At times, shopping for car insurance can be confusing. For instance, what is the difference between no-fault insurance and fault insurance? Well, we’re here to help. In this guide, we’ll look at no-fault insurance and what it covers. We’ll also explain what is meant by “at-fault” insurance coverage. Let’s dive in!
What is No Fault Auto Insurance?
No-fault insurance is usually called personal injury protection (PIP). Personal injury protection is coverage that helps you financially in the event that of an accident that results in injury.
The reason personal injury protection is sometimes called no fault insurance is that your insurance company will pay out for medical expenses no matter who caused the accident. So, even if it was you who took your eyes off the road for a moment, you’re still covered.
What Does No-Fault Insurance Cover?
Check with your insurance agent to find out the limits for your no-fault insurance. Limits may vary based on your policy and your state’s minimums.
With that said, the types of expenses covered by PIP are fairly standard. Your personal injury protection will cover the medical expenses and hospital stays for you and the passengers in your vehicle. If you lose income as a result of your accident, your no-fault insurance will cover you. And should someone require funeral expenses, these will be covered by your PIP.
Remember when you shop for your no-fault insurance that every policy has a maximum limit. That means your hospital, unemployment, and funeral expenses will only be covered to that limit; the rest is your responsibility.
What is At-Fault Insurance?
Technically, there’s no such thing as at-fault insurance. When you purchase your injury and property damage liability insurance, this is at-fault insurance in most states. That means that if you caused the accident, your insurance company will pay.
Most states-all but 12-are at-fault states. Therefore, most insurance is at-fault insurance. In no-fault states like Pennsylvania and Kentucky, liability coverage is paid by both insurance agencies, no matter who caused the accident. In other words, all drivers pay premiums to cover their own injuries.
Do I Need No-Fault Insurance?
In no-fault states, personal injury protection is usually required as part of your insurance coverage. However, you may request that this coverage be waived in some cases. Check with your insurance company to see if this is the case.
If you live in an at-fault state, you usually have the option to carry PIP or to decline it. The choice is up to you but speak with your insurance agent about how your other insurance policies will cover you in an accident.
If you’re injured in a wreck, you may be covered by your health insurance for your hospital stay or medical bills. But it’s not likely that childcare, home cleaning services, or lost wages will be covered. PIP can help with those costs.
What about your umbrella insurance? In the event of an accident, what will this policy cover? Your lost wages? Damage to your property? Funeral expenses? A cash death benefit?
It’s important that you review your finances and your existing coverages before you automatically decline personal injury protection coverage. No-fault insurance can be quite useful during a stressful time.
How Much Does No-Fault Insurance Cost?
The monthly premium you’ll pay for your personal injury protection will vary based on several factors specific to you. As with any insurance, your carrier will look at your:
- Marital status
- Zip code
Each of these factors can influence the cost of your personal injury protection, but on average drivers pay anywhere between $20 to $50 each month for this coverage.
Personal injury protection (PIP) coverage isn’t super inexpensive, but it’s not cost-prohibitive, either. Consider adding the protection to your policy to help keep you financially secure in the event of an accident.
Conclusion: No-Fault and Fault Car Insurance
No-fault insurance and fault car insurance are some of the most frequently misunderstood protections on an insurance policy. However, no-fault insurance is simple: you’re paying to cover your own injuries and medical expenses.
Personal injury protection may or may not be required-or even available-in your state. If it is an option for you, however, consider researching how this coverage can protect you in case you’re involved in an accident.