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No-fault states limit the ability to sue another driver for injuries or pain and suffering after a car accident. Drivers in these states are often required to carry insurance that pays for their own injury-related costs — such as personal injury protection or medical payments coverage. These coverages extend to the insured driver’s passengers as well.
Here’s a look at which states have “no-fault” insurance laws, how the insurance in those states works, and the pros and cons of no-fault auto insurance.
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States with no-fault insurance
Car insurance laws vary by state. As a result, there are different applications of no-fault insurance systems. Some states apply the rules rigidly by requiring all drivers to accept limited lawsuit rights and maintain insurance for their own medical costs. Other states, called “choice no-fault states,” have lawsuit limitations, but allow drivers to opt out of no-fault insurance. Still, others require no-fault insurance, but do not restrict lawsuits.
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True no-fault states
These states and jurisdictions require drivers to carry no-fault insurance, specifically personal injury protection (PIP):
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Florida
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Hawaii
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Kansas
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Massachusetts
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Michigan
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Minnesota
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New York
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North Dakota
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Utah
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Puerto Rico
Learn more: The minimum car insurance requirements in all 50 U.S. states
“Choice” no-fault states
Choice no-fault states allow drivers to opt out of the no-fault system. In Kentucky, for example, you can file a notice with the state insurance department to reject no-fault insurance. This preserves your right to sue another driver for medical damages, but it also means someone else can sue you.
These states allow drivers to opt out of no-fault insurance laws:
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Kentucky
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New Jersey
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Pennsylvania
Other states requiring no-fault insurance
These states aren’t technically no-fault states because they don’t restrict your right to sue another driver, but they do have certain insurance requirements you must adhere to:
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Delaware requires drivers to carry PIP
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In Maine, medical payments coverage (or MedPay) is mandatory
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Although New Hampshire doesn’t require auto insurance, any policy you have must include MedPay coverage
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Oregon requires drivers to carry PIP
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Washington D.C. requires drivers to carry PIP
What does ‘no-fault state’ mean?
In a no-fault state, no matter who’s at fault, you must file a claim with your own insurance company after an accident to pay any medical bills you or your passengers obtain. It’s possible to sue for damages in many no-fault states, though certain criteria need to be met. For instance, your medical costs may need to exceed a specific amount or your injuries will need to be serious. Criteria vary by state.
In contrast, in an at-fault state or tort state, the at-fault driver’s insurance covers the costs, including medical bills and car repairs for other parties.
How no-fault insurance works
Your no-fault insurance covers medical costs for you and your passengers after an auto accident, regardless of fault. There are two forms of no-fault coverage: PIP and MedPay.
PIP is the most commonly required form of no-fault insurance. It covers:
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Emergency room visits
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Hospital stays
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Medical bills
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Lost wages due to injury
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Costs of services like house cleaning and childcare for injured parties
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Funeral expenses
MedPay is mandatory in only two states — Maine and New Hampshire — and optional in others. MedPay is similar to PIP, but the coverage pays for direct medical costs only. Indirect expenses resulting from an accident, like lost wages and replacement house cleaning, are not covered.
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Pros and cons of no-fault auto insurance
Pros
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Faster claims processing
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Reduced litigation
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Coverage for healthcare costs, even if the other driver was uninsured/underinsured
Cons
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Legal recourse may be limited
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Insurance premiums may increase even if you aren’t at fault
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Auto policies may be more expensive due to additional coverage requirements
Learn more: How does uninsured motorist coverage work?
Factors to consider when choosing insurance in no-fault states
If you live in a no-fault state and are shopping for car insurance, there are a few things to consider before you choose a policy. It’s important to look at exclusions, out-of-pocket expenses, and your potential premium and deductible. Compare carriers before signing up for new coverage.
Understand minimum requirements
First, it’s essential to understand your state’s minimum insurance requirements, as well as whether no-fault insurance is optional or required. Your insurance company or state’s motor vehicles department can confirm required coverages.
Consider additional coverage
In states where no-fault car insurance is required, talk with prospective insurance companies about coverage levels that make sense for your situation. The state’s minimum requirements may not be enough to adequately protect you and your vehicle.
Learn more: The most common types of car insurance coverage explained
No-fault states FAQs
Is no-fault insurance the same as liability coverage?
No. Liability insurance covers property damage and injuries to others in an accident — it does not cover your own losses. Drivers in no-fault states typically need to carry liability insurance and PIP.
Even in no-fault states, the at-fault driver’s liability policy generally compensates the other party for damage to vehicles or property.
Learn more: What is liability car insurance and how much do you need?
What are the advantages of a no-fault state for auto insurance?
No-fault insurance laws are intended to control the costs of insurance coverage by keeping the injuries and other claims resulting from minor accidents out of court, according to the Insurance Information Institute.
However, some claim no-fault insurance laws have been ineffective in lowering insurance costs and don't provide appropriate compensation for pain, suffering, or other types of long-term damages that can occur even in minor accidents.
Learn more: What is a car insurance premium, and how is it calculated?
Can you still be sued after an accident in a no-fault state?
Most of the time, you can be sued in a no-fault state for severe injuries or extensive damages. Each state sets its own threshold for this, but most require medical expenses exceeding $1,000 or more or the loss or impairment of a bodily function. The damages that can be received may also be limited.
For instance, New York requires medical expenses exceeding $50,000, dismemberment, permanent loss or limitation of a body organ, disability for more than 90 days, or death before a lawsuit can be brought.
Learn more: How to protect yourself from being sued after an accident
Who pays for vehicle damage in no-fault states?
At-fault drivers are responsible for property damages in no-fault states. All at-fault and no-fault states, except New Hampshire, require drivers to have property damage liability insurance.
Tim Manni edited this article.
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