When you are involved in a car accident is not the best time to learn about what auto insurance coverage you have. If you live in certain states, there’s a type of car insurance coverage that is required for all drivers to protect them in the event of an accident.

What is no-fault insurance?

No-fault insurance, or personal injury protection insurance (PIP), is a type of auto insurance that covers your own or any of your passengers’ medical expenses, no matter which driver is at fault in a car accident. Any income that is lost due to being hospitalized and absent from work may also be covered.

According to the Centers for Disease Control and Prevention (CDC), around $33 billion in work income was lost due to crash injuries in 2012. On top of that, medical costs totaled $18 billion - with 75% of that occurring during the first 18 months after a crash injury. 

No-fault insurance was written into legislation in the 1970s as a way to help simplify the process of determining who was at fault in an auto accident. For the first time ever, people were able to purchase PIP insurance to cover medical expenses caused by accidents. Since then, some states now legally require drivers to obtain this type of insurance or some variation of it.

Do you live in a no-fault insurance state?

The following 14 states currently require a certain level of no-fault insurance coverage:

  • Delaware
  • Florida

  • Hawaii

  • Kansas

  • Kentucky

  • Massachusetts

  • Michigan

  • Minnesota

  • New Jersey

  • New York

  • North Dakota

  • Oregon
  • Pennsylvania

  • Utah

No-fault insurance is offered but not mandatory in the following 9 states:

  • Arkansas*

  • District of Columbia

  • Maryland*

  • New Hampshire

  • South Dakota

  • Texas

  • Virginia

  • Washington

  • Wisconsin

*Some states will include PIP on every auto insurance policy, but drivers may have the option to waive it. 

Making a no-fault insurance claim

If you live in a no-fault insurance state, there are some guidelines as to how to make a claim. For instance, instead of giving a statement to the other party’s insurance provider, you work exclusively with your own insurer.

Depending on what your policy requires, you may need to provide your insurer with a statement and medical proof of damages relating to the accident. Your insurance company may often appoint the physician or hospital responsible for examining you after an accident.

You may not have a choice on where you can get treatment, but working with these insurance-approved doctors or hospitals ensures that your claim gets processed as quickly as possible. Legal proceedings, paperwork and treatment can easily become unmanageable.

It’s necessary to provide your insurer all of the information they ask for after an accident or they may completely deny coverage altogether.

>>Related: 5 surprising factors that can lower your car insurance

No-fault insurance covers your own or any of your passengers’ medical expenses, no matter which driver is at fault in a car accident.

Limitations to coverage

You require different insurance coverage in different situations.

Let’s say that you hit a building of a business and the building owner does not have enough insurance coverage to pay for the damages. In this case, you would want to have auto insurance with property damage to pay for your part in the accident.

With no-fault coverage, it only pays for specific types of damage in an automobile accident. Here are the following types of damages that may be paid for with PIP insurance:

  • Personal or passenger injuries and medical expenses resulting from the accident
  • Funeral expenses in fatal accidents
  • Loss of income due to the inability to work (medical recovery after accidents)

You’ll notice that there is no coverage that pays for damage to your vehicle or buildings. If your accident involved damage to your vehicle, you’d need to have  an additional type of auto insurance such as collision insurance to be covered.

>>More coverage, lower rate: Get an insurance quote

Is no-fault right for you?

While health insurance may be an alternative to no-fault insurance, it doesn't offer the same coverage for serious accidents and you will usually pay a deductible.

if you're not sure whether PIP coverage is right for you, here are a few things to consider.

  1. Could you get in a serious car accident based on your living situation?

  2. Can you afford all of the injury expenses associated with accidents?

  3. Would you have peace of mind knowing these expenses are covered?

Knowing that you and your passengers will be fully taken care of in an accident can be all that it takes to determine if it's the right option for you and which limits to set in your policy.