No-Fault Waivers: Understanding Your Auto Insurance Options

No-fault insurance, also known as Personal Injury Protection (PIP), is a type of auto insurance coverage that applies regardless of who is at fault in an accident. In no-fault insurance states, each party's insurance company covers their own medical expenses and other losses. This is in contrast to at-fault states, where the driver deemed responsible for the accident must compensate the other parties for damages and injuries. No-fault insurance aims to streamline the claims process and reduce the time and costs associated with resolving car accidents, but it may limit the compensation available for severe injuries.

No-fault insurance states

No-fault insurance, also known as personal injury protection (PIP), is mandatory in certain states. In no-fault insurance states, drivers are required to file claims for bodily injury with their own insurance company, regardless of who is at fault for the accident. This type of insurance covers medical bills and other accident-related expenses for the insured and their passengers.

As of February 2023, there are 12 pure or "true" no-fault insurance states, with Puerto Rico having its own mandatory no-fault insurance requirement. Three of these states are "choice no-fault" states, allowing drivers to opt out of buying a no-fault policy and retaining the right to sue for injuries suffered in an accident. These states are Kentucky, New Jersey, and Pennsylvania.

In no-fault insurance states, drivers are typically required to have a minimum amount of PIP coverage to help ensure they have financial protection in the event of an auto accident. This coverage is often in addition to other types of auto insurance, such as bodily injury and property damage.

No-fault insurance claims generally require the insured to provide a recorded statement of the accident and complete a medical exam with a physician selected by the insurance company. Failure to comply with these requirements may result in a claim denial.

It is important to note that no-fault insurance laws can vary from state to state, and it is always a good idea to consult with a local agent or insurance professional to understand the specific requirements and options available in your state.

Personal Injury Protection (PIP)

In a no-fault state, if a policyholder is injured in a car crash, their own insurance policy will cover their medical expenses, regardless of who caused the accident. PIP coverage is available primarily in no-fault states, and in some states, it is mandatory to have a minimum amount of PIP coverage. This coverage is in addition to other types of auto insurance, such as bodily injury and property damage coverage.

The purpose of PIP is to ensure that individuals injured in car accidents can get the medical care they need and recover any lost income or other expenses related to the accident. PIP coverage typically includes payment for medical and rehabilitation expenses, lost income, and funeral and burial expenses. It is important to note that PIP does not cover property damage.

The specific benefits and requirements of PIP can vary by state. For example, in New York, the basic No-Fault coverage provides up to $50,000 per person for economic losses, including medical expenses, lost earnings, and other necessary expenses related to the injury. In Massachusetts, PIP covers medical expenses, up to 75% of lost wages, and replacement services up to a limit of $8,000.

It is worth noting that if the cost of necessary medical care exceeds the PIP limits of the auto insurance policy, health insurance may cover the additional expenses. PIP policies have a per-person maximum coverage limit, which means that the coverage is limited to a certain amount per person if multiple people are injured in an accident.

Collision deductible waivers

A collision deductible waiver (CDW) is an optional feature that can be added to a car insurance policy to cover your deductible in the event of an accident where you are not at fault. This type of endorsement is not available in every state or with every insurance company. California and Massachusetts are the only states where CDWs are state-regulated; in other states, insurance companies define what a CDW is and how it may be applied.

How a collision deductible waiver works and when it applies depends on the guidelines set by your insurance company. However, there are some common restrictions that most companies follow:

• Actual cash value (ACV): The ACV of your vehicle must be more than the amount of your deductible.
• Fault determination: Most insurers require you to be not at fault for the accident. Some auto companies may require you to be 100 percent fault-free to have the deductible waived, while others may waive a percentage of your deductible based on your percentage of fault.
• Driver identification: The at-fault driver typically needs to be identified and found uninsured. If the driver is unidentified, the coverage will not apply, and if they are identified and have insurance, their property damage coverage will pay for your vehicle repairs.

A collision deductible waiver may not apply in some cases:

• You're at fault or partially at fault: The other driver has to be entirely at fault for you to qualify for a collision deductible waiver.
• You're a hit-and-run victim: Although rules vary by state, you can't typically claim a collision deductible waiver in a hit-and-run accident as you must identify the uninsured driver first.
• An insured driver hits your car (in some states): Depending on the state, a CDW may only apply if an uninsured driver damages your vehicle.

The cost of a CDW depends on the carrier, the amount of your deductible, and your overall policy and driving profile. The national average cost of CDWs ranges from $1-$12 per month.

Uninsured motorist coverage

No-fault insurance refers to how injuries are covered by car insurance. In a no-fault insurance state, if you're injured in an auto accident, you file a claim with your own insurance company to pay for related medical costs, regardless of fault. No-fault insurance is often called Personal Injury Protection (PIP). In no-fault insurance states, drivers are usually required to have a minimum amount of PIP coverage to ensure people have coverage if they're injured in an auto accident.

Uninsured motorist bodily injury (UMBI) may pay medical bills for both you and your passengers, while uninsured motorist property damage (UMPD) may pay for damage to your vehicle. Underinsured motorist bodily injury (UIMBI) may pay medical bills if you or your passengers are injured by a driver with insufficient coverage, and underinsured motorist property damage (UIMPD) may pay for damage to your vehicle in the same circumstances. Note that some states may require a deductible for UMPD/UIMPD, but UMBI/UIMBI generally doesn't include a deductible.

While not all states mandate uninsured and underinsured motorist coverage, around half require at least one of these coverages, and some may only require coverage for bodily injury. States that don't require uninsured and underinsured motorist coverage may still offer the option to purchase it. For example, Illinois requires both types of coverage, while New Hampshire requires both types of coverage to be included on every policy if insurance is purchased. Other states, like Massachusetts and South Carolina, only require uninsured motorist coverage.

No-fault insurance claim process

No-fault insurance, also known as Personal Injury Protection (PIP), is an insurance system that requires people injured in car accidents to use their own insurance coverage to pay for accident-related losses, regardless of who caused the accident. This system is in place in around a dozen US states, while a handful of others follow a "choice" or "hybrid" system, and all states offer some form of no-fault or PIP insurance as an add-on.

In a no-fault insurance state, drivers are required by law to file a claim with their own insurance company, which will then pay for certain financial losses related to their injuries. This includes lost income (up to a certain dollar limit), the cost of replacement services, and funeral costs if someone died as a result of the accident. No-fault insurance does not cover "pain and suffering" damages.

The process for submitting a no-fault insurance claim is straightforward. After a car accident, you submit your claim to your insurance company, which will then compensate you for certain financial losses, regardless of who caused the accident. This means that you don't need to worry about the insurance company denying your claim or having to prove that another driver was at fault.

However, no-fault insurance does not guarantee a settlement, and there are limitations on the types of compensation that can be claimed. Additionally, it's important to note that vehicle damage claims are typically not part of the no-fault scheme, and drivers usually rely on their own collision coverage or the at-fault driver's liability policy to cover these costs.

It's also worth mentioning that even in no-fault states, it may still be possible to sue the other driver in certain situations, such as when the accident caused significant injury as defined by state law, or when the accident resulted in medical bills above a certain threshold.

Frequently asked questions