No Fault Coverage

The Origins of No Fault Coverage

The idea of no fault insurance was born from the mounting number of court cases involving drivers pointing fingers at each other over car accident negligence. This in turn was clogging the legal system and delaying medical coverage for injuries sustained in car accidents by months and even years.

To expedite insurance payments and eliminate the legal tangle caused by traditional auto insurance plans, no fault coverage was enacted, or what some referred to as tort-reform. Tort, for the sake of clarity, refers to more traditional liability insurance systems that base accident claims on provable negligence.

The Benefits of No Fault Auto Insurance

The advantages of PIP include:

• You're covered, regardless of fault.

• Without the legal haggling over blame, coverage payments from insurance companies are awarded much faster after filing car accident claims.

• This coverage restricts the ability to sue, except for extreme injury cases or death.

Disadvantages of No Fault Vehicle Insurance

When originally enacted, 24 states made no fault insurance mandatory; however, since then that number has whittled down to 12. Colorado, which recently returned to a tort system, rejected its no fault law due to the dramatic escalation of car insurance premiums and a mounting number of medical abuse cases.

Other disadvantages include:

• It does not cover property damage and, depending on state, vehicle repairs.

• No fault only pays up to your insurance policy limits for medical expenses. To recoup medical expenses exceeding your policy limit you must file a personal injury claim against the other driver's insurance company. The process for this can be long, eliminating the original intent of no fault insurance.

• It does not provide coverage for pain and suffering. Consequently, to compensate for this you must file an insurance claim based on your state's designated "injury threshold."

• The system penalizes good drivers.

• The system does not deter bad drivers.