No matter where you live, you need to understand the different kinds of car insurance coverage that could come into play after a car accident. That's especially true in a no-fault car insurance state, where the kinds of mandatory coverage most often associated with no-fault may not necessarily cover all of your losses associated with the accident. In this article, we'll touch on the basics of no-fault car insurance, including the applicability of no-fault to vehicle damage claims after a car accident.
What is No-Fault Car Insurance?
Around a dozen states follow some version of a "no-fault" car insurance insurance system, where a vehicle owner's own insurance company -- through no-fault or "personal injury protection" (PIP) coverage -- pays for certain losses sustained by a car accident victim covered by the vehicle owner's policy, regardless of who was at fault for the accident.
In every state where no-fault is mandatory (and in the few states where policyholders may essentially choose whether to be bound by the no-fault system), there is a specific threshold at which the injured person may step outside the confines of no-fault and file a liability claim (meaning a third-party insurance claim or a personal injury lawsuit) against the at-fault driver. These thresholds are either monetary (medical bills associated with the accident must exceed a certain amount) or injury-related (the car accident injuries must qualify as "serious" enough under the state's statutory definition). Check the specifics of your state's laws or talk to an attorney for the details.
Who Is Covered Under No-Fault?
The specifics vary from state to state, but the no-fault or PIP protections of a car insurance policy almost always cover people beyond the policyholder or vehicle owner. For example, in Florida, PIP coverage also applies to:
- a policyholder's children (not just for accidents that occur in your car, but also for injuries that occur while riding on a school bus)
- members of the policyholder's household, and
- most passengers who lack PIP Insurance (as long as they don't own a vehicle).
What is Covered Under No-Fault?
The kinds of losses that are covered by the no-fault or PIP provisions of a car insurance policy will vary from state to state too. For example, in Minnesota, no-fault or PIP protection covers (up to certain limits):
- medical bills incurred after car accident injuries
- disability and lost income resulting from a car accident
- the cost of replacement services (household chores, etc.) made necessary by a car accident
- funeral and burial expenses, and
- economic loss benefits for survivors.
You may notice a glaring omission from this list: vehicle damage or other kinds of property damage. That's because, in Minnesota and almost all other no-fault states...
Property Damage Is NOT Typically Covered Under No-Fault
Most states have either excluded, or do not discuss, property damage in their no-fault statutory schemes. For example, Minnesota's No-Fault Automobile Insurance Act specifically excludes "benefits for physical damage done to property including motor vehicles and their contents." (Minnesota Statutes section 65B.44.)
One exception is Michigan, where the "Property Protection Insurance" component of a no-fault policy will pay up to $1 million for any damage your car does to other people’s real property in Michigan -- for example, if your car hits a house or a fence. Note that this PPI component will only pay for damage your car does to another vehicle if the vehicle was properly parked. PPI won't apply to vehicle damage caused by an accident between moving vehicles in Michigan, and it will never apply to damage sustained by your own vehicle. You'll need collision coverage and/or comprehensive coverage for those kinds of damages.
Your Have Other Options for Vehicle Damage After an Accident
A vehicle owner who wants coverage for accident-related damage to their own vehicle will probably have to buy separate collision insurance coverage. This kind of coverage lets you make a claim with your own insurance company for damage to or destruction of a covered vehicle -- up to the policy limits, of course -- regardless of who was at fault for the underling accident. You can even file your collision claim and collect the proceeds for fixing or replacing your car while you (or your insurer or your lawyer) are still negotiating with the other driver's insurance company.