What Auto Insurance Coverage Do I Need in a No-fault State?

Drivers who live in a no-fault state still need to have liability coverage in place to protect their assets. The term “no-fault” is a bit of a misnomer: insurance companies investigate accidents to determine which driver is legally responsible for the damages. People who have been injured in a motor vehicle accident will seek compensation for their medical bills and related expenses from their own insurance provider as long as the level of damages is below a threshold set by the applicable state.

The state will set a certain level of liability coverage which drivers must have in place to stay legal. A driver can choose to buy a policy with a higher policy limit if he or she wishes to do so; the higher the limit, the better the driver is protected from having to pay for damages following an accident personally.

Claims for personal injuries made by the policyholder and the occupants of his or her vehicle are paid though Personal Injury Protection (PIP) coverage. The state will probably set a minimum level of coverage which must be put in place. Drivers who have a good medical insurance plan may want to limit their PIP coverage to this level, while those residents who don’t have medical coverage or who have limited benefits can buy a PIP policy which will pay out a higher level of benefits.