Various states have adopted “no-fault” liability insurance laws in order to speed up the claim process for minor auto accident injuries and to save insurance companies money arising from unjustified and/or frivolous lawsuits.
The type of no fault insurance coverage available to you will vary based on which state you live in. All no-fault laws are considered to be a form of personal injury protection, or PIP. With PIP coverage, you simply choose a dollar amount between $500 and $50,000 you’d like to be covered for. Rates are typically very high for coverage in excess of $10,000.
Add-on plans are one type of no-fault insurance coverage available in certain states. No rights to sue a negligent party are taken from you under this plan. You simply have the ability to add-on coverage to your traditional auto policy. You may receive money from your insurer without having to prove fault of another driver, and you retain the right to sue the negligent driver as well.
Some states allow for choice no fault coverage. You have the option to receive strictly no-fault benefits, without retaining the right to sue a negligent party, or you can choose to reject no-fault coverage and retain the right to sue a negligent party. Typically, your rates are reduced if you choose no-fault coverage with lower limits.
Modified no-fault states seek to limit your right to recover damages from the at-fault party. Here’s how it works. Ultimately, if the injuries are relatively minor in nature or inexpensive, typically below $2,500, your own insurance company will pay for the care you receive regardless of who was at fault for the accident.
With modified no-fault coverage there is either a “verbal” threshold, dealing with the types or severity of an injury, or a “monetary” threshold that provides a stated dollar amount the injury must not exceed. If the verbal or monetary threshold is surpassed, you would have the right to sue the at-fault party for damages.
Call your direct insurer or independent agent to determine what coverage you currently have or to make adjustments to your current policy. You may want to shop online for a few quotes in order to make sure you are getting the best coverage at the lowest rate possible.