January 1, 2012

What To Know About No Fault State Auto Insurance Laws

Most states operate under traditional tort state auto insurance law. In tort systems, individuals can go to court to receive damages when they're injured or when their property is damaged by a driver. The logic behind this type of system is that the at-fault party should have to pay, but tort systems have some serious problems, not the least of which is the high cost of litigation. Some states like Florida have adopted no fault state auto insurance law. No fault systems don't try to apply fault after an accident and every driver pays for his or her own damages. A typical auto insurance quote in a pure no fault state will have limited liability coverage, as liability coverage is much less important under such a system.

Insurance companies frequently support no fault insurance laws, as they claim that the laws significantly lower the costs of the average insurance claim by basically getting rid of standard court costs and attorney's fees. Insurance providers say that smaller claims allow them to offer their customers lower insurance rates, so everyone benefits. However, there are a few things to keep in mind when moving to or driving in a no fault state.

First of all, many states don't follow pure no fault state auto insurance laws. Instead, they allow simple liability claims to be handled under no fault laws, but claims over a certain amount are eligible for litigation. This means that liability insurance coverage can still be useful in a number of circumstances and should still be carried to provide drivers with financial protection. Secondly, no fault states still have insurance requirements, which often include a set amount of personal injury protection (PIP). State minimum requirements, however, are rarely sufficient to handle the costs of any accident. As such, choosing coverage can be tricky in a no fault state. It's generally better to skew on the side of too much insurance, but there are plenty of resources such as insurance comparison websites that can help drivers choose coverage.

When buying coverage, drivers should check with their Department of Motor Vehicles for an overview of no fault auto insurance laws as they operate in the state. It's important to understand how their state insurance laws operate, as laws will greatly affect the value of each auto insurance quote. Even in a no fault state, it's a good idea to buy liability coverage, especially if a state has restrictions on its no fault laws. Finally, all drivers should take the time to compare insurance rates, as even in a no fault state, quotes can still vary greatly from one insurance company to the next.