No-fault insurance


No-fault insurance is a type of automobile accident insurance. It provides that if a driver, passenger, or pedestrian is injured in a car accident, an insurance company must pay the injured person, no matter who caused the accident. It is usually the driver’s insurance company who pays. Under no-fault plans, injured people receive damages (payments) for medical costs and loss of income. Many no-fault plans limit a victim’s right to sue for pain and suffering or other nonfinancial injuries. Such restrictions forbid a suit for nonfinancial injuries unless the medical expenses are over a certain amount or the victim was disfigured, disabled, or killed. Many other types of insurance, including fire, health, and life insurance, have always been no-fault.

Supporters of no-fault automobile insurance believe it corrects flaws in the older system. They argue that it brings quicker legal settlements and fairer distribution of damages. Under the traditional system, fault must first be determined before claims are settled. Determining fault often involves costly legal battles and as a result, many victims of automobile accidents must wait for years before receiving payment. Insurance companies fight large claims more vigorously than small ones. As a result, many seriously injured victims receive either little or nothing in damages after lengthy delays.

Opponents of no-fault insurance argue that it is unfair to free careless drivers of their responsibility for injuries they cause. These opponents believe that no-fault plans do not provide appropriate incentives (motives) for people to drive safely. They also argue that such plans give a financial reward to irresponsible drivers, because some accident costs are paid by drivers who are not at fault.