No Fault Insurance

Auto insurance providers in all 50 states offer automobile insurance in accordance with applicable state laws. Currently, there are only 12 states in the country, no fault states, in which no fault insurance policies are available. The other states operate under an alternative arrangement known as tort insurance. What is the difference?

Most precisely, the term "No Fault" refers to auto insurance coverage that will pay for the medical expenses and specific risks identified in the policy that are incurred in an accident regardless of who is responsible or "At Fault" for the accident. The insured party is held harmless, or indemnified, against any additional claims, such as physical damage or liability claims made by an injured party. He or she cannot be sued or held liable for additional losses.

In fact, absolute no fault insurance does exist. Nevertheless, the term is commonly used to describe policies in which the insured party, and only the insured party, is indemnified against medical liability claims made by the injured party. He or she is still liable for physical damages. In effect, these policies do not extend to total coverage and could rightly be called no fault medical coverage. The policy does protect the policy holder from liability even if she is responsible, but only for that particular category.

The other type of automobile insurance is tort insurance and is available in all of the remaining 38 states. Under this type of coverage, the person who is determined to be the responsible party in an accident is also potentially liable for paying other costs incurred by the injured party as an immediate result of the event or arising later. Such associated injuries may include lost wages, physical damages, emotional damage and more. The specifics depend on whether the insured carries full or limited tort coverage.

Full tort insurance allows the policy holder to sue the responsible party for any and all perceived injuries. It is up to the legal system to determine if the claims are justified and if so, to determine the amount of compensation reasonably due the claimant. Limited tort coverage restricts the ability of the insured party to claim compensation only for what are considered to be serious injuries sustained in the accident, not for peripheral issues such as pain and suffering. It is important to understand that the court has the right to define exactly what constitutes a serious injury and does so in very narrow and specific terms. The consumer may request either type of tort insurance based on his needs.

Being properly insured is important. To be informed of the options is the best way to get the right auto insurance.