Most people still do not understand the no-fault insurance policy and its operation. The no-fault insurance is a policy that assists in covering drivers and passengers’ medical bills and the income they lose after an accident, without considering whose fault was it. The fact that the no-fault insurance does not consider the fault of the party responsible for the accident makes the policy different from other auto insurance policies such as the collision and liability policy. The no-fault insurance policy is sometimes called the PIP (Personal Injury Protection claim), and it varies from state to state.

What It Does and Does Not Cover

Some of the things the no-fault policy cover for motorists and their passengers include:

1. Medical and hospital bills incurred because of the accident

2. Loss of income caused by the accident, for example, the inability to work

3. Funeral costs

The no-fault policy does not cover:

1. Car theft-this is covered by the comprehensive insurance policy

2. Car damage-the no-fault policy only compensates financial losses, and not damages to the car. This is covered by the driver liability policy or collision insurance.

The Advantage of Having No-Fault Policy

The greatest benefit of having a no-fault policy is that the insurance will pay hospital expenses and compensate for the loss in earnings caused by the accident, depending on the limits set by the state. Some jurisdictions have a dual medical expense limit on the no-fault policy. In such jurisdictions, if the victim has a health insurance, the no-fault policy will only cover a small portion of the medical bill; the health insurer pays the rest.

Minimum Coverage Requirements

The only requirement for one to be covered by the no-fault policy is that the type of accident covered should be comprehensively defined in the policy. Moreover, when filing a claim for no-fault policy, most states require the claimant to cooperate with the auto insurance provider. This means that the normal procedures and rules of dealing with injuries in personal cases should be ignored. For example, it is unwise for a person filing a claim for injury to give a recorded statement to the insurance company covering the defendant. However, in no-fault cases, state law requires the parties involved to cooperate with the insurer.

In some states, no-fault laws may compel the party involved to give their insurers recorded statement, and be examined by a physician appointed by the insurance company. Failure to cooperate with the insurer in no-fault claims can lead to the cancellation of benefits.