Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

Full Bio →

Written by

Benjamin Carr was a licensed insurance agent in Georgia and has experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. Benji is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

Full Bio →

Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Mar 29, 2022

Advertiser Disclosure

It’s all about veterans. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help veterans make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with one auto insurance company and cannot guarantee quotes from any single company. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for veterans interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance-related. We update our site regularly, and all content is reviewed by auto insurance experts.

What You Should Know

  • No-fault insurance is mandatory in 12 states and Puerto Rico
  • Your provider pays for your medical bills even if another driver was at fault
  • In Kentucky, Pennsylvania, and New Jersey, you can decide whether you want no-fault coverage or not

Searching for car insurance can be a tedious process, but it’s essential to protect you from unexpected expenses after an accident or bad weather. You can purchase no-fault auto insurance in 12 states, but what does no-fault insurance mean? No-fault car insurance means that your insurance will pay for your medical bills, no matter who was at fault after an accident. In other insurance systems, the insurance company of the at-fault driver will have to pay both parties.

No-fault insurance lets drivers avoid costly, stressful court battles. In this article, we’ll talk about what no-fault insurance covers, which states require it, how it works, how much it costs, and what to look for when choosing no-fault insurance.

What is covered by a no-fault insurance policy?

There are two different types of no-fault insurance, although only one is in use in the U.S.

With pure no-fault insurance, your insurance company pays for all of your damages, including medical and lost wages. This means there’s no need to sue.

The states with no-fault laws use a modified no-fault system instead. Drivers need insurance up to a certain limit and if their damages are beyond the state limit and they didn’t opt for additional coverage, they can sue an at-fault driver. However, people in modified at-fault states can’t sue for pain, suffering, or other personal claims below the limit. This helps limit legal expenses and get car insurance payments to drivers faster. It also keeps people from spending insurance payouts on legal fees.

We should point out that you will still need property damage liability insurance in no-fault insurance states. This is the insurance that will pay for damage to someone else’s property if you cause a collision. 

Compare quotes from the top auto insurance companies and save!

secured lock Secured with SHA-256 Encryption

Is no-fault insurance required by law in some places?

No-fault insurance is required by law in 12 states and Puerto Rico. Here are a few examples of what some states require and what that means:

  • New Jersey, Florida, Michigan, Pennsylvania, and New York have verbal thresholds. This means that people can only sue when damage exceeds a verbal limit. For example, people in some states can only sue after an injury that causes a permanent disability. It is called a “verbal” threshold because the limit is not a defined monetary sum, but instead by the nature of your injury. 
  • In Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah, there’s a monetary threshold instead. Drivers can only sue when their monetary damages are more than the threshold, which is expressed as a dollar amount. This helps keep court costs low and leaves more money for injured people.
  • New Jersey, Pennsylvania, and Kentucky have “choice” no-fault car accident claim laws that let motorists choose no-fault insurance or reject the lawsuit threshold and keep the right to sue after an accident whether or not the total damages exceed a verbal or monetary threshold.

In add-on states, you can add additional coverage for when someone else is at fault, but the benefits might not be as substantial as in no-fault states.

How does no-fault insurance work if you need to file a claim?

With a no-fault claim, your insurance company pays for any medical bills no matter who was at fault in a crash you are involved in. No-fault states have fewer legal disputes over car accidents, and they help people get their insurance payments faster, without spending as much money on lawyers.

If you have a car accident, call your local police station and file a report as soon as possible. Record the officer’s name and badge number, and take some pictures of the damage. When you file your insurance claim, it should include:

  • The driver’s name
  • The owner’s name
  • The policy number
  • Names and contact information for witnesses and any passengers
  • Your car’s location right after the accident or other incident

To make your insurance payout as high as possible, include as much information as you can.

How much does no-fault insurance cost?

The answer to questions like, “How much is no-fault insurance?” can be complicated. No-fault insurance often costs more than other types of insurance. People with no-fault insurance have less recourse to be paid for non-economic damages like pain or suffering.

The cost of no-fault insurance, which usually means personal injury protection (PIP) varies by state and by the amount of coverage you choose.

There are always unique circumstances for every driver, as well as other insurance discounts available that can lower your rates. 

Compare quotes from the top auto insurance companies and save!

secured lock Secured with SHA-256 Encryption

What to Look for When Getting No-Fault Insurance

A policy from a company with the financial stability needed to pay your claims promptly can give you the protection you need. Search for an insurer that also has low rates and good customer service. No-fault insurance requirements and coverage types vary from company to company, and state to state.