No-fault systems in theUnited Statestypically offer a kind of bargain between insurers and consumers. For their part, consumers are asked to forgo pain-and-suffering claims, which compensate for the mental anguish or loss of the enjoyment of life’s pleasures they have endured as a result of an accident. Insurers, on their side, promise that claims for economic losses (usually lost wages and hospital bills) will be handled relatively quickly because issues of fault do not have to be considered. Finally, in a no-fault system the insurer compensates for all economic losses, not just the ones caused by someone else’s negligence.
Under a typical no-fault system, economic damages from injuries sustained in an accident are covered by a driver’s own insurance, known as personal injury protection insurance, without regard to fault. Thus, compensation for injuries does not depend on the determination of fault; injured parties who were in no way responsible for the accident recover economic damages from their own insurance as does the at-fault driver. Property damages, however, are typically handled under the traditional tort system.
In addition, no-fault systems restrict compensation for non-economic damages. Injured parties must demonstrate that their economic damages exceed some threshold before they are allowed to sue for non-economic damages. In some states, economic damages must exceed a dollar threshold before the injured party can pursue compensation for non-economic damages. No-fault is a first-party system, because the injured person applies to his own insurer for compensation. As the name implies, this system eliminates the central issue in tort lawsuits—fault—because the injured party receives compensation whatever the cause of the accident, even if the driver bumbled into the accident by himself.
No-fault auto insurance claim the system delivers speedier and more equitable compensation at lower cost than traditional tort insurance. Accidents victims should consult with an experienced accident lawyer. Accident victims are entitled to compensation for their injuries and damages. In some states, the accident victims will be entitled to compensation even if the victim is at fault.
It is a type of auto insurance in which each party looks to his or her own insurer for payment, regardless of who caused the accident. Under state no-fault insurance laws, negligence doesn’t have to be established before an insurance company agrees to pay. The insured receives prompt payment from his or her insurer and no subrogation follows. Usually no-fault insurance only applies to injuries and not to property damage. The trade-off for the insurance companies in states with no-fault insurance is that the insured’s right to go to court for additional damages is restricted.
No-fault insurance differ from traditional car insurance basically in the manner in which the innocent party collects. With regular auto insurance, an accident victim makes a claim against the other driver’s insurance company. Before that insurer will pay, the accident victim must establish that the other driver was negligent or reckless. This may be difficult if the cause of the accident is tough to determine.
If the other driver was at fault, the amount payable to the accident victim must be calculated. The figure depends on such factors as the victim’s medical expenses, property damage, lost wages, and pain and suffering. Sometimes added are the lawyer’s fees for proving who was at fault.