No-Fault vs. Fault-Based Insurance States

Just about everyone has heard the term “no-fault insurance” at some point. Maybe you heard it during a television ad for auto insurance or you may have been shopping for insurance and had a sales agent mention it. Do you really know what “no-fault” insurance is and how it works? It may come as a surprise that most states in America are not no-fault states.

At Heninger Garrison Davis, LLC, we help people who have been seriously injured in motor vehicle crashes. With our extensive experience, our attorneys have the diversity of practical knowledge to handle any case, large or small. Give us a call today to set up a completely free consultation with an attorney in your area.

Insurance Law by State

 Each state must decide how insurance claims will be handled. Ultimately, the Seventh Amendment to the U.S. Constitution guarantees us the right to bring a civil lawsuit before a jury when we are seeking compensation. However, the U.S. Supreme Court has repeatedly upheld the right of states to limit this right for public policy reasons. Therefore, in some states, this right is limited by no-fault rules under certain circumstances.

In general, there are two ways states can handle auto insurance claims: no-fault or tort-based (aka fault-based). To date, the following states maintain no-fault insurance rules, while the remainder stick to the traditional tort-based system:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah
  • Puerto Rico

What is a Tort-Based Insurance Claim?

In the majority of states, everyone is responsible for his or her own actions. In short, if you hurt someone, you are responsible for the damages you cause. Therefore, if you are injured in a car accident, you have a right to immediately seek compensation from the other party who caused the crash. If they have insurance, then you can file a claim against their insurance and attempt to seek compensation through negotiation, or you can file suit against them. If successful in securing a judgment, their insurance company will have to pay up to its policy limits to satisfy that judgment. This is the rule in places like Alabama and Georgia.

What is a No-Fault Insurance Claim?

 On the other hand, in states like Florida, New York, and New Jersey, there are certain legal thresholds you must meet before you can proceed with a claim against a negligent driver who hurts you. Rather than immediately filing suit or even filing a claim with their insurance carrier, you must first meet a few hurdles. Depending on the state, these can vary. In some places, there is a monetary threshold, meaning you must show that your medical bills or lost income exceed a certain amount. In other places, the requirement may have more to do with the severity and nature of your physical injuries.

In a no-fault state, you must typically first file a claim with your own insurance company, seeking compensation through your personal injury protection (PIP) coverage. Once you can show that this is exhausted or that your injuries are severe enough to exceed PIP, then you can shift your claim to the other side, seeking compensation from the at-fault party.

This requirement does not apply to everyone. In some locations, motorcyclists, bicyclists, and pedestrians may be exempt from this requirement, as are certain out-of-state residents or passengers. To check the rules in your state, contact an experienced auto accident lawyer who can help you better understand your options after a collision.

The Benefits of Speaking to a Lawyer Early

 A lot of people make the mistake of trying to handle their own insurance claim, thinking that if they run into problems they can always call a lawyer then. While this may work out okay in some situations, it is usually a bad idea. For one, many of the critical decisions that can make a huge difference in your financial recovery after an accident are made in the 24-48 hours after the crash. One small mistake, and you could lose tens of thousands in compensation, or worse yet, you could jeopardize your entire case.

Furthermore, the longer you wait, the harder it can be to build a strong case. For instance, consider what might happen if you fail to get the proper diagnosis early enough. You may fail to meet the threshold for no-fault rules, leaving you limited to just your PIP coverage. An experienced attorney can make sure you get the care you need and that your claim is established properly from the start.

Call Heninger Garrison Davis, LLC today to speak with an attorney in your state who can help you build a strong case and fight for fair and just compensation.




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