After a car accident, one of the first things victims want to do is assign blame and file a claim for damages. While this is understandable, it can also lead to a backlog of accident-related lawsuits. Some states have attempted to address this problem by adopting a no-fault system.

No-Fault Auto Insurance Laws

Under the no-fault system, it does not matter who is to blame in an accident. The injured person's insurance pays all medical bills and related expenses, as well as lost wages, up to the policy limits.

The ability to sue for non-monetary damages, like pain and suffering, is limited to cases with medical expenses that exceed a certain threshold. Each state defines this threshold differently, so it's worth talking to a lawyer if your injuries are severe or long-lasting.

Only 12 states currently use this system, and they are:

  • New York
  • New Jersey
  • Pennsylvania
  • Massachusetts
  • Kentucky
  • Florida
  • Michigan
  • Minnesota
  • Utah
  • Kansas
  • North Dakota
  • Hawaii

No-fault insurance applies only to physical injuries and lost wages. Property damage still falls under fault rules.

A few "fault" states do give residents the option to purchase a no-fault add-on to their policy so that their insurance company will cover their personal injury claims. In Maryland, Arkansas, Delaware and the District of Columbia, you can get the benefits of quick payment of your medical bills while retaining the right to sue the other party for pain and suffering.

Fault Auto Insurance Laws

All the remaining states continue to use the fault system, in which the parties involved in the accident must prove fault before the insurance companies will make any settlement payments. Multiple people can be at fault, and each person's settlement may be reduced based on his or her share of the blame.

If you don't agree with an insurers decision, you may file a lawsuit to recover additional damages, either monetary, such as lost wages, or non-monetary, like emotional distress. This is the situation that no-fault states are trying to avoid.