When it comes to car insurance, all U.S. states require drivers to carry a certain amount of liability insurance coverage in order to legally drive. Liability insurance kicks in when the policyholder causes an accident and can pay for third-party property damage and injuries.
In so-called “no-fault states,” however, the driver who caused the accident is not responsible for covering the associated medical bills of the other parties involved. For this reason, drivers in no-fault states are required to carry a minimum amount of personal injury protection coverage—also called PIP.
A driver will use their PIP insurance (also called no-fault insurance) to help cover the cost to treat any injuries they sustain in a car accident, and can even help cover lost wages and funeral expenses, if necessary.
No-fault insurance states
In total, there are 12 no-fault states in the U.S. They are Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. The minimum PIP insurance requirements for these states is as follows.
| State | Minimum PIP Coverage Requirements |
|---|---|
Florida | $10,000 |
Hawaii | $10,000 |
Kansas | $4,500 |
Kentucky | $10,000 |
Massachusetts | $8,000 |
Michigan | $50,000 |
Minnesota | $40,000 |
New Jersey | $15,000 |
New York | $50,000 |
North Dakota | $30,000 |
Pennsylvania | $5,000 |
Utah | $3,000 |
Who pays for car damage in a no-fault state?
No-fault insurance only applies to personal injuries; therefore, the at-fault driver’s insurance will pay for property damage they cause, including car damage.
To cover car or other property damage, drivers will need to have liability insurance, which helps pay to repair third-party property damage if the policyholder is found responsible for the accident that caused the damage.
Drivers may also want to carry collision insurance, which will help pay for repairs to their own vehicle in an accident for which they are responsible—though collision insurance is not a requirement in any state. Regardless, having collision insurance can save drivers a great deal of money if they’re involved in an accident—especially if that accident was caused by an uninsured or underinsured driver.
What’s not covered by no-fault insurance?
No-fault insurance is designed to pay for the medical expenses of the policyholder if they’re injured in a car accident, regardless of fault. That means property damage is not covered by this type of insurance.
Instead, you’ll need to carry property damage liability coverage, which is required by law in all U.S. states (though the minimum coverage requirements vary from state to state). This coverage will help pay to repair any damage to someone else’s property or vehicle that’s sustained in an accident where you’re at fault.
Although not required, it’s also a good idea to have collision coverage to help pay to repair your own vehicle after a collision, and comprehensive insurance to pay for repairs to your vehicle caused by weather events (such as hail), fire, vandalism, and damage caused by an animal.
Frequently asked questions (FAQs)
Can you sue in a no-fault state?
You can sue in no-fault states, but in many cases you’ll only be able to do so if your injuries are considered severe or if your medical bills are over a certain threshold. Visit your local Department of Motor Vehicles office to determine the specifics in your state.
Whose insurance pays in a no-fault state?
In both at-fault and no-fault states, the driver who is responsible for the accident will be responsible for paying for property damage through their insurance.
How many states in the U.S. are no-fault states?
There are 12 no-fault states in the U.S.: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.
What is the advantage of a no-fault system for states?
The main advantage of a no-fault insurance system is that there are fewer lawsuits after car accidents to recoup medical costs. Since no-fault insurance helps pay for the policyholder’s medical bills, they won’t need to sue the other driver involved in the collision to get compensation. That results in less administrative work for medical and legal professionals, and faster payments for policyholders.
Do no-fault claims affect insurance?
It’s possible you’ll see an increase in your insurance premiums after filing a claim on your no-fault insurance. However, the exact increase will depend on your insurer, the amount of the claim, your claims history, and other factors.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
