How No-Fault Auto Insurance Works
According to the website AutoInsuranceWeb.com, no fault insurance is a commonly-used term in the industry that is often misunderstood by consumers. No-fault insurance does not mean that a driver will get a speedy, no-questions-asked pay-out, but it does protect drivers from lawsuits.
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Definition
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No-fault car insurance is a state-mandated policy that forbids drivers from suing another driver's car insurance company after an accident, even if the other driver was at fault. Under no-fault law, the policy-holder's insurance company is responsible for the damages to the policy-holder's car only, and not any other third-party drivers involved in the accident. This is good news for insured drivers, but very dangerous territory for uninsured or under-insured drivers, who cannot sue for damages if the accident was not their fault.
Benefits
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The no-fault car insurance system was enacted to protect motorists from heavy financial losses arising from post-accident litigation, to keep car insurance premiums down, and to ensure speedy coverage after a car accident to all parties.
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No-Fault States
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Currently, only 12 states are considered no-fault states, they are: Pennsylvania, Massachusetts, Utah, Florida, Kansas, Kentucky, Michigan, Minnesota, New Jersey, New York, North Dakota and Hawaii.
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References
Resources
- Photo Credit road accident image by Nicola Gavin from Fotolia.com
