How No-Fault Car Accident Claims Work: Whose Insurance Pays for Damages?

Get the facts about no-fault accident claims. Learn when your insurance company pays and when you can go after the other driver for your damages.

Traditional liability insurance policies, still the norm in most states, won’t pay a victim’s claim until the insurance company determines who caused the car accident. Generally, the burden is on the victim to prove the insured’s fault.

To cut down on lawsuits and allow accident victims to receive a faster payout, several states passed no-fault laws allowing victims to recover medical expenses from their own insurance company.

No-fault states require auto policies to include Personal Injury Protection (PIP) insurance coverage.

Motorists in no-fault insurance states are still required to carry liability coverage for bodily injury and property damage. At-fault drivers can be held liable for the victim’s vehicle damage and personal injuries that are severe enough to exceed the state’s threshold for PIP coverage.

No-Fault Insurance vs. Traditional Liability Insurance

  • In no-fault insurance states, drivers must first look to their own PIP coverage for injury expenses, regardless of who was at fault.
  • In traditional liability or “tort” states, at-fault drivers, or their insurers, are responsible for paying the other driver’s medical expenses and property damage.

How No-Fault Car Insurance Works

The No-Fault Insurance Claim Process

Step 1: Notify your insurance company of the accident and your desire to file a PIP claim. Your claim will be assigned to an adjuster and you will get a claim number.

Step 2: Explain what happened to the insurance adjuster. Be careful if they ask for a recorded statement. Even though it’s your own insurance company, they’re still in business to make a profit and don’t want to pay out any more than they have to.

Step 3: Provide medical records to support your injury claim. Don’t sign a “general” release that provides access to your medical history for the past five or ten years.

Step 4: Submit proof of related expenses. Gather receipts for out-of-pocket expenses like OTC pain medications and bandages. If you had to hire someone to shovel snow or mow your lawn while you were laid up, get an invoice or receipt. Also ask your employer for a statement of lost wages.

Step 5: Negotiate your settlement. When your medical records and other documentation are reasonable for the scope of your injuries, the insurance company should pay your claim promptly, with little or no discussion.

You may need a few rounds of negotiations to settle your claim if the adjuster has questions about the amount of time you were off work, a pre-existing condition, or any inconsistencies in your records.

What No-Fault Insurance Covers

If you live in one of the 13 jurisdictions with mandatory no-fault insurance laws, your car insurance policy must include Personal Injury Protection (PIP).

Depending on the laws in your state, PIP will cover:

  • Medical bills
  • Out-of-pocket expenses for things like medications, bandages, crutches, etc.
  • Lost wages
  • Funeral expenses
  • Replacement services, like the cost of childcare while you’re recovering

PIP covers reasonable and necessary medical expenses. Adjusters know how much it costs to treat a broken arm or whiplash. Excessive testing, treatments, or inflated bills will be challenged and may be rejected. Likewise, insurance companies more readily accept treatments provided by a medical doctor, rather than a chiropractor or other alternative health care provider.

What No-Fault Insurance Doesn’t Cover

PIP coverage does not compensate injured victims for pain and suffering or emotional distress. PIP is only for injury claims, up to the stated limits, and it may not be enough for severe injury claims.

In no-fault states, you can’t seek compensation from the at-fault driver for most injuries.

The upside to no-fault insurance is a faster settlement of reasonable and necessary medical bills for you and your passengers, no matter who was at fault for a car accident.

Property Damage

No-fault insurance rules don’t apply to property damage claims.

You can file a property damage claim with your own insurance if you carry collision coverage, but you will probably have to pay a deductible. Or, you can file a property damage claim with the at-fault driver’s insurance company.

Property damage may include:

  • The cost of your car repairs
  • Rental costs while your vehicle is in the shop
  • Replacement costs for personal items lost in the crash, like eyeglasses, clothing, or a laptop
  • The book value of your vehicle if it’s a total loss

Exception to No-Fault Laws for Serious Injuries

States with no-fault laws allow exceptions for severe, high-dollar injury claims that meet or exceed the state’s “threshold.”

Each no-fault system has rules that allow seriously injured claimants to pursue the at-fault driver for damages, including amounts for pain and suffering.

Threshold claims can include: 

  • Wrongful death claims
  • Claims for injured children
  • Injuries resulting in disability for any length of time
  • Disfiguring injuries to the face or body
  • Any permanent injuries

Case Example: Victim’s Injuries Exceed Florida No-Fault Threshold

Rita Johnson was driving to work in Pensacola, Florida. She was proceeding through an intersection with a green light when she was T-boned by an SUV driven by Sam Martinez. Sam had been responding to a text from his wife and failed to stop for the red light.

Sam was cited at the scene for failing to obey a traffic signal, failing to yield the right of way, and texting while driving.

Rita was taken by ambulance to the nearest trauma center where she was treated for head and facial lacerations, internal injuries, and compound fractures to her right arm and leg. Rita was left with limited use of her right arm and permanent scarring to her face, arm, and leg.

Rita’s no-fault auto policy included the state-required $10,000 in Personal Injury Protection (PIP) coverage.

Rita incurred more than $50,000 in medical bills and $17,000 in lost wages. Because Rita’s hard costs exceeded her PIP coverage, and she suffered permanent scarring and loss of the full use of her right arm, her damages meet Florida’s no-fault threshold.

