No-Fault Car Insurance: What Does It Cover?

No-fault insurance offers coverage against the medical and vehicle damage costs. It can also provide wages compensation for up to 3 years. No fault insurance will pay out the compensation regardless if you are responsible for the accident. Several states such as Michigan require motorists to purchase the no fault insurance. Some drivers misunderstood that a no fault insurance will protect them against all kinds of damages beyond their insurance's worth. In truth, you will only get covered up the amount agreed in the insurance policy. With no fault insurance, you don't have to prove that you are not at fault in order to get compensation. You will get compensation no matter if you have or don’t proof that you are not at fault.

No-fault insurance is necessary because the court has the authority to decide who is at fault in the accident. If the third party is at fault but the judge ruled that you are at fault, you will not get coverage by the insurance company of the third party. If you make a claim, your insurance company may not pay out the compensation because the judge ruled that you are at fault. In this scenario, only the no fault insurance can help you. With the no fault insurance, each party will be responsible for his damages. You will not be liable to pay for the damages of the third party if you are not at fault. No fault insurance helps you to avoid expensive legal fees when disputing with the third party at the court.

Each state has its own no fault auto insurance policy. The victims in the accident can still sue a third party in states that practice the no fault insurance. The victim has the right to file a lawsuit if he is seriously injured in the accident. Even if your state requires no fault insurance, you will still be held accountable for the accident damages. This is because you are offending the laws of the Department of Motor Vehicles (DMV) by not carrying insurance. If your state requires no fault insurance, you should check the website to find out about the minimum requirements. It is not sufficient to meet the minimum requirements. You must purchase more insurance than the minimum requirements. By doing so, you can avoid emptying your bank account to pay the damage costs when an accident occurs.

The no-fault insurance cannot be used as replacement for your health insurance. The health insurance will pay for the fees that are not covered in the no fault insurance. It does not provide coverage for the property damages that are caused in the accident. If someone's property is damaged, you are liable for paying the cost the damage incurs. Besides, it cannot cover the damages done to all parties in the accident. If you are responsible for the accident, you will have to pay for your own vehicle repair cost, provided that you don't have collision coverage. Your premium rate could possibly increase as well if you don't have collision coverage.

As a conclusion, no fault insurance is necessary in order to protect you from a situation where no one is responsible for the accident. You can talk to your insurance agent before getting a no fault car insurance so that he can guide you.