What Is the Difference in an At-Fault and No-Fault State?

Who caused the accident? In some situations, it does not matter as much. When a vehicle accident occurs, one of the first steps you must take as a driver is to contact the police. The police arrive at the location. They inspect both vehicles. And, eventually, they determine who caused the accident.

Sometimes the driver at fault will receive a moving violation. Other times that does not occur. However, what happens with your auto insurance coverage depends on the type of state you are in.

Can You Sue?

Putting aside the financial components of at fault and no fault states, consider legalities. In a no fault state, the victim in the case does not have to sue to obtain the coverage he or she needs. For example, Sue and Dan are in a car accident in a no fault state. Sue caused the accident by rear-ending Dan’s car. Instead of Dan filing a lawsuit in court for the damage to the car, he turns to his car insurance. Dan’s car insurance will cover Dan’s losses up to a certain point. This reduces the need for Dan to prove he was innocent. It also keeps most matters out of court.

In an at fault state, that is not the case. In some situations, Dan may have to prove he was the victim in the incident. This may mean filing a lawsuit in court. And, in at fault states, the insurance company for the at fault driver pays for the damages to the victim. In this case, Sue’s auto insurance pays Dan’s losses.

There Are Limitations

Even in no fault states, limitations exist. These range from one state to the next. Some states place an upper limit on claims made without filing a claim with the court (if the other insurance agency isn't willing to settle). In major accidents with significant damage, the insurance company can refuse to pay the losses without determining fault. This gets tricky. It is always best to have ample car insurance to protect you in such cases.

Most often, drivers do not have an option in what type of auto insurance they have. These are state laws. They can change over time. The goal for everyone involved is to maintain proper auto insurance. Protect your vehicle’s value. Have at least enough liability insurance to meet state requirements. Often, more is better. Doing this helps reduce your risks further.