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At-fault vs. no-fault accidents

Two cars in collision on roadway
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When you get into an accident with another driver, your car insurance policy can step in to help protect your finances from the fallout. However, insurance claims are settled differently depending on your state’s fault laws. In a no-fault state, your personal injury protection (PIP) insurance covers your own medical bills, whereas in an at-fault state, the at-fault driver’s bodily injury liability coverage pays for the other driver’s hospital bills. Understanding how claims are settled in your state could help you feel more comfortable with the claims process if you are involved in an accident.

At-fault accidents vs no-fault accidents

Car crashes can involve numerous scenarios and while each accident is unique, there are standardized ways of handling the aftermath. After an accident, an auto insurance claim is generally filed by the at-fault party. The claim will be handled according to the state’s fault laws. Currently, 12 states and Puerto Rico follow no-fault insurance laws, with the other 38 states and Washington, D.C. being considered at-fault states.

Keep in mind that there is a difference between accidents that occur in no-fault states and not-at-fault accidents. A no-fault accident is a crash that occurs in a state with no-fault laws. A not-at-fault accident occurs when you are not the cause of an accident, like when someone rear-ends you.

Accidents in at-fault states

In an at-fault state, also called a tort state, a driver who causes a car crash is responsible for compensating the other party or parties for their losses. This can be done with an insurance claim or the at-fault driver can pay the other party out of pocket.

If you cause a collision and use your insurance to pay for the damages, the property damage liability portion of your policy is designed to pay for the other driver’s vehicle damages and your bodily injury liability insurance is designed to pay for the other driver’s and passengers’ medical expenses if they are injured. These coverages will only pay up to the limits on your policy and any overage is your responsibility to pay out of pocket. Depending on the coverage you have, your insurance policy might also pay for the damages to your car and for your injuries and the injuries of your passengers.

Accidents in no-fault states

Contrary to the name, fault does still exist in no-fault states. No-fault insurance only refers to injuries that occur in crashes; drivers are still liable for the property damage they cause if they hit someone.

After an accident in a no-fault state, both drivers’ insurance companies will pay for their medical expenses using their PIP coverage, regardless of which driver caused the collision. However, the at-fault driver is typically required to compensate the other driver for their car repairs using property damage liability coverage. The 12 states that have no-fault insurance laws are:

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

Puerto Rico also operates under a no-fault insurance system.

Accidents where you are not at fault

So how does car insurance work when you are not at fault for an accident? In the event of a not-at-fault accident, meaning an accident you did not cause, the claim will be handled based on the state’s fault laws. Remember that a not-at-fault accident and no-fault accidents are two separate things; not-at-fault accidents happen in both no-fault and tort states.

If you get hit by another driver in a no-fault state, your PIP coverage will pay for your injuries and injuries sustained by your passengers up to your policy limit. It may also pay for lost wages if you cannot work and for the expenses associated with hiring someone to handle household tasks that you cannot complete while injured. The at-fault driver’s car insurance should still cover the cost of your vehicle’s repairs.

If you get hit by another driver in an at-fault state, the at-fault driver’s car insurance should pay for your medical bills and vehicle repairs. However, in tort states, you may still have the option to purchase PIP coverage or medical payments coverage. These options will pay for your medical bills and for the bills of passengers that were injured regardless of who caused an accident. If your insurance company does pay you under these coverages, it will likely work to be reimbursed by the at-fault driver’s company in a process called subrogation.

Car insurance and negligence

When it comes to car accidents, it is not always clear which driver was responsible. Some accidents are complex and fault is not always obvious. In situations where both drivers are partially at-fault, insurance companies will look at the amount of negligence that each driver had.

Negligence typically falls into three categories — pure contributory, pure comparative and modified comparative. Every state has a different definition of negligence, so where you live and the amount of responsibility you assume in an accident will both impact how your claim is handled.

Frequently asked questions

Will my car insurance go up after an accident?

Yes, it is likely that your car insurance rate will increase after an accident, especially if you were the one responsible. The amount that your insurance premium will increase depends on the severity of the crash, your existing claim history and your insurance company. You could even see your premium go up for a not-at-fault accident if you could lose a claim-free discount or your policy is re-evaluated by your company. However, if you have accident forgiveness, your insurance company might waive the premium increase after your first collision. Each company has different guidelines regarding accident forgiveness programs, so talking to an agent might help you understand how your company’s program functions.

What is the best car insurance company?

The best car insurance company is different for every driver. It depends on where you live, what type of coverage you need, how much you can afford to spend and what discounts you qualify for. If you are shopping for car insurance, understanding what you are looking for in a company and getting quotes from several providers could help you find the best option for you.

How much does car insurance cost?

In the United States, the average cost of car insurance is $1,674 per year for a full coverage policy. However, keep in mind that every driver pays a different rate for coverage. Some of the factors that will impact your car insurance premium are your claim history, the type of car you drive and the amount of coverage you need. In most states, your age, gender and credit score will also impact your premium, although some states ban the use of one or all of these rating factors.

Who pays for car damage in a no-fault state?

The at-fault driver still pays for property damage in a no-fault state, and that includes damage to vehicles. This means that if another driver hits you, they are still liable for your damages and could pay for the expenses with insurance or out of pocket. No-fault coverage only refers to injuries.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, and NextAdvisor, among others
Edited by
Insurance Writer & Editor