What is No-Fault Car Insurance?

In the United States, it is up to state governments to set rules and regulations for the car insurance industry. Some states opt to use a no-fault car insurance system in an attempt to reduce tort claims and lower caseloads for the state's judicial system. No-fault car insurance provides coverage for the insured, regardless of role in the accident.

• No-fault car insurance allows an individual to have all auto accidents covered under their own insurance in exchange for giving up the right to pursue damages for personal injury from other involved parties.

• Some states allow varying degrees of no-fault insurance coverage. This means that in some situations an individual with no-fault coverage may still be able to pursue a personal injury claim against another party. This provision is called a verbal threshold, and the limits as to what is allowed vary from state to state. In most cases, it includes certain types of claims such as death, dismemberment, and other permanent and significant injuries. A verbal threshold is different from a monetary threshold, which is used in some states, and is adopted in an attempt to prevent inflated damage estimates.

• There are states that have a no-fault car insurance clause that allow citizens to opt-out out of the program and instead elect traditional automobile insurance coverage.

• The aim of no-fault car insurance is to eliminate the need of the legal system to interpret the subjective roles in an accident, instead relying on individual coverage to handle costs. With no need to arbitrate claims, the caseload of the courts is reduced. Additionally, in states that have verbal or monetary thresholds, the belief is that cases that have a significant claim or damages will be resolved faster.