If you are involved in an accident, your car insurance policy will help to protect you financially. However, how your claim is settled will depend on the state you live in and the fault laws that are in place. 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. It is important to understand how claims are settled in your state in order to be prepared in the event of an accident and help you feel more comfortable with the claims process if you are involved in one.

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Accidents in at-fault states vs. no-fault states

There are numerous car accident scenarios that can take place, and while each accident may be unique, there are standardized ways of handling the aftermath.  The claim will be handled according to the state’s fault laws. Currently, 12 states follow no-fault insurance laws, with the remaining states and Washington, D.C. being considered at-fault states. In a no-fault state, both parties will file a claim with their own insurer to help pay for their own injuries. The insurance company of the driver who caused the accident will also be responsible for paying for property damage expenses of both parties. In an at-fault state, all claim expenses, including injuries and property damage, will be filed with the at-fault driver.

Accidents in at-fault states

In an at-fault state, also called a tort state, a driver who causes a car accident 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 coverage types will only pay up to the limits on your policy and any overage is your responsibility to pay out of pocket. Depending on if you have full coverage, your insurance policy might also pay for the damages to your car. If you have PIP or medical payments coverage, your policy can also help pay for your injuries and the injuries of your passengers, up to your policy limit.

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 accidents. 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 respective insured’s medical expenses using their PIP coverage, regardless of which driver caused the collision. However, the at-fault driver is responsible for compensating 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

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 is designed to pay for your injuries and, typically, the 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, usually, the bills of passengers in your car who were injured, regardless of who caused the accident. If your insurance company issues a payout under these coverage types, 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 usually 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.

How is fault determined in a car accident?

The details of each accident will vary, but the process of determining fault after an accident is usually the same. In an at-fault state, fault is determined by the party that caused the accident. The drivers involved in a car accident may also discuss fault at the scene of the incident and in some cases, a driver admits guilt.

  1. The police will analyze the scene to try to understand who is at fault. This may involve making a diagram of the incident and note the extent and location of vehicle damage on the police report.
  2. The report will be shared with the drivers’ car insurance companies to review. Your car insurance company will decide which claims your policy fulfills and which ones it does not.
  3. Each insurance company will get statements from both drivers involved in the accident. Your insurance company will seek a payout from the other driver’s insurance provider if the other party involved is the at-fault driver.

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