Does it Matter Whose Fault an Accident Is? That Depends on Where You Live!

Gavin Magor

My home state of Florida is talking about dropping the Personal Injury Protection requirements from its insurance mandates. Seems legislators think the system is outdated and ineffective at holding auto insurance rates down.

But the debate got me thinking about a more important, broader question many car accident victims ask: Does it matter whose fault an accident is? The answer isn’t straightforward … because it depends on where you live!

You see, aside from specifying required liability policy limits, some states also have what is known as a “no-fault” liability law. In such states, each person in an accident is covered by their own insurance company, regardless of who caused the accident.

Although you may feel such a system is unfair if you aren’t the one who caused the accident, you’ll undoubtedly appreciate the ease with which you can file a claim since you’re only dealing with your own insurance company. This system is supposed to help lower insurance costs and keep policy costs down by eliminating most small court claims and limiting lawsuits to only those involving serious injuries.

Unfortunately, due to fraud, the states with no-fault insurance know this can be taken advantage of. Florida is trying to fight back and, who knows? Maybe premiums might actually not rise so much (though it would be hard to imagine them actually dropping, even as it would be nice!)

Overall, 12 states currently require all auto policies to be no-fault policies:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

Another 11 states allow you to add a no-fault provision to your auto insurance policy in order to facilitate claims. These states, known as “Add-on” states, are:

  • Arkansas
  • Delaware
  • D.C.
  • Maryland
  • New Hampshire
  • Oregon
  • South Dakota
  • Texas
  • Virginia
  • Washington
  • Wisconsin

But they don’t restrict your ability to sue the other party in an accident. In these states, if you choose no-fault insurance, you’re immune from being sued and from suing other drivers for non-economic damages like pain and suffering.

However, if you choose traditional liability coverage, you can sue and be sued if the other driver also has traditional coverage. Because the no-fault choice provides immunity from being sued, it tends to be the choice of bad drivers.

Even so, these same limits on lawsuits also tend to make no-fault coverage the cheaper option. Consequently, this system is often charged with unfairly punishing good drivers.

In addition, drivers in the District of Columbia can choose no-fault or a traditional liability policy. But if they choose no-fault, they have 60 days after an accident to decide if they want the no-fault benefits or wish to pursue a claim against the other person in the accident.

The remaining 27 states have regular liability policies with no specific limitations on your ability to sue for damages.

So, in conclusion, it appears that the majority of states actually believe in a good old-fashioned argument to resolve fault. Maybe this is the way to punish bad drivers, but that will only be the case if enforcement of mandatory insurance coverage is enforced. Too often uninsured drivers put us all at risk, financially and physically.

My insurer has already notified me that I’m already qualified for a “no claims” bonus, or at least they tell me that I can have one “at fault” accident and not have my premiums increased. The cynic in me believes that the rate will rise anyway, but that’s another story.

As always, be sure to check an insurer’s safety rating on the Weiss Ratings website. And if you’re a Weiss Platinum subscriber, you can go a step further and complete and save your own customized screeners.

Think Safety,

Gavin Magor

Gavin has more than 30 years of international experience in credit-risk management, commercial lending and insurance, banking and stock analysis and holds an MBA. Gavin oversees the Weiss ratings process, developing the methodology for Weiss’ Sovereign Debt and Global Bank Ratings. Gavin has appeared on both radio and television, including ABC and NBC as an expert in insurance, bank and stock ratings and has been quoted by CNBC, The New York Times, Los Angeles Times, and Reuters as well as several regional newspapers and trade media.