Depending upon where you live, your state may require you to carry what is referred to as no fault insurance.  No fault insurance is different from most states because it does not find fault with either driver.  In this way, each driver is responsible for paying for his or her own damages when involved in an accident.  As such, the driver must carry insurance to keep his or her expenses covered.

What Does it Mean to Be “No Fault?”

To be truly “no fault,” a state would not allow its drivers to sue each other at all.  After all, if no one is found to be at fault, how could one driver have the right to sue another?  Although this is the true meaning behind no fault, no state is actually 100% no fault.  Rather, there are a few situations in which a driver may sue another driver.  In order to be granted the right to sue, however, the damages must reach either a verbal or a monetary threshold.

A verbal threshold is threshold that requires the person who is injured in the accident to sustain serious injuries before they can sue.  Each state has its own definition of what is considered to be serious and what is not.  So long as the person’s injuries are considered to be serious by the state, however, that person can sue for damages.

The other type of threshold that may be in place is referred to as a monetary threshold.  A monetary threshold refers to the dollar amount of the damages the person sustains.  If the bills associated with the medical damages exceed a certain pre-determined amount, the victim can sue in order to collect on damages.

What are the Pros and Cons of a No Fault System?

According to supporters of no fault systems, this type of method should help keep insurance rates down since drivers cannot sue unless certain minimums are met.  In actuality, however, drivers in states with no fault regulations pay higher insurance rates than most other states. 

One benefit to no fault insurance is the fact that the damages can be processed much more quickly since the insurance companies do not have to haggle over who is at fault.  In addition, with the thresholds in place, the court system can be freed up because there are less cases to deal with.  Some fear that the lack of legal action essentially gives some drivers a “free pass” to driver recklessly, but there has been no evidence that this is truly the case.