Auto Insurance Coverage

How No-fault Car Insurance Works


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Many states over the past years have enacted “no-fault car insurance laws.” However, this does not mean that in the case of a car accident, neither driver is at fault. What the law does is speed up payments to the insured. Each of the drivers insurance will pay their customers for the repair damages to their vehicles.

Consequently, there is no average cost for no-fault accident insurance. This is due to insurance being based on such a huge array of variable factors, including, but not limited to: the age of the driver, the gender, the age of the vehicle, the value of the claim, etc. The add-on cost of the insurance is likely to be lower on average if your claim is of a low value. Your car is old, hence not worth as much as a new car. The add-on cost of the insurance is likely to be higher on average if the driver is younger. The insurance company will assume irresponsible driving compared to if an older, more experienced driver had the same accident.

At Fault Laws

Before any no-fault laws were enacted the insurance policy of the driver at fault would have to pay for all the costs to damage and medical for both parties in the accident. The problem was determining who was at fault. Unless it was totally obvious, both drivers will claim the other driver caused the accident. To determine who was at fault, it might have to be determined by the courts. With all the time and lawyers needed to present the case, the expenses to the insurance companies and at times the parties involved would be staggering.

No-fault Laws

Interestingly, even though every state that has a no-fault law the actual description of the laws varies. In most cases, if there is a car accident both parties insurance covers the claims and repairs of their policy holder. Since both drivers insurance have to pay for their claims, an increase of premium will probably increase at renewal. Even though one of the drivers did not cause the accident, since there is no declaration of fault, there is no way to prove which drive actually caused the accident. In accidents that happen under a no-fault law, the driver and occupants of each vehicle will have their medical, rehabilitation and lost wages covered by that drivers insurance, they cannot sure either driver for pain, suffering or emotional distress. Only under certain conditions can they sue predetermined by the laws.

The only real advantages for no-fault car insurance are for the courts and the drivers causing the accident. With this type of law, there are fewer cases having to be seen by the courts since determination of the cause of the accident is removed except in major accidents with deaths or large settlement costs. It is also advantageous for the bad drivers because the price the insurance company pays out is less due to only having to pay for one cars damage.

The disadvantages are to the innocent. They pay higher insurance premiums because insurance companies generally raise the premium rates for any policy holder that has collects on a claim. Also, the driver's record will show an accident, even though they were never guilty of causing an accident. It also makes it difficult for the victims to sue for pain, suffering and emotional distress cause by being in such an accident.

Changes and Repeals

Originally, 24 states enacted no-fault insurance laws; many have repealed or adjusted the laws. Some of the states had a time limit for the original law and let the time expire without continuing the laws. A few states that still have the laws have modified the law to better protect both the insurance companies and the drivers from phony claims and scams.

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