What is no-fault auto insurance and which states have it?

No-fault insurance is a system of auto insurance that mandates an insured driver's policy pays for injuries that occur in an accident, no matter who was at fault in the crash.

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In states with no-fault insurance, your insurance company pays for your expenses and the other driver’s insurance pays for his or her expenses. Individual state laws dictate whether other insured drivers injured in your car will be covered by their own policy or by your policy. 

Although the District of Columbia and 23 states permit policyholders to receive compensation from their own insurance companies, only 12 are considered to be true no-fault states – Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah legally limit the circumstances under which you can sue the person who caused the accident. 

Insurance coverage in no-fault states

True no-fault states require drivers to purchase minimum levels of personal injury protection (PIP) coverage. The amount of coverage required varies by state, as does the nature of the coverage.  Depending on the state, PIP coverage may reimburse the policyholder for medical and other accident-related expenses as well as lost wages.

Unless certain conditions apply, true no-fault states restrict your ability to sue the person who caused the accident. Generally, you have to meet one of two thresholds before you can sue:

• Verbal threshold. The injuries must result in death or significant disfigurement.
• Monetary threshold. The expenses must exceed a set dollar amount.

Because there are different laws and interpretations of no-fault insurance laws and those laws may be under review and subject to change, it's your responsibility to know what your insurance policy covers. Work with your insurance company representative to understand your no-fault auto insurance options and make the right choices to protect you and your family.