How Does No-Fault Insurance Work?
No-fault insurance is coverage that allows the car driver to get paid for damages to his vehicle by his own insurance carrier, regardless of who caused the accident. Many states have also chosen this type of coverage as the standard. Some states, such as Florida, Pennsylvania, New Jersey, New York and Michigan have no-fault insurance with a verbal threshold. While Kentucky, Kansas, Hawaii, Massachusetts, North Dakota, Minnesota and Utah have no-fault insurance with a monetary threshold. Puerto Rico also has no-fault coverage. More info on no-fault coverage here: car accident legal help
In extreme cases when injuries demand greater compensation, a motorist in Kentucky, Pennsylvania and New Jersey can retain the right to sue the insurance company for greater compensation. Because no-fault is not a tort-based type of coverage, the other party is not sued, even in cases where they are at fault. This also alleviates the need to carry coverage for bodily injury liability to person in the other vehicle.
If an Accident Occurs
No-fault insurance works by giving all persons carrying insurance coverage the right to be indemnified when a accident occurs. Everyone who has coverage and is involved in an accident will get their vehicle repaired and receive compensation for injuries incurred.
Limits to Personal Injury Protection with No-Fault Insurance
With no-fault insurance PIP or personal injury protection is limited to a certain dollar amount. In Florida, its as low a $2500 when emergency medical protection is not needed. With emergency medical attention the limit goes up to $10,000. The injured parties including driver and passengers have 14 days after the accident to seek medical care from hospital, family doctor or chiropractor.
Fraud with No-Fault Insurance Claims
Because PIP makes up about 20% of the premium paid by the insured, the rise in fraudulent medical claims for no-fault insurance carriers is a real problem. It threatens to increase the cost of no-fault insurance. New York state had to crack down on the fraudulent medical claims. They did this by limiting the billing for different types of injuries. They also required doctors to sign affidavits insuring that they were using their licenses lawfully.
No-Fault Insurance Premiums May be Reduced
No-fault insurance is still undergoing many changes, due to fraud and abuses perpetrated against the system by the insured. Still, one of the main opponents to no-fault insurance is the medical community, which believes the insurance restricts their ability to make a living. Insurers however, are content with the coverage, believing that by limiting fraud, they can reduce premiums in the future.
How does no-fault insurance work? It works well in the 13 U.S. territories in which it is regularly employed. It limits the amount of lawsuits and torts in the court system and it indemnifies the injured driver.