No-fault Insurance policy also known as personal injury protection is a branch of auto insurance that offers coverage for expenses incurred by the insured in the event of an accident. The passengers and third parties are covered Even if they don’t have health insurance.
If the cost of treatment of the injured in the Accident surpasses the no-fault insurance limit, health insurance can be used to settle the remaining expenses.
No-fault Insurance policy doesn’t investigate who is at fault in the accident. It pays as long as there is a claim and proof of the Accident occurring.
Types of no-fault insurance coverage
No-fault insurance typically reduces the effect of a car accident related lawsuit on your finances.
basically No-fault Insurance policy consist of
- Property damage liability coverage: this covers the repair of any property(vehicle, fence, etc.) Damaged in the event of an accident caused by the insured
- Bodily injury liability: this covers for the medical bill for the treatment of injury brought about by an accident involving the insured.
- Personal injury protection: pays for the expenses to be made by the insured that may arise in the event of an accident. These expenses may include medical bills, lost wages, cost to hire someone to do chores etc.
Note that the liability coverage part of this policy( property damage and bodily injury liability) only covers the effect of the accident on other parties involved and not on the insured and his passengers but the pip covers for that.
Also, each state requires a specific minimum amount for each coverage. Different rules also apply to different states in regards to no-fault insurance policy.for instance, the PIP coverage limit in new york is #50,000 per individual and pay out for lost wages is capped at 80% of income.
What does no-fault insurance cover
Medical bills: medical bills relating to the car accident are covered
Lost income: the amount of income the insured would lose as a result bof the accident up to a predetermined amount is covered
Funeral cost: cost of funeral, if a life is list as a result of the accident, is covered
Cost of repair: the cost for the repair of the damaged vehicle or property as a result of the accident is covered.
Important services acquisition: if as a result of the accident, the insured couldn’t perform some certain duties like house chores, child care, grocery shopping etc. No fault insurance pays for alternative personnel to carry out these services.
Benefits of no-fault insurance policy
- The cost of premium are usually low
- The cost of filling a claim is low
- It takes shorter time for payout after a claim is filed
- For non drivers (pedestrians, motorcyclist etc) involved in the accident, their medical bills are covered irrespective of whether they have a health insurance or not
Set backs of no-fault insurance policy
- No-fault insurance policy is not adopted by every state
- It only covers basic injury and damages caused by the accident
- The fact that it doesn’t check who is at fault, it just compensates everybody involved puts no discrimination against bad driving.
How to file a no-fault insurance claim
You can only file a claim for this kind of policy if you have been involved in an accident. The steps to get your claim are
- When you are involved in an accident, check to see if you really need to file a claim. A claim may be filed if you or your passenger is injured as a result of the accident.
- Contact your insurance provider. You might be required to report certain details about the accident ( where it happened, how bad the injuries are, people injured etc) and also Information about your lost wages and medical expenses
- Your insurer would then process your claim and make payout to the tune of your limit stated in the contract. Claims should be made faster since there is no need to investigate who was responsible for the accident.
No-fault Insurance and liability insurance
No-fault Insurance cannot be substituted for liability insurance since liability insurance only covers the third party in the accident.
When buying a no-fault insurance policy, ensure that you confirm your state’s minimum coverage amount to know if it is adequate for you. You can always purchase more coverage where necessary for a higher premium.