Thirteen states (including the District of Columbia) have instituted some type of “no-fault” auto insurance system. The use of this system has serious consequences with respect to the source of your compensation for car accident injuries, and can even determine whether or not you are compensated at all.
Personal Injury Protection (PIP) Insurance and “No-Fault” Claims
In a “fault” state, motorists are required to purchase auto liability insurance, and they may either file a lawsuit against an at-fault motorist or file claim against his liability insurance carrier. In a “no-fault” state, by contrast, motorists are required to purchase PIP insurance, which covers the victim’s injuries up to the policy limit no matter who was at fault.
In a no-fault state, in the event of an injury accident you are required to look to your own insurance to satisfy your claim (unless an exclusion applies). You are not allowed to file an insurance claim or a lawsuit against an at-fault driver. The inability to file a lawsuit can be particularly significant, because in some cases a court will grant a plaintiff damages for “pain and suffering” in an amount that is far greater than the amount for medical bills.
PIP insurance works in conjunction with health insurance – typically, your health insurance will apply up to its policy limits, and your PIP insurance will apply to amounts your health insurance policy does not cover.
Every state applies exclusions that allow a seriously injured victim to sue the defendant or file a claim against his auto insurance policy. The definition of “serious”, however, varies from state to state. A typical exclusion might allow you to file a claim or a lawsuit against a defendant if your medical bills exceeded $4,000 or if you suffered a disability lasting more than 60 days. Check the text of your state’s applicable statute for details. Catastrophic injuries are almost always excluded from the “no-fault” system.
The Duty of Cooperation
If you live in a “fault” state and file a claim against the at-fault driver’s liability insurance carrier, you are in an adverse position with respect to the insurance carrier (your aim is to maximize the mount of your compensation, while their aim is to minimize it). For this reason it is wise to take a rather adversarial position versus a liability insurance carrier – by refusing to give a recorded statement, for example. In most no-fault states, by contrast, your PIP insurance carrier is not considered an adversary and you are legally required to fully cooperate.
What happens if you carry only liability insurance because you are from a “fault” state, but you are injured in a traffic accident in a “no-fault” state that was the other driver’s fault? Since your liability insurance will not cover your damages, can you sue the in-state driver despite the “no-fault” ban on lawsuits? In this situation like many others it is best to contact an experienced personal injury attorney, because the law can get complex and because the resolution of this problem can vary depending on which two states are involved.