How it works
In no-fault states, drivers must carry personal injury protection (PIP). PIP pays medical bills and, depending on the state, lost wages, funeral costs and help with household tasks. The Insurance Information Institute counts 12 states with no-fault laws, plus Puerto Rico.
Key features:
- First-party benefits. You claim injury benefits from your own insurer, which speeds up payment.
- Limits on lawsuits. You can sue for pain and suffering only if the injury passes the state's tort threshold, either a description of serious injury or a dollar amount of medical bills.
- Choice states. In 3 of those states, New Jersey, Pennsylvania and Kentucky, drivers can reject the lawsuit limit and keep the full right to sue.
- Add-on states. Some other states add first-party benefits like PIP to the traditional fault system without limiting lawsuits.
No-fault rules are about injuries, and PIP does not pay to repair cars. Michigan's system also includes property protection insurance, which pays for damage your car does in Michigan to property such as buildings and properly parked cars.
Related terms
Sources
- Insurance Information Institute, Background on: No-fault auto insurance how no-fault works, thresholds, choice and add-on states
- Michigan Department of Insurance and Financial Services, Auto Insurance Frequently Asked Questions Michigan's required no-fault coverages
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