Auto insurance seems to be the same, no matter where you live. If someone steals your car or a tree falls on it, you file a claim and receive payment to take care of the problem.
But when an accident happens, how the insurer handles your claim and determines possible compensation changes, depending on when you live in a fault or no-fault state.
No-Fault States
Let’s start with the simplest type: no fault. The insurance company compensates you for the accident, just as the other party’s insurer compensates him or her. This happens no matter who is at fault.
The amount you receive depends on how much car insurance coverage you’ve bought. More coverage can mean a bigger payout.
Many states allow the victim to receive compensation without having to prove that the other driver was at fault. This usually appears in the policy as personal injury protection, or PIP, and is often required for a policy. PIP covers medical bills for you and your passengers, deductibles for health insurance, lost wages, funeral expenses, and other bills related to the accident.
The no-fault system was developed to lessen the cost of car insurance by removing small claims from the courts. You can still sue, although it’s more limited. Some states only allow such lawsuits above a certain limit, such as $250,000, or when of severe injuries have occured.
Many claims in no-fault states, however, do not involve any legal process at all. To make claims smoother, some states require that:
- Those involved in an accident cooperate with their insurance companies, including providing a statement and going through a medical exam
- Exhaust the benefits of his or her medical insurance before going through auto insurance.
The following are no-fault states:
- Florida
- Hawaii
- Kansas
- Kentucky. You can choose between fault or no-fault policies.
- Massachusetts
- Michigan
- Minnesota
- New Jersey. You can choose between fault or no-fault policies.
- New York
- North Dakota
- Pennsylvania. You can choose between fault or no-fault policies.
- Utah
Fault States
Most locations in the USA are in fault states. (This is also known as “at fault” or tort.) The insurance company pays for damage based on the fault of each party involved, which is called negligence.
- Pure Contributory Negligence only pays you if you have no responsibility for the accident. If you’re even partially responsible, you don’t receive any payout. The states that use Pure Contributory Negligence are Alabama, Washington DC, Maryland, North Carolina, and Virginia.
- Pure Comparative Negligence pays depending on the percentage of fault assigned to each person. If you’re 60 percent responsible, you receive only a 40 percent payout. Pure Comparative Negligence is used in the following states: Alaska, Arizona, California, Florida, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, New York, Rhode Island, and Washington.
- Modified Comparative Negligence is used in the remaining states. It is similar to Pure Comparative Negligence in looking at the percentage of fault, but it sets limits of 50 or 51 percent of fault. If you were 45 percent at fault, you can receive 55 percent from the claim. But if you were 52 percent responsible, you get nothing.
If you don’t agree with the payout from your insurance company, you’re free to file a lawsuit to compensate for economic damage, such as lost wages and medical expenses, as well as non-economic damage, such as pain and suffering.
Who’s at Fault?
Proving who was at fault in an accident can be difficult when relying on you or the other party’s eyewitness accounts because your points of view differ. Assigning blame of at least 50 percent in an accident can determine what you’re paid in a claim and your quotes, which will most likely increase.
Insurers consider physical evidence, objective police reports, statements by eyewitnesses, camera recordings, and your description. Upon closer examination, who’s at fault in an accident can change.
For example, if you hit a vehicle from the rear, you may think that you’re at fault. But if the vehicle in front of you was rushing to pass a yellow light and stops suddenly when it turns red, that driver would be partially at fault.
What to Do After a Car Accident
Whether you live in a fault or no-fault state, it’s important to protect yourself and ensure fair treatment by taking a few steps, over and above obtaining the other party’s driver’s license and insurance information.
- Check that you and everyone involved are okay. Taking care of everybody’s health is your priority. If there are injuries, call 911 immediately to bring first responders to the scene.
- Call the police to get an official report. Insurers consider police evidence more reliable than what you or bystanders provide.
- Gather evidence by taking plenty of pictures of all involved vehicles, any damage, your surroundings, any signs, and skid marks on the road. Such visual evidence is crucial in processing claims.
- Write down your version of events while it’s still fresh. If you visit a doctor for any injuries, submit the doctor’s report to your insurer.
- Contact your insurance company to report the incident. They can also advise you on what to do next.