Lawsuits are expensive... and they only ever get more costly as time goes on. To reduce delays, state governments have searched for ways to fairly apportion damages for certain types of accidents without having injured parties resort to filing lawsuits for some time. Workers' Compensation is one example of a system that states have used to avoid and prevent lawsuits in the specific field of workplace injuries by eliminating any requirement for fault or negligence.
Several states have attempted to apply this thinking to the area of automobile accidents. These so-called “no fault” states require that personal and commercial automobile insurance policies include personal injury protection provisions. A personal injury protection provision means that your insurance policy will pay for the medical and other costs you and any passengers incur as a result of being involved in an accident regardless of fault. Typically, these states bar attempts to sue an at fault driver for personal injuries unless the medical expenses reach a certain threshold.
In a typical automobile accident, an injured party would submit a claim to the insurance company of the at fault driver. If the injured party and the insurer were unable to agree on a settlement for the damages sustained, the case would go to court. In a no fault state, the injured party submits the claim to their own insurance carrier. The injured party has a legal obligation to co-operate with their insurance company in settling the claim. The injured party’s carrier will pay the medical expenses and other damages, rather than those expenses paid by the insurance carrier of the at fault party.
It’s worth noting that the twelve or so states that have no fault laws apply them differently. Several states allow plaintiffs to opt out no fault protection and sue at their own discretion. Others might allow plaintiffs to sue only after injuries pass a pre-determined point of seriousness, such as a broken bone or extended hospitalization. The goal of all these policies is the same – to reduce claims costs and time by restricting litigation to only the most severe claims.
It’s worth noting some important caveats with regard to no fault liability. First, it only covers personal injuries. It does not apply to physical damage to a vehicle. Second, it differs from traditional medical payments coverage offered in traditional states as regular medical payments coverage will not cover costs beyond medical bills.
Companies should take the time to examine their personal injury protection coverage if they operate in no fault states to ensure they are being covered to the extent they should be and to take advantage of the option to opt out of or to opt into the no fault system if they operate in a state where doing so is allowed.