AUTO INSURANCE ARTICLE

Auto Insurance Basics: What Does No-Fault Coverage Mean?

By: regalado

Do you wonder what your no-fault auto insurance coverage mean? Is it correct to say that regardless of who was at fault in an accident, your no-fault auto insurance assures you to be off the hook? If you answered no, kudos! You are one educated driver who has done your homework. If however, you answered yes, we give you some points for being a good sport for answering the question. And as a bonus, we have prepared this article for you, so next time you know better what your coverage is about.

As we write, there are only thirteen states in the US with no-fault car insurance protection for its state's citizens. While no state operate under a common standard, these thirteen states offer the closest thing to it.

No-fault auto insurance coverage does not get you off the hook from an accident where you are at-fault. It however, provides you, the policyholder, coverage for vehicular and personal damages in the event of an accident, no matter if you are at fault or not.

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, or compensation for workdays lost, 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.

Typically, an attending police officer determines who was at fault in an accident. 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. 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.

Your at-fault liability may be 0% to 100%, 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.

Specific rules vary of course, depending on car insurance companies. 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.