Many people have heard the term "no-fault insurance." However, do you understand what that actually means? In short, a no-fault insurance system is an auto insurance policy required by state law in which each driver purchases auto insurance that protects him or her and limits his or her ability to sue other drivers for damages while also protecting him or her from being sued for damages by the other drivers in most cases.

Therefore, if you are involved in an auto accident, your insurance company will pay your damages, up to your policy limits, regardless who was at fault. These limits must meet your state's minimum coverage if your state is a "no-fault" state. The other drivers involved in the accident would be covered by their insurance policies. The theory behind this system is to ensure every motorist would receive immediate coverage for damages, thereby reducing the law suits resulting from an accident. This would, in turn, help keep insurance premiums down.

However realistically, there is no "pure" no fault system in practice by any state in which drivers would totally be covered by their insurance policies and, therefore, nobody would sue the other driver for damages. In reality, every "no-fault" state utilizes some form of "no-fault" and standard liability system. Therefore, drivers are responsible for some damage costs that he or she is found "at-fault." Consequently, law suits can be permitted depending upon the monetary amount or severity of the accident.

Currently, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Puerto Rico are considered "true" no-fault states.

Arkansas, Delaware, Washington, DC, Maryland, New Hampshire, Oregon, South Dakota, Texas, Virginia, Washington, and Wisconsin are considered "add-on" states because they require insurance policy coverage that offer elements of the no-fault system which the true no-fault states feature.

The other 28 states: Alabama, Alaska, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Vermont, West Virginia, and Wyoming, feature the traditional "tort liability" system in which there are no restrictions on law suits.

Again, since there is no pure no-fault system in practice and every state's laws vary, it is recommended that you contact an experienced personal injury law firm to determine how fault and no-fault laws may affect your situation should you be involved in an auto accident and wish to recover damages for injuries sustained.

Minimum no-fault coverage limits vary between states. As previously stated, some state laws allow law suits depending the severity of injuries incurred, or if the total cost for damages reach a specified monetary dollar amount. Therefore, many no-fault systems will cover damages sustained up to a driver's policy limit, which must meet the state's minimum limits, but will also allow the injured party to sue for damages exceeding that specified limit.

You may have heard Personal Injury Protection (PIP) used synonymously with no-fault insurance. PIP is the name of the actual insurance policy under a no-fault system. Although PIP minimum coverage limits vary between participating states, they are similar in that the benefits usually cover most injury-related expenses including: medical costs, lost wages as a result of injuries, compensation for loss of services, funeral expenses, and death benefits. Generally, damages such as pain and suffering, and emotional distress and inconvenience are not covered by no-fault insurance coverage. It is important to note that medical expenses or lost income above your PIP limits are not covered. Typically, an additional insurance policy to cover physical property damage is not covered under PIP and is typically needed.

Choice No-Fault Insurance

Under this system, drivers can choose to retain elements of no-fault and the traditional fault or tort liability systems. States such as Kentucky, New Jersey, and Washington, DC offer versions of choice no-fault systems.

For example, the difference under a no fault system is that a driver is not allowed to sue an at fault driver for non-economic damages and is also protected from such suits if found at fault. Under choice no-fault, if that driver opts to retain his or her right to sue for personal injury under the traditional tort system, he or she can sue other drivers who have also elected to retain their tort liability rights. Keep in mind that the first party is not protected, and can, therefore, be sued by the second party.

Conclusion
Since situations resulting from an accident can get complicated, an experienced personal injury attorney specializing in motor vehicle accidents can help you sort out your rights and entitlements under the state in which the accident occurred. Therefore, they can clarify and recommend your best option under the applicable laws of that state. © Copyright 2005 The Auto Insurance Web Company