No-fault Auto Insurance Coverage Explained

No-fault auto insurance coverage is a system where people who have been injured in a car accident file claims for their “reasonable and necessary” expenses to their own insurance company for payment. This system makes paying claims a much quicker and easier process than with the tort system of car insurance. Under the tort method of managing claims, accident victims have the right to sue the driver found responsible for causing the accident but they have to wait longer to receive compensation for their injuries.

A no-fault car insurance system applies to personal injury claims only and pays for medical bills, as well as rehabilitation and other expenses incurred by the accident victims. It covers the policyholder, his or her family members and passengers traveling in the policyholder’s vehicle.

Claims for property damage, such as repairs to the policyholder’s vehicle, are not covered under no-fault insurance. An investigation is conducted to determine which driver was at fault for the accident and the at-fault driver (and his or her insurance company) is responsible for paying for these expenses.

In many states which have adopted the no-fault auto insurance system, accident victims have the right to sue to collect damages from the at-fault driver if their injuries are serious and permanent in nature. For this reason, third party liability coverage is required in no-fault car insurance states. Drivers must have at least a minimum level of protection in place to drive legally.