No-Fault Car Insurance

If you are injured in a car accident, one of the first things you have to consider is how to pay your medical bills and related expenses. Because car accident-related injuries can be expensive to treat, your health insurance policy may not cover all costs. 

It’s also important to be familiar with the specific laws in your state regarding fault and compensation in a car accident. Whether or not you were at fault for the accident, the compensation you may receive depends on where you live in the United States.

What Is No-Fault Insurance?

No-fault auto insurance is a policy where an individual’s insurance company will provide them with personal injury benefits whether they were at fault in the accident or not. The premise is to ensure that everyone has basic coverage for injuries. 

States with a no-fault system reduce the number of lawsuits in small claims courts, where the reimbursement process for injured parties happens. In at-fault (tort) states, small claims courts may be clogged with liability lawsuits, which generally makes the reimbursement process quite slow.

The History of No-Fault Car Insurance

Conceptually, no-fault car insurance is relatively new. In 1932, Columbia University proposed a system for out-of-pocket loss benefits for those involved in car accidents. Similar to today’s at-fault systems, this plan had limitations on liability, eliminated recoveries for pain and suffering, and did away with determination of fault.

Although no-fault was introduced in the 1930s, it didn’t come to fruition until the late 1950s and early 1960s. That’s when Robert E. Keeton and Jeffrey O’Connell, Professors of Law at Harvard University and the University of Illinois respectively, wrote about and appeared in front of state legislatures to explain their proposed system’s benefits.

They proposed a system where drivers could purchase basic protection insurance, which would compensate each individual injured in a car accident regardless of fault. Each individual’s insurer would provide the compensation for injury up to a limit of $10,000. 

Their plan also called for states’ legislature to provide a partial exemption from tort liability, where the at-fault driver’s insurance pays for all injured persons. However, in Keeton and O’Connell’s original plan, tort remedies remained for the seriously injured, an idea that still exists today.

Although only 12 states currently operate under a no-fault system, the following states once utilized it, but have since repealed.

  • Colorado. No-fault become effective April 1974 and was repealed in 2003
  • Connecticut. No-fault became effective in January 1973 and was repealed in 1993
  • Georgia. No-fault became effective in 1975 and was repealed in 1991
  • Nevada. No-fault became effective in 1974 and was repealed in 1980

No-Fault States

Currently, 12 states operate under a no-fault car insurance system. Every auto insurance policy in these states must include personal injury protection (PIP) insurance, which provides basic coverage for minor injuries of those involved in car accidents. 

Below is a list of the years in which each state signed no-fault into law, as well as the serious injury thresholds that must be met for the victim of a car accident to sue the at-fault driver in that state.


  • Massachusetts. Serious injury threshold: Medical bills exceeding $2,000; loss of body part; permanent disfigurement; loss of sight or hearing; bone fracture, or death.


  • Florida. Serious injury threshold: Loss of an important body function; permanent injury; permanent scarring or disfigurement, or death.


  • Michigan. Serious injury threshold: Permanent disfigurement or death.
  • New Jersey. Serious injury threshold under “limited right to sue” policy: Loss of body part; loss of fetus; significant disfigurement or scarring; permanent injury, or death.


  • Hawaii. Serious injury threshold: Medical expenses exceeding $5,000; permanent loss of body function; permanent disfigurement, or death.
  • Kansas. Serious injury threshold: Medical expenses exceeding $2,000; permanent disfigurement; loss of body part; bone fracture; permanent injury; permanent loss of body function, or death.
  • New York. Serious injury threshold: Medical expenses exceeding $50,000; dismemberment; significant disfigurement; bone fracture; loss of fetus; permanent loss or significant limitation of use of body organ; disability for more than 90 days, or death.
  • Pennsylvania. Serious injury threshold under “limited tort” policy: Severe impairment of body function; permanent disfigurement, or death.
  • Utah. Serious injury threshold: Medical expenses exceeding $3,000; dismemberment; permanent disability or impairment; permanent disfigurement, or death.


  • Kentucky. Serious injury threshold: Medical expenses exceeding $1,000; fracture; permanent disfigurement; permanent injury, or death.
  • Minnesota. Serious injury threshold: Medical expenses exceeding $4,000; permanent disfigurement; permanent injury; disability for 60 or more days, or death.


  • North Dakota. Serious injury threshold: Medical expenses exceeding $2,500; dismemberment; permanent disfigurement; disability for 60 or more days, or death.

Choice No-Fault States

In three of the 12 no-fault states, individuals can opt out of the system and choose to sue the at-fault driver. While opting out of no-fault means an individual can sue, it also means that an individual can be sued.

The states that allow individuals to opt out of the no-fault system are:


  • Kentucky
  • New Jersey
  • Pennsylvania


Although no-fault car insurance certainly has its benefits, the system can also be frustrating to navigate if an individual has been seriously injured and needs more compensation than their insurance company provides them. If you live in a no-fault state and need clarification or guidance on how to go outside the no-fault system, contact an experienced car accident lawyer today.

Last updated on: October 1st, 2020