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No fault insurance applies to state in which an insurance company will pay for minor injuries resulting from an accident regardless of who is at fault. It also means that policyholders can only sue it their case meet certain conditions.
Florida no fault insurance is intended to reduce the cost of auto insurance by taking small claims out of court. Several industries, particularly the insurance industry favors this system because it lowers legal fees which account for up to 15 percent of the cost of auto insurance.
In states that use the no fault insurance system of auto insurance, each insurer pays its own policyholders for minor injuries regardless of who was at fault in the accident.
Suppose Meg was driving to a rock concert with her roommate, her car was struck by another auto. The driver who hit did not have liability auto insurance. If Meg lives in a no fault state such as Florida, Michigan or New York, her policy will allow her to collect from her own insurer, even though the accident was not her fault. What is more, Meg's roommate would also be covered under the no fault system if she sustained injuries.
Meg receives first party benefits which are mandatory coverage and vary from state to state under the no fault system. If Meg lives in a state that offers the most comprehensive benefits, she would also be paid for medical expenses, time off work, funeral costs (if the accident was fatal), and whatever other expenses she may have incurred.
The following states use the "true" no fault insurance system of auto insurance:
Florida
Hawaii
Kansas
Kentucky
Massachusetts
Michigan
Minnesota
New Jersey
New York
North Dakota
Pennsylvania
Utah
Puerto Rico
Choice No Fault
Choice no fault means the a person buying auto insurance can choose between the traditional tort liability auto insurance and no-fault insurance. Kentucky, New Jersey, and Pennsylvania use the choice no fault system.
Add-On
Policyholders in add-on states receives reimbursement for their losses from their own insurance company, but they are also allowed to sue the other policyholder at fault in the accident without restrictions. However the "first party" benefits a policyholder receives from her own no fault insurance company are not mandatory and the benefits may be lower that in the "true" no fault states.
Add-On States
Arkansas
Delaware
D.C.
Maryland
New Hampshire
Oregon
South Dakota
Texas
Virginia
Washington
Wisconsin
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