Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati....

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Mar 28, 2022

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The Full Review

  • No-fault insurance means drivers submit injury claims with personal injury protection (PIP) coverage through their own insurance company
  • There are 12 no-fault states, and three states allow drivers to choose
  • At-fault drivers still pay for property damage in no-fault states

Although most states hold at-fault drivers responsible for bodily injuries, 12 no-fault states require drivers to use their insurance for injuries. A no-fault state mandates PIP to pay for bodily injury claims.

However, at-fault drivers are still responsible for property damage. Not to mention, drivers still need collision and comprehensive coverage to protect their vehicles.

While the idea behind no-fault auto insurance was to reduce claims and make the process faster, no-fault states usually see higher rates and insurance fraud.

Read on to learn more about no-fault states and how no-fault auto insurance works.

What is no-fault insurance?

The term “no-fault insurance” is a bit misleading. Drivers in no-fault states still pay for property damages caused in an accident. However, the difference lies in who pays for bodily injuries. Every state has different auto insurance requirements, so it’s crucial to determine whether you live in a no-fault state.

In at-fault or tort states, police and insurance companies decide who caused the accident. Then, the at-fault driver’s car insurance pays for property damage and bodily injuries caused to others.

What is a no-fault state? A no-fault state prohibits drivers from filing bodily injury claims with the at-fault driver’s insurance company. Instead, drivers must carry personal injury protection to cover their injuries, regardless of fault in the accident.

PIP covers medical bills, lost wages, funeral expenses, child care, and other medical-related costs. Only people with severe injuries can sue the at-fault driver in no-fault states. In addition, each state has its own definition of severe.

For example, let’s say someone runs a red light and crashes into you. While that driver’s car insurance pays for damages to your vehicle, your insurance pays for injuries. The only time the other driver pays for your injuries is if they are severe.

So, if you broke your arm, your insurance pays. However, if you have significant injuries and require long-term recovery, your state may allow you to sue the driver.

Regardless of where you live, minimum auto insurance requirements won’t cover damages to your vehicle. You should add collision and comprehensive coverage to protect your car since states usually only require liability, PIP, and uninsured/underinsured motorist coverage.

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Which states are no-fault states?

There are currently 12 no-fault U.S. states. According to the Insurance Information Institute, an additional five states repealed their no-fault laws and became at-fault states.

A no-fault state requires drivers to file injury claims with their own insurance company, no matter who is at fault.

This table shows the 12 no-fault states and their insurance requirements.

No-Fault States Auto Insurance Requirements
StateBodily Injury Liability (BIL) Per Person/Per AccidentProperty Damage Liability (PDL)Personal Injury Protection (PIP)Uninsured/Underinsured Motorist (UM/UIM) Per Person/Per Accident
Michigan$50,000/$100,000 BIL,$10,000 outside Michigan, $1 million inside Michigan$50,000-$250,000$0.00
New Jersey$0.00$5,000.00$15,000.00$0.00
New York$25,000/$50,000$10,000.00$50,000.00$25,000/$50,000
North Dakota$25,000/$50,000$25,000.00$30,000.00$25,000/$50,000
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Kentucky, New Jersey, and Pennsylvania allow drivers to choose between no-fault and traditional car insurance. In addition, Washington, D.C. enables drivers to choose after an accident, and 10 other states require drivers to carry PIP coverage.

Many no-fault states face higher insurance rates and fraud. It is unclear if the remaining no-fault states will keep the current laws or return to at-fault auto insurance.

For example, Michigan’s full coverage car insurance rates are among the highest in the country because of the extremely high PIP requirements and fraud rates. Until recently, Michigan guaranteed unlimited lifetime medical benefits to car accident victims.

What are the advantages and disadvantages of no-fault auto insurance?

No-fault auto insurance attempts to limit frivolous lawsuits and speed up the claims process. States with these laws intended to reduce car insurance rates, but instead, there were increased car insurance rates and fraud.

No-fault insurance has advantages and disadvantages. Advantages of no-fault auto insurance include:

  • Limited frivolous injury lawsuits
  • Quicker settlement of injury claims through your insurance company
  • Funeral expenses, lost wages, and medical expenses paid by PIP coverage
  • Lower rates due to limited lawsuits
  • Lawsuits limited to severe bodily injuries

Though there are advantages of no-fault insurance, there are also disadvantages, some of which include:

  • Property damage being the driver’s responsibility
  • High rates with PIP coverage
  • Higher injury fraud, since the state doesn’t determine fault
  • Higher auto rates after a claim, even if you aren’t at fault

States determine whether the advantages of no-fault insurance outweigh the disadvantages. Regardless, ensure you carry the minimum amount of insurance required.

Experts encourage drivers to increase their limits and add full coverage for more protection. Compare multiple companies to find the cheapest full coverage auto insurance, regardless of whether you live in a no-fault state.

No-Fault States: The Bottom Line

Drivers in no-fault states use their insurance if they get injured in an accident. Your state determines if injuries are severe enough to warrant a lawsuit.

No-fault states require PIP coverage, which pays for medical costs, lost wages, and funeral expenses, but it will raise your car insurance rates.

Currently, there are 12 no-fault states. While three states allow drivers to choose no-fault or at-fault coverage, the rest use traditional at-fault or tort auto insurance. However, at-fault drivers are responsible for property damages they cause, no matter where they live.

Though no-fault auto insurance aims to speed up the claims process and minimize lawsuits, higher rates and insurance fraud also occur.

If you live in a no-fault state, increase coverage amounts and add collision and comprehensive coverages for more protection.