What is No-Fault Auto Insurance?
People commonly use the term ‘no-fault auto insurance’ in reference to insurance companies that will provide financial support regardless of fault in a collision. However, this isn’t the most accurate explanation for no-fault insurance.
In fact, no-fault insurance refers to something entirely different. No-fault insurance is required of insurance companies in some states by law. It ensures policy holders will have access to financial support from their auto insurance provider, while they determine liability and collect information from parties involved. There are currently 12 states that have no-fault insurance laws of some sort in place, including: Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah.
In New Jersey, Pennsylvania, and Kentucky however, no-fault insurance is optional, at the preference of the driver.
A number of states have tried no-fault auto insurance law for short periods of time, only to find that the increased premiums were not were the additional protection.
If you have received no-fault benefits from someone else’s policy and are found at fault, you will likely have to repay the insurance company that gave you the benefit of the doubt to begin with.
No-fault insurance is by no means a viable replacement for health insurance. In fact, if you are in need of expensive and immediate health care, you will still need health insurance. No-fault insurance will typically cover additional costs such as co-pays.
Just because your state requires no-fault insurance, does not mean you can drive without auto insurance. Not only is it required by state law to carry auto insurance, but no-fault insurance only really protects you if you were not at fault.
No-fault insurance, in no way, offers coverage for property damage. Just because you have no-fault insurance does not mean any damage to property will be reimbursed to you. No-fault insurance pertains only to personal well-being matters, such as medical, disability, etc.
No-fault insurance laws have experienced a lot of abuse since their inception. Doctors and clinics have been known to take advantage of the readily available financing for expensive procedures to drive up the medical bills.
If you are living in a state that requires no-fault insurance, you may have noticed an increase in your premium over the years. This is due to insurance policy holders taking advantage of no-fault insurance to book additional medical treatments.