No-Fault Car Insurance – Is there such a thing?
There are twelve states (DC, PA, MN, FL, KY, MA, NJ, MI, ND, HI, UT, NY, and KS) which have a ‘no fault’ system of car insurance. This means that, if you happen to cause an accident, your insurance company does not have to pay for damages to the other party.
This system requires all drivers to insure themselves and limits the extent to which they can sue each other. Insurers pay out on a claim according to the limits of the policy, and without considering whose fault the accident was.
The reason these states chose this system was because it meant that every driver had access to medical treatment immediately in the event of an accident, and it also reduces administration and legal costs. This ought to mean lower insurance premiums, however liability issues often push these back up again.
There is however no completely fault free system, and drivers can still be held liable sometimes in the case of injuries. If injuries are sufficiently sever, some states will allow the injured party to sue, and other states allow this if the injured party’s costs rise above a certain level.
An example of such a no-fault situation is of one neighbor living in a four-plex building, the driveway of which includes four parking stalls. This means that the driveway is wide enough for tenants to turn their cars around in it rather than having to back out into the street, and this is what they usually do.
One day a tenant gets into her car to go and visit a friend, backing out as usual. She feels the car hit something and hears a scream, and is horrified when she gets out of the car to find she has run over someone.
She goes inside to call 911, but is too scared to go back outside, even though it is likely the person is seriously hurt. A man comes along and lifts the car off the person, who says she feels fine and doesn’t need to go to hospital. The police and ambulance officers think otherwise. In fact, the woman was sunbathing in the driveway, and the driver did not see her when she went out to her car. It turns out the injuries are not serious after all.
Feeling dreadful, the driver takes full responsibility for the accident. Even so, when she contacts her car insurance company, they tell her that since the injured person is a driver and car owner, her own insurance company will pay medical expenses, owing to no-fault regulations.
Still feeling awful, the driver asks her neighbor to sue her, but the neighbor refuses to do so. So although this was the driver’s fault, the injured party’s car insurance pays for it.
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