What Is No-Fault Insurance Coverage?
No-fault insurance coverage, also called Personal Injury Protection (PIP) coverage, helps to pay medical bills if you or passengers are injured in an automobile accident regardless of who is at fault. No-fault isn’t available in every state.
Check your state’s auto insurance requirements to see if it has no-fault laws in place. For states with no-fault insurance laws, the type of no-fault insurance required in each state can differ.
No-fault insurance coverage applies without regard to who is at fault in the auto accident. It helps cover costs tied to injuries but does not cover costs related to damage to a car or other property. No-fault insurance coverage is provided on a per-person, per-occurrence basis.
No-Fault Insurance Coverage availability varies by state.
What Is the Definition of No-Fault Insurance?
Only offered in some states, the term "no-fault" car insurance is often used to signify a type of car insurance that allows policyholders to recover financial losses from their insurance company, regardless of who is at fault in an accident. No-fault insurance, also known as Personal Injury Protection (PIP) insurance, pays benefits related to bodily injuries resulting from an automobile accident.
Determining Your Limits for Personal Injury Protection Insurance
In some states, Personal Injury Protection insurance is mandatory while other states have no PIP requirements. If personal injury protection is available in your state, consider what your health insurance will cover and what it will not. Also consider your health insurance deductible. Then determine how the following expenses might impact you and your family should one or more of you be injured in a car accident.
Medical Expenses – Personal injury protection insurance can help pay reasonable expenses for necessary hospital, medical, surgical, optical, dental, chiropractic, rehabilitation, X-rays, prostheses, prescription drugs, ambulance and nursing costs.
Work Loss – Personal injury protection insurance can help pay for the loss of income due to injury, including costs incurred by a self-employed person who hires substitute employees to perform necessary tasks and to maintain income. It can also help replace lost income to people who do not have sick day benefits and will not be paid if they don’t work.
Funeral Expenses – Personal injury protection insurance can help cover reasonable funeral and burial or cremation expenses.
Survivors’ Loss – Personal injury protection insurance can help pay for loss of income and replacement services to surviving dependents.
Essential Services – Personal injury protection insurance can help pay for essential services, such as house cleaning, caring for small children, cooking, laundry and more – to replace those normally performed by the injured person.
When No-Fault Insurance Comes in Handy
Imagine you're driving to work one morning when you unexpectedly collide with another car. You’re pretty banged up and have to go to the hospital. Luckily your injuries aren’t life-threatening, but the doctors estimate you’re going to be out of work for six weeks while you recover.
You’re worried about losing your income for six weeks, but luckily, you have no-fault auto insurance to help. Regardless of who caused the accident (you or the other driver); your personal injury protection insurance can help pay your lost income, as well as medical expenses including your health care deductible, and essential services to help with the shopping, cooking, house cleaning and more that your primary health insurer doesn’t cover.
What Is Not Covered by No-Fault Insurance
No-fault insurance does not apply to property damage and does not prevent lawsuits. No-fault insurance does not cover property damage claims, so it is important to consider getting property damage coverage in addition to your car insurance policy. To cover the costs to fix your car if it is damaged in a crash, consider adding collision coverage to your auto policy.
Is No-Fault Insurance Required?
No-fault insurance requirements vary by state so it is important to understand your state’s specific rules regarding auto insurance and if personal injury protection or no-fault coverage is mandatory. In some states, no-fault coverage is required. Other states may have either no requirements for no-fault protection or they may specify the levels of required coverage. Contact your auto insurance professional, state motor vehicle agency or state insurance department to learn about the auto insurance requirements in your state.
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