You’ve might have heard of no-fault insurance. But do you really know what it means and how it impacts your auto coverage?
If not, the following Q&A will help clarify things for you. (Along with this general overview, we recommend speaking with your local Erie Insurance agent for personalized guidance.)
What is no-fault insurance?
No-fault insurance applies to the Personal Injury Protection (PIP) part of your auto insurance policy, also known in some places as Medical Payments or First Party Benefits Coverage. PIP covers your medical expenses if you are in an auto accident. In some states, it can also reimburse you for lost wages and other related costs.
In a state with no-fault insurance laws, you file a claim for covered expenses with your own auto insurance company—regardless of who caused the accident. Along with collecting from your own insurer, no-fault insurance often restricts your ability to file a lawsuit.
Which states have no-fault insurance?
There are currently 12 states with no-fault insurance:
Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, Pennsylvania, North Dakota, and Utah.
In Kentucky, New Jersey, and Pennsylvania, there’s something slightly different called choice no-fault. In these states, drivers can opt out of no-fault rules to retain the right to sue under traditional liability laws.
Why do some states have no-fault insurance?
The idea behind no-fault insurance is to reduce expensive, time-consuming lawsuits (especially for minor injuries) and to ensure the prompt payment of medical claims.
If everyone can collect from their own insurer and lawsuits are limited to serious injuries, there are generally fewer court cases and quicker resolutions.
When can I sue another driver in a no-fault state?
States define lawsuit eligibility using either verbal or monetary thresholds. Verbal thresholds describe the severity or type of injury, while monetary thresholds specify a minimum dollar amount in medical expenses. Once a threshold is met, you can sue for damages like medical bills, though pain and suffering claims may still be limited.
- Verbal threshold states: Florida, Michigan, New Jersey, New York, Pennsylvania
- Monetary threshold states: Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, Utah
Do I still need uninsured or underinsured motorist coverage?
Yes—it’s strongly recommended. Even in no-fault states, uninsured and underinsured motorist coverage is important because:
- About 1 in 7 drivers lack insurance.
- Many drivers carry only minimal liability coverage.
- No-fault benefits may not fully cover lost wages or pain and suffering.
- Your health insurance may have high deductibles or coverage limits.
- Suing an uninsured driver can be costly and stressful.
Having this extra layer of coverage helps protect you financially and gives you peace of mind.
No-fault insurance can be complex, but your local Erie Insurance agent can help you understand your options and ensure you're properly covered.
Talk to your local Erie Insurance agent today to make sure your auto insurance plan fits your needs.
