No Fault Insurance

Traditionally, car insurance pays for medical bills, injuries, and property damage based on who is at fault in an accident. While this is typically a cost effective model for the auto insurance companies, it is not always beneficial to consumers. For this reason, several states have adopted no fault insurance laws to protect drivers.

No fault insurance provides immediate medical coverage to consumers by eliminating the burden of determining fault. This makes car insurance more efficient and reliable for consumers - instead of waiting for weeks or months for an insurance company to determine fault, the insured can get the medical attention they need right away.

The types of no fault coverage available vary from state to state. All “no fault” states require insurance companies to provide coverage for medical and hospital expenses. Many also require companies to pay for rehabilitation expenses, such as physical therapy and in-home care. Some states mandate coverage for income loss, funeral and burial expenses, and transportation to and from medical appointments. A couple of states even require insurers to pay for the cost of hiring help to handle tasks that injured people cannot do, such as going to the grocery or mowing the lawn!

While no fault coverage may be beneficial to consumers, though, it is important to understand that this coverage can be quite expensive. No fault states set minimum coverage levels, and some even require all drivers to purchase at least the minimum amount. However, most insurance companies offer higher limits of coverage. It is a good idea to objectively look at your needs before purchasing a high level of no fault coverage.

Also, no fault insurance is not available in every state. Less than half of states recognize this type of insurance coverage - if you are not sure about whether your state does, ask your agent or visit you state's Insurance Department website.

Some states, such as Colorado, have recently moved away from the no fault insurance model, opting for the traditional liability model instead. As medical costs continue to rise, more and more states will likely tighten their no fault laws, making it more difficult for consumers to get the medical attention they need right away.