuit, you will always submit a claim to your own insurance provider. With this insurance type, you will not have the burden of proving to an insurance adjuster that the other party was at fault.
Note that even if you do not live in a state that mandates no-fault insurance, you can nearly always add PIP coverage to a traditional auto insurance policy.