AUTO INSURANCE ARTICLE

What Does “No-fault” Coverage Mean for Your Auto Insurance?

By: regalado

The term "no-fault" coverage is commonly misunderstood. In auto insurance terms, no-fault coverage doesn't mean that you are off the hook if you cause an accident. So what does no-fault coverage really mean?

No-fault coverage means that in the event that you are injured or your car is damaged because of an accident, you go after your own insurance company, whether you or a third party is at fault. You don’t have to deal with the insurance company of the driver who caused the injury, loss or damage. This protects you for example, in cases when you need immediate access to any medical benefits, even if you were at-fault for the accident. You do not need to wait for the auto insurance company of the other driver who has to make an assessment first of who was at fault before paying out any benefits.

Each party’s insurance company may come in the picture to arrive at a settlement based on the degree of responsibility attributed to each person. Even in the absence of police charges, insurance companies investigating the circumstances of the accident will come up with their own assessment of the fault responsibility of one or more of the drivers involved in the incident. And even if the police say that neither of the drivers was “at fault”, the law enforcers’ decision is to be understood only within the context of laying of charges, and not in relation to auto insurance claims.

You can either be between 0% to 100% of being at-fault in a motor accident. Fault can be shared, and is ascribed to a driver in which the circumstances most closely depicts the accident. But in case the accident does not fit any of the scenarios, fault is judged with reference to the rules of negligence law. Any driver who gets a fault rating of more than 0% automatically earns an “at-fault” accident on his or her insurance record. This makes one a likely candidate for an auto insurance premium hike.

What about lending your car to someone where you were neither driving nor a passenger of the vehicle when the accident happened? When you lend your car to someone, you’re also lending him or her your insurance. Such that, if the person who is using your car has an at-fault accident, the accident will be on your insurance record. And it could also hike your insurance premium.

But fret not. Some auto insurance companies are more forgiving. Either they keep your driving record clean, if it’s a first-time fault, or they maintain your premium. Otherwise, you will then need six years to steer clear from accidents for your record to be back on a clean slate. But if you disagree with the at-fault assessment of your auto insurance company, you may want to ask for an explanation.

But always remember that no-fault coverage is not a cover for you if you are at-fault. It merely allows you access benefits from your own insurance company whether you are at-fault or not, in accidents.