Glossary
No-Fault State
A state whose auto insurance law requires drivers to carry personal injury protection and to file injury claims with their own insurer first, regardless of who caused the crash. Lawsuits against the other driver are limited unless injuries meet a threshold.
In a no-fault state, each driver's own insurance pays for their medical bills and some lost income after a car accident, through personal injury protection (PIP) coverage, no matter who was at fault. The trade-off is a limit on suing. You generally cannot sue the other driver for pain and suffering unless your injuries meet the state's threshold.
According to the Insurance Information Institute, twelve states and Puerto Rico have no-fault auto insurance laws. Florida, Michigan, New Jersey, New York, and Pennsylvania use verbal thresholds, which describe the kind of serious injury needed before you can sue (such as significant disfigurement or permanent loss of a bodily function). Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah use monetary thresholds, which are based on the dollar amount of medical bills. New Jersey, Pennsylvania, and Kentucky are "choice" states, where drivers can reject the lawsuit limit and keep the full right to sue, usually at a higher premium.
No-fault rules matter for several kinds of claims:
- Whether you can recover pain and suffering after a crash depends on meeting the threshold.
- Insurers in no-fault states handle huge numbers of PIP claims, and class actions sometimes challenge systematic underpayment of medical bills.
- When PIP runs out, uninsured and underinsured motorist coverage can become important.
Learn more on our pages about underinsured motorist stacking, the Liberty Mutual and Safeco UIM settlement, and total loss car payouts.
Related on Best Class Actions
Sources.
Statutes, court rules, appellate opinions, and bar publications we relied on. See our editorial standards.