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6. What is
"no-fault" insurance?
No-fault insurance is a system adopted in
some states that essentially bypasses the conventional legal
procedure which finds fault in many accidents. (This is the
procedure by which you hire a lawyer, file suit and possibly
go to court to prove the accident was the other guy's
fault.) No-fault simply does away with the concept of one
party or the other being at fault. There are no lawyers, no
court, no judge, no jury, no lengthy lawsuits against the
other party. This is considered beneficial to taxpayers,
because it eliminates costly legal proceedings that the
state must manage, and to insurance policyholders, because
it helps keep rates down.
If you are insured in a no-fault state and
have an accident, in many instances you don't go after the
other driver. You contact your own insurer and file a claim.
Your own insurance policy compensates you for damages,
medical expenses, lost wages, etc.
The type and range of no-fault coverage
varies from state to state. What defines the limitations of
no-fault policies can differ in two critical areas:
•Threshold—The
type or cost of damage/injury that triggers the need for
legal action.
• Mandated Benefit Level—The
package of benefits (medical, wage loss, replacement
services and other expenses) your state requires you to
carry.
The details of no-fault insurance can be
complicated. Contact your agent or your state's insurance
department for further information.
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