If you're looking at auto insurance, one of the things you may have seen is no-fault coverage. This is a special type of coverage that limits your ability to sue for accidents. In order to make the right insurance decisions, you need to understand how it works.
What Is No-Fault Insurance?
No-fault auto insurance means that each driver pays for their own costs of the accident. Unlike a liability or negligence case, they can't sue the other driver. Instead, they can only go through their own insurance.
No-fault coverage is supposed to save everyone more money overall because it reduces the need for lawsuits. So even if you weren't able to sue for an accident and your insurance had to pay, you probably got the benefit of cheaper insurance premiums.
What Does No-Fault Auto Insurance Cover?
No-fault coverage depends on where you are. In some places, it covers a certain amount of losses for injuries. If you have minor injuries in an accident, you go through your own auto insurance. If you have more serious injuries that cost more than the no-fault limit, that's when you can sue the other driver or file a claim against their liability coverage.
Some places also have no-fault property damage coverage. It works the same way as medical expenses. Your insurance pays for minor repairs. If you have more serious damage, you might be above the no-fault limits and can recover from the other driver if they caused the accident.
Is No-Fault Insurance Optional?
No-fault insurance is often required by law. The reason is to make sure that all drivers have their basic insurance needs met.
This requirement is similar to how you have to have minimum levels of liability coverage. The difference is the coverage pays you instead of the other driver.
What Happens if You Don't Have No-Fault Coverage?
If you don't have insurance coverage that's required by law, you could get fined, lose your license, or even go to jail. That applies to no-fault coverage when it's required by law.
If you don't have to have no-fault coverage by law, not having it is taking a financial risk. You can't sue the other driver for things you're supposed to have no-fault coverage for. If you get in an accident, you'll have to pay those costs out of your own pocket.
To learn more about full coverage auto insurance, contact a local insurance company today.
For more information on auto insurance, contact a professional near you.