Understanding No-Fault Insurance

Under traditional systems of accident law, or an “at-fault system,” people injured in a car accident may sue the responsible party to recover damages sustained as a result of the accident. While most states adhere to an at-fault system of accident law when it comes to automobile accidents, there are several states that have a “no-fault system” in place.

No-fault insurance laws limit a person’s ability to seek legal damages from the person responsible for their accident; they are designed to reduce the number of legal actions taken against insurance companies in an attempt to keep car insurance rates low for drivers.

Under no-fault insurance laws, an insurance company should pay the damages sustained by their policy holder in a car accident regardless of who is at fault for causing the accident. That means if you have a car accident under a no-fault insurance policy, your insurance company should cover your accident-related expenses up to your policy limit, and you may only sue the responsible party in limited circumstances.

In the United States, no-fault insurance states operate under a modified system, allowing injured people to seek compensation for damages if certain conditions are met. These conditions include:

• Verbal Threshold—people who suffer serious injuries (e.g., broken bones, brain damage, spinal cord injury, etc.) and surviving family members of a person killed in an accident may seek compensation for non-economic damages, like pain and suffering. “Serious injuries” are defined differently in each state that has no-fault insurance laws.

• Monetary Threshold—people who reach a certain dollar amount in economic losses directly related to an accident may sue the person responsible for the accident. Dollar amounts vary from state to state.

It is important to discuss your situation with an experienced personal injury attorney in your state to determine what action (if any) you may take against the person responsible for your car accident-related injuries. A qualified personal injury attorney should also be consulted if you are having difficulty receiving compensation from your own insurance company.