There’s a lot of confusion out there about what no-fault insurance is and how it works. So let’s start with a basic definition: no-fault insurance, sometimes referred to as personal injury protection insurance (PIP), can help cover you and your passengers’ medical expenses and loss of income in the event of a covered accident, regardless of who is found at fault.
That last part is important and sets no-fault insurance apart from other types of auto insurance – such as comprehensive, collision and liability – which reimburse for damages depending on who is determined to be “at fault” in the accident. As long as the accident is covered within the terms of your policy, PIP coverage pays for medical bills, income losses and other related expenses incurred by you or your passengers (after your deductible, and up to your covered limit).
Is no-fault insurance optional?
No-fault insurance is mandatory in 18 states. Importantly, some states require that medical expenses incurred in the accident are covered by medical payments insurance (or med pay), not no-fault insurance.
What does no-fault insurance cover?
Here are a few things no-fault insurance may cover for no-fault policy owners and their passengers:
- Hospital and medical expenses resulting from the accident
- Income losses resulting from the inability to work
- Funeral expenses
Does no-fault insurance cover theft?
No, your comprehensive insurance policy covers theft.
Does no-fault insurance cover car damage?
Although your no-fault insurance covers economic losses, damage to your vehicle would be covered by either your collision insurance or the other driver’s liability policy – not by no-fault insurance.