Insurance Q&A: “Is California a no-fault state for auto insurance?”
Spoiler alert: California is not a no fault state for auto insurance. I repeat, not a no fault state.
The state still operates under the tort system, where individuals have the right to sue one another for compensation for bodily injury and loss resulting from an auto accident.
It has been this way for many years in most states. However, now a handful of states have enacted “no fault” laws in order to free up the court systems and save time/money for insurance companies and consumers in general.
These states include FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA and UT.
Under no fault laws, an injured driver doesn’t have to prove another driver is “at fault” for an accident in order to receive bodily injury compensation for resulting bills.
The injured person’s own insurance company simply pays the claim. This is referred to as personal injury protection, or PIP.
Some states allow the victim to also file a lawsuit if a certain dollar threshold or injury severity, or “descriptive” threshold are met as a result of the accident.
Monetary threshold states currently include HI, KS, KY, MA, MN, ND and UT. The monetary threshold may be as low as $2,500.
Additionally, serious injuries also allow for lawsuits to be filed in no fault states. The injury threshold states are FL, MI, NJ and NY.
Note that property damage is not covered under “no fault” laws. In order to seek compensation for damaged property, you must deal with the insurance company of the person who caused the damage.
“Add-on” coverage is available in some states as well. This coverage allows you to purchase personal injury protection, but remains a tort system for recovery, meaning you can still sue and be sued freely. Currently, AR, DE, MD, and Washington D.C. are add-on states.
There are three unique states that allow their drivers to choose to purchase personal injury protection and waive the right to sue, or decline PIP, and stick with the good old-fashioned tort system and continue to sue each other like crazy.
Check out the complete list of no fault insurance states.