No-Fault vs. At-Fault Car Insurance: How Coverage Differs
Quick Answer
If you get hurt in a car accident in a no-fault state, you’ll file injury claims with your insurer. In at-fault states, the at-fault driver’s insurance company will cover medical expenses for you and your passengers.
Car insurance can be complicated, and every state has its own unique requirements regarding the type of coverage you need. If you or your passengers get hurt in an accident, no-fault insurance can help pay for medical costs and lost wages—no matter which driver is to blame. But in some states, the at-fault driver's insurance company will help cover these costs. Some states require no-fault insurance, while others offer it as an optional add-on, but it isn't available in all states.
No-Fault vs. At-Fault Car Insurance
Both at-fault car insurance and no-fault insurance can cover medical expenses and lost wages after an accident, but there are some key differences to be aware of. Here's a side-by-side comparison of how these types of car insurance are alike and different.
| No-Fault Insurance | At-Fault Car Insurance | |
|---|---|---|
| Will it cover my medical expenses if I'm injured in an accident caused by another driver? | Yes. In no-fault states, you're required to file injury claims with your insurer first. | Yes. In at-fault states, the at-fault driver's insurance company helps pay for medical expenses for you and any passengers who were injured in your car. |
| What about accidents that I cause? | No-fault insurance helps pay for your medical expenses and lost wages, regardless of who's at fault. Your passengers are also covered. | If you're at fault in an accident, your liability coverage will help pay for medical expenses and property damage you cause to others. But this does not cover injuries or damage that you, the at-fault driver, suffer. |
| Is it required? | Some states require drivers to carry no-fault insurance, others offer it as optional coverage, and some states don't offer it at all. | Some states allow drivers to choose between no-fault insurance and at-fault car insurance. |
| Do you have the right to sue an at-fault driver after an accident? | In most cases, no-fault states limit a driver's ability to sue an at-fault driver following an accident. | There's no limit to a driver's right to sue the at-fault party after an accident. |
What Is No-Fault Insurance?
No-fault insurance is sometimes referred to as personal injury protection (PIP). It comes into play if you're involved in an accident that results in injuries to you or your passengers, no matter who's to blame. If this happens, you'll file a claim with your own insurance company. No-fault insurance typically covers:
- Accident-related medical costs
- Lost wages
- Housekeeping, child care and other routine services that your injuries prevent you from doing yourself
- Funeral costs
Whether you can purchase no-fault insurance depends on where you live. No-fault states require drivers to purchase PIP coverage. Three at-fault states do as well.
| No-Fault States | At-Fault States That Require PIP Coverage |
|---|---|
|
|
Kentucky, New Jersey and Pennsylvania are choice no-fault states. That means drivers can choose to opt in to the no-fault system or go with at-fault car insurance (also known as tort insurance).
What Isn't Covered by No-Fault Insurance?
No-fault, or PIP, coverage, is designed to cover accident-related medical bills and other expenses—but it does not extend to other drivers or their passengers. If they're injured in an accident, and you're in a no-fault state, they'll need to file a claim with their own insurance company.
Property damage is also off the table. That includes damage to your car, another vehicle or any other property that's affected by an accident. Instead, collision insurance or liability coverage will kick in.
No-fault insurance also doesn't cover theft, weather-related damage or damage caused by falling objects. Comprehensive insurance is designed to cover these events.
Can I Sue Another Driver if I Have No-Fault Insurance?
No-fault states typically limit a driver's ability to sue an at-fault driver for damages. In most cases, the only exception is if another driver causes an accident that results in:
- A severe injury, such as death or disfigurement
- Medical bills that exceed a certain monetary threshold
What Is At-Fault Insurance?
If you live in an at-fault state and you or your passengers are injured in an accident that's caused by another driver, that driver's liability insurance will help pay for any related medical costs, up to a certain point. This coverage will also help pay for property damage caused by an at-fault driver.
What Isn't Covered by At-Fault Insurance?
In terms of coverage, it's important to understand how things work if you're at fault. If you're hurt in an accident that you caused, your injuries will not be covered by your insurance unless you have personal injury protection or medical payments coverage (MedPay). The following six at-fault states allow drivers to carry optional PIP coverage:
- Arkansas
- New Hampshire
- South Dakota
- Texas
- Virginia
- Washington
MedPay is an optional add-on that's available in some at-fault states, though Maine and New Hampshire require it. Like PIP, it covers medical bills and funeral expenses from injuries sustained in an accident, regardless of who's at fault. However, lost wages, household services and child care expenses are not covered.
Learn more: Auto Insurance Add-Ons That Can Save You Money
Can I Sue Another Driver if I Have At-Fault Insurance?
Drivers who suffer injuries or damages in at-fault states have more leeway when it comes to lawsuits. The at-fault driver can be sued for pain and suffering, as well as medical expenses related to an accident they caused.
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The Bottom Line
No-fault insurance and at-fault car insurance operate differently. The type of coverage you're required to have depends on your state, though you might be able to purchase optional add-on coverage to provide extra protection. Your personal risk tolerance and financial situation are important factors when determining how much car insurance you need. What matters most is ensuring that your policy meets your state's requirements while providing adequate coverage.
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About the author
Marianne Hayes
Marianne Hayes is a longtime freelance writer who's been covering personal finance for nearly a decade. She specializes in everything from debt management and budgeting to investing and saving. Marianne has written for CNBC, Redbook, Cosmopolitan, Good Housekeeping and more.
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