What is No Fault Coverage?

No fault car insurance coverage is a common form of car insurance that pays for the damage to your car and to yourself regardless of whether you are found at fault for the accident or not. What this means is that if the other driver is found responsible for the accident, your insurance provider will still pay for your losses. This type of car insurance is fairly common in many countries including in the United States.

In contrast to a no fault car insurance system is a tort system which means that the driver who is found responsible for the accident is also responsible for the losses and the damage. This means that your insurance only comes into effect if you are held accountable for the accident.

No Fault Car Insurance

No fault coverage is also referred to as ‘policy holder’ insurance and comes with plenty of pros for the policy holder and is necessary car insurance. However, there are also plenty of cons. Under a no fault system policy holders may lose some of their rights to sue the other driver for the damage they have caused. Because they have received compensation from the agency, they are giving up their right to seek further legal action. This is one of the biggest problems with the no fault system. While you may be able to sue through your insurance agency, there are a lot of complications involved when filing this type of personal injury lawsuit. Another concern with the no fault coverage system is that insurance providers will continue to increase your premium if you make a claim even if you are not at fault for the accident.

One of the biggest benefits to a no fault system is the ease in the claims process. There is no mention of blame for the accident and thus you can easily make a claim without having to determine who is considered at fault for the accident. Another benefit to a no fault system is that it reduces the amount of lawsuits filed after a serious accident. Rather than the individual filing a lawsuit, many critics believe that the insurance providers are now taking on this burden which does nothing to stop the amount of suits filed; it only shifts the responsibility away from the driver.

No Fault Coverage States

Many states in America operate under a no fault car insurance policy. This includes Florida, Michigan, North Dakota, New Jersey, New York, Hawaii, Massachusetts Pennsylvania, Utah, Minnesota, Kentucky and Kansas. Keep in mind that all states are different when it comes to car insurance, however. One state will vary greatly from another so be sure to compare how your particular state works in terms of no fault coverage and insuring your vehicle.

In Kentucky, New Jersey and Pennsylvania, drivers have the choice to insure under a no fault system (or limited tort system) or a full tort system. Drivers cannot change their minds after they have been in an accident however – whatever is written on the policy at the time of purchase or renewal stays.

Regardless of whether your state operates under a no fault system or not, it is important that you understand this insurance term. Before you agree to any policy, know your legal rights and determine what amount of coverage you need to drive under a no fault coverage system. Many drivers will look into higher limits when choosing their car insurance policy; after all, you are completely responsible for your own insurance for no fault system and thus it is best to be prepared with the best provider and the most adequate policy.

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