AUTO INSURANCE ARTICLE
What Is No-Fault Insurance?
By: RoryFNo-fault insurance covers basic medical costs associated with an accident. In many states it is a required type of insurance that every person must carry. The phrase "no-fault" refers to the fact that the medical costs are paid no matter who is at fault. Another name for no fault insurance is "Personal injury protection".
The limitations of a no-fault insurance policy.
No fault insurance usually has a strict limit and doesn't guarantee coverage beyond a certain price point. It's main purpose is to help pay for basic medical care of injured people after an accident, while the legal system sorts out who is at fault. This works pretty well and the system has endured for a long time for that very reason. Legal wrangling can sometimes take a long time, but injuries happen in a heartbeat, and somebody has to pay the medical costs. Currently there are 12 states that either require, or allow you to operate under no-fault insurance.
The secondary purpose of no fault insurance.
One of the main purposes of no fault insurance is to reduce the number of lawsuits due to personal injury. In many states, people are only allowed to sue for costs that go beyond the coverage level their insurance. This is supposed to help lower insurance premiums and save the consumer money. Some critics would argue that it fails in it's purpose of lowering premiums. No-fault regions often have some of the highest insurance premiums in the country, but that may be because no fault insurance areas are usually very dangerous places to drive.
Does no-fault make it too easy to be a bad driver?
Some people who are critical of no-fault insurance feel that it protects bad drivers, who only have to pay higher premiums instead of suffering the harsher punishments that could be handed out through civil litigation.