No Fault Auto Insurance

No fault auto insurance is a system of insurance where drivers are covered for losses in vehicle accidents solely by their own insurance company, regardless of who may be at fault for an accident.

The intended goal of state no fault insurance laws are to reduce the cost of auto insurance premiums for drivers. Limits are placed on litigation regarding accidents and as a result, premiums should be lower overall. When an accident occurs, the victim can only collect from their own insurance company. The driver who is at fault also collects only from their own insurance company. However, an at fault driver can expect higher premiums from their insurance company as they are now considered higher risk.

Claims are generally paid out more quickly as there is no period of determining fault and there is no period of expected litigation.

Critics and detractors of the no fault system claim that the system does not adequately punish negligent and reckless drivers. There are no jury awards or legal settlements. Victims of no fault accidents often find it difficult to seek recovery from an accident as their legal recourses are limited. Critics also claim that no fault laws result in a larger percentage of drivers operating while uninsured, due to the fact that an uninsured driver who is found at fault in an accident cannot be sued.

Proponents of the no fault system argue that auto accidents are inevitable and drivers who are at fault should not be excessively punished through the legal system. They also claim that auto insurance premiums can be lower in a no fault system, however this is a point of debate by both sides.