Under a fault-based insurance system, your insurance company pays the claims of both drivers involved in an accident if the accident was your fault. If the accident was the other driver's fault, the other driver's insurance pays the claims of both drivers. If you have no-fault insurance, on the other hand, your insurance company will pay your personal injury claim no matter whose fault the accident was. Several states require no-fault auto accident insurance.
No-Fault Coverage is Limited
No-fault insurance covers certain types of personal injury claims, including medical bills, lost wages, funeral expenses, and loss of income to surviving dependents. Some policies provide limited coverage for damage to property such as buildings or parked cars. No-fault insurance may not cover damage to your car or claims for pain and suffering. You must buy a minimum amount of coverage. Coverage will not exceed strict policy limits. However, if the accident was the other driver's fault and your claims exceed your policy limits, you may be able to file a claim with the other driver's insurance company for the rest of your losses, depending on state law.
You Don't Have to Be Insured
Two types of insured people may file a claim under a no-fault insurance policy - direct insureds and indirect insureds. Direct insureds include the person named in the policy and other members of this person's household. Indirect insureds include passengers and pedestrians injured in the accident. Indirect insureds often must claim benefits under their own no-fault insurance policy if they have one. If they don't, they can claim benefits under either the vehicle owner's no-fault policy, or under any policy covering a vehicle involved in the accident.
Not All Vehicles Are Covered
No-fault insurance covers injuries caused by a motor vehicle. In many no-fault states, the term "motor vehicle" includes only vehicles with more than two wheels. Injuries caused by motorcycles, for example, may not be covered by no-fault policies in these states. Most no-fault policies also exclude commercial vehicles, such as taxis or delivery trucks, or specialty vehicles such as all-terrain vehicles.
You May Be Able to File a Lawsuit
If insurance does not fully compensate you for your losses, and if the accident wasn't your fault, you may be able to sue the other driver. In most states that require no-fault insurance, however, direct and indirect insureds may sue only for certain types of serious injuries, or for injuries where costs exceed a certain dollar amount. If you are entitled to sue, you may gain access to damages that a no-fault insurance policy wouldn't cover. These include pain and suffering, for example, or punitive damages.
An Insurance Lawyer Can Help
The law surrounding no-fault auto insurance is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact an insurance lawyer.