News · 12 Jun 2011 · Car Deal Expert Editorial Team
Originally published 2011-06-12. This article is part of the CarDealExpert historical archive — see our latest UK car-finance, insurance and used-car coverage in the menu above.
Depending on the state you live in, no-fault insurance may be an option for your vehicle. There are a variety of opinions on no-fault insurance, and each state has a different law. In most states that allow no-fault vehicle insurance, there is still legal recourse for injured drivers.
The idea behind no fault insurance
With traditional vehicle insurance, the person who caused an accident is responsible for paying for the damages. This system means that when an accident happens, someone must be judged as “at fault” for the accident. That person’s insurance receives a claim for the damages, and usually, their insurance rate goes up. No-fault insurance, on the other hand, does not take into account who is at fault for an accident; it just pays the damages for the insured and that’s that. The concept is that no-fault insurance prevents clogged courts and higher insurance premiums by not taking into account fault.
The effectiveness of no-fault insurance
Many consumer advocates have lauded no-fault insurance as a way to speed up the claims process and improve “insurability.” High-risk drivers often have a more difficult time getting affordable insurance. Judging fault of an accident can also take months, if not years, of in-court challenges. No-fault insurance areas tend to have lower rates of uninsured motorists, which protects those injured in accidents from those unable to pay liability damages. Most states that allow no-fault insurance do have some form of legal framework in which those injured by accidents caused by neglect or purposeful misdeeds may still file suit.
Why no-fault may not work
More than half of the states in the U.S. have, at one point or another, allowed some kind of no-fault vehicle insurance. Most states, however, have ended up repealing or carefully limiting their no-fault insurance programs. Many believe that no-fault insurance punishes good drivers by increasing the cost of insurance for everyone. No-fault insurance also keeps bad drivers on the road by keeping insurance affordable when the number of accidents would eventually price them out of insurance.
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