Rita’s attorney filed a bodily injury liability claim with Sam’s auto insurance carrier, demanding $250,000 for Rita’s medical expenses, lost wages, replacement services, and her significant pain and suffering. The claim was settled out of court for $200,000.

Although PIP does not cover pain and suffering, seriously injured car accident victims are allowed to pursue compensation for all their damages from the at-fault driver’s liability coverage. 

Sample No-Fault Car Accident Settlements

Most no-fault state laws mandate between $5,000 and $10,000 in PIP coverage. You may choose to purchase higher levels of PIP coverage at an increased premium cost.

Keep in mind that PIP won’t compensate for pain and suffering. No-fault settlements are limited to reasonable hard costs for medical treatments, lost wages, and in some states, replacement services.

  • Concussion: The average cost of an uncomplicated concussion is about $800 for an emergency room or urgent care visit, an x-ray or CT scan, and a follow-up visit. Add another $800 for a $20 per hour employee who misses a week of work, and a few out-of-pocket expenses for a total average settlement of $1,700.
  • Whiplash: Mild whiplash injuries arising from a low-impact rear-end collision can cost up to $4,000 for emergency room diagnosis, treatment, and a cervical collar. Assuming $1,600 for two weeks off work at $800 per week, and $2,000 for physical therapy, it adds up to a total no-fault settlement value of $7,600.
  • Arm Fracture: Medical costs of a broken arm without surgery can run up to $3,000. Add $800 for lost wages for an estimated settlement value of $4,000.

Severe injury claims that are likely to exceed your state’s no-fault threshold should be handled by an experienced car accident lawyer. Basic calculations for injury claim compensation will factor in pain and suffering.

No-Fault States and Territories

Twelve states and Puerto Rico require no-fault insurance:

Florida
Hawaii
Kansas
Kentucky
Massachusetts
Michigan

Minnesota
New Jersey
New York
North Dakota
Pennsylvania
Utah

Kentucky, New Jersey, and Pennsylvania allow policyholders to choose between no-fault and traditional auto insurance.

The District of Columbia and ten states allow PIP coverage to be added on to auto insurance policies. Only D.C. restricts policyholders with PIP coverage from suing the at-fault driver.

The states with add-on PIP and no lawsuit restrictions are:

Arkansas
Delaware
Maryland
New Hampshire
Oregon
South Dakota
Texas
Virginia
Washington
Wisconsin

Protecting Your Injury Claim in a No-Fault State

Even in a no-fault state, what you say and do after a car accident will have a big impact on the success of your claim.

You don’t have to prove who caused the crash to file a PIP claim with your insurer. But what if your PIP policy limits aren’t enough to cover your injuries? Or the other driver blames you for property damage?

Protect your financial future. Start gathering evidence at the accident scene.

Immediately after an auto accident:

  1. Call 911: Always call 911 after an accident, even just a fender-bender. Tell the dispatcher you are injured, and if you know of anyone else who might be hurt.
  2. Medical care: Let paramedics treat you at the scene. Shock and stress can mask injury symptoms. You could be badly injured and not realize it. If you aren’t taken directly to the hospital, seek medical attention as soon as possible. Refusing or delaying medical treatment after an accident gives the insurance company a good excuse to deny your claim.
  3. Photographs and videos: Try to take photographs and a video of both cars, the surrounding area, and debris on the road. You can’t take too many pictures. Pictures of your injuries taken at the scene and throughout your recovery will also help your claim.
  4. Look for witnesses: Talk to anyone who saw the accident. Independent witness statements can be very convincing evidence to prove the other driver’s fault.
  5. Police report: In most cases, when you call 911 the police will come to the scene. An officer will investigate the crash and prepare a formal police accident report. Police reports are convincing evidence of fault that insurance adjusters take very seriously.

Notify Your Insurance Company

Even if you don’t think you’re injured or think the accident wasn’t your fault, you have a contractual obligation to notify your insurance company after an accident.

Almost every auto policy has a “notification and cooperation” clause stating you agree to tell the insurance company about every accident, and you also agree to cooperate with the company’s investigation of the accident.

The notification and cooperation clause will have language like this:

“Insured (you) agrees to notify the insurer (your insurance company) of any accidents and thereafter comply with all information, assistance, and cooperation which the insurer reasonably requests, and agrees that in the event of a claim the insurer and the insured will do nothing that shall prejudice the insurer’s position…”

Cooperating with your insurance company’s investigation can get sticky. Insurance companies hate to shell out money for injury claims. Always on the lookout for fake injury scams, the adjuster may start treating you with suspicion.

If your PIP claim is denied, or you feel the adjuster is making unreasonable demands for proof of your injuries, you may need a personal injury attorney to help you win a decent payout.

Your attorney will know if the insurance company’s behavior and mishandling of your injury claim are grounds for a bad-faith lawsuit. Bad faith lawsuits can lead to thousands of dollars in jury verdicts against the offending insurance company.

There’s too much at stake to handle complicated car accident claims on your own. There’s no obligation, and it costs nothing to contact an experienced personal injury attorney to discuss the value of your claim.

Charles R. Gueli, Esq. is a personal injury attorney with over 20 years of legal experience. He’s admitted to the NY State Bar, and been named a Super Lawyer for the NY Metro area, an exclusive honor awarded to the top five percent of attorneys. Charles has worked extensively in the areas of auto accidents,... Read More >>