Understanding what type of insurance state you live in is important even if you have never been in an accident to date. If you were to be in an accident, you should know what type of law will apply to the circumstances of the event.
Additionally, the insurance coverage that you carry may change depending on the laws of your state and the states you drive in. To really know what type of coverage you are signing on for, you need to have an idea of whether you live in a no-fault state or a tort law insurance state.
Let’s break down all of this terminology today so that you can get up-to-date and fully informed on your car insurance options today.
Why do different states have different insurance laws?
Like many laws in the US, insurance laws are made at the state level. This means that the rules about auto accidents can take three different forms:
- No-fault state
- Tort law state
- Combination state
Learn more about what no-fault states and tort law states require when it comes to auto insurance and handling car accidents. To make the best choices about your personal auto insurance coverage, be sure to check what laws your state has in effect so that you don’t end up trapped without the proper protection.
No-fault car insurance
In no-fault car insurance states, drivers insure their own injuries and car damages instead of having insurance coverage to pay for other people’s expenses. No matter who causes a car accident, everyone involved must file a claim with their insurance company.
Most no-fault car insurance states have strict rules about car accident lawsuits. Lawsuits can only be processed in specific conditions and typically must reach a specific injury severity.
States that use no-fault car insurance coverage typically require drivers also to have Personal Injury Protection (PIP) coverage. This coverage is used to pay for any medical bills that happen because of the accident. On the other hand, property damages may be paid based on who is responsible for the accident.
What states are no-fault states?
The following states all have some type of no-fault car insurance rules in place:
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
Puerto Rico, which is a US territory, also follows no-fault laws.
As of early 2021, Florida has been considering repealing its no-fault laws and moving to a combination tort law system. If you live in Florida, be sure to keep up with those changes as they happen.
Tort law car insurance
The other end of car insurance cover in the US is known as tort law car insurance or at-fault insurance. Tort law, a more traditional type of car insurance coverage, sets things up differently. In the event of a car accident, someone is assigned fault, and that person is responsible for all bills.
Car accident lawsuits are relatively unrestricted in at-fault states, and drivers that are found to be at-fault are liable to pay for all charges that go beyond the limits of their insurance coverage.
Tort law states have different ways of determining fault, and sometimes that results in both parties being held responsible for an accident. In those cases, a 50/50 car insurance claim decision would require both sides to pay for some of the damages.
What states are tort law car insurance states?
As of writing, 38 states are tort law car insurance states. All states that are not no-fault states are some type of tort law state.
If you live in one of these states, your state’s car insurance coverage follows tort law practices:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Georgia
- Idaho
- Illinois
- Indiana
- Iowa
- Louisiana
- Maine
- Maryland
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Mexico
- North Carolina
- Ohio
- Oklahoma
- Oregon
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Comparing no-fault and tort law insurance laws
When you boil down all the facts comparing no-fault vs tort car insurance, what are the primary differences that drivers should be aware of?
These are the primary things that you should remember when comparing the two systems:
- No-fault states use PIP coverage to pay for medical bills.
- No-fault states cover property damage based on who is responsible for the incident.
- Tort law states only require liability coverage, which protects other drivers’ cars but not your own.
- Tort law states do not require you to file a claim unless you are responsible.
- Everyone involved in incidents in no-fault states must file a claim when an accident occurs, and drivers are responsible for their deductibles even if the accident was not their fault.
- Car accident lawsuits are limited in no-fault states but are not limited in tort law states.
Make sure to do your own research
Whether you’re moving to a new state or buying car insurance coverage for the first time, ensure that you have checked out the specific rules for your state on car insurance. Your state may require car insurance and PIP protection, or you may have optional types of coverage that you can add on.
The bottom line is that you want to ensure you are properly insured with the right amount of insurance to not pay for anything out-of-pocket if an accident does occur. Do your research, and you can avoid that situation ever occurring.