What Does It Mean to Be in a No-Fault or At-Fault State?
Each state sets laws determining who handles paying for an accident after it occurs. When two parties collide, determining fault is not always the goal. In some states, each person’s insurance pays for the losses. How does this work? Are you in a no-fault or at-fault state? Here is a breakdown of what this means to you.
What is a No-Fault State?
In a no-fault state, drivers maintain insurance to cover losses they suffer during a car accident. This type of car insurance covers your own injuries and the damage you suffer. Fault does not matter in this situation. In some states, individuals need to buy PIP coverage as well. This helps cover the medical costs associated with your injuries during an accident.
In some states, individuals can still file a lawsuit against the responsible party if the amount of damage is severe. If the amount of loss exceeds the amount of car insurance available to cover losses, you may be able to file a claim against the responsible driver to recoup your losses. Not all states allow this, however.
What is an At-Fault State?
Also called a tort state, an at-fault state puts the blame and financial responsibility on individuals. The person responsible for the losses, including medical bills and property damage, is the one responsible for the incident. In these states, usually a police officer determines who is at fault. This decision comes from reviewing witness statements, gathering evidence, speaking to all involved and using a bit of science to determine what happened.
In an at-fault state, you maintain auto insurance called liability insurance. Your policy covers the losses other drivers suffer as a result of your actions or inactions. Liability insurance does not pay for your losses if you are responsible for them, though. Other forms of car insurance may offer some help.
It’s also important to know that in at-fault states if the liability insurance policy does not cover all of the damage, the victim is able to file a lawsuit against you to pay for additional losses. That is why it is so important to have proper auto insurance in place that offers enough protection. You might be able to add extra liability protection to help you respond to these scenarios however.
In all types of situations, your car insurance should match both local laws and your risks. Work with your agent to customize a plan that helps eliminate any risk of a lawsuit.