What are the advantages and disadvantages of the auto no-fault insurance and what does the no-fault insurance cover?

No-fault insurance is a commonly misunderstood term. Despite the name, it still matters who caused the accident. If you have the entire or the partial fault for an accident, then your insurance rates can increase. You are also not fully protected against lawsuits and if you do not have other car insurances you may still end up paying for some damages. In the US no state has a 100%”no-fault” insurance system. Usually no-fault states use a combination of no-fault and liability insurance coverage. For example, if you want to claim some vehicle damages you will need to have separate collision insurance because vehicles are usually excluded from the no fault laws, although some laws may just limit the amount that covers vehicle damages. In general no-fault insurance means that if you are injured you will get the compensation directly from your insurance company, regardless of whose fault the accident is. In this case the no-fault insurance policy holder is limited in his/her ability to file lawsuits for losses caused by other parties involved in the car accident. The idea is to keep the insurance fees lower by moving the settlements outside of the court rooms and save the money that will otherwise be spent on legal fees. The policy holder can sue the driver that caused the accident only under some extreme predetermined conditions called “thresholds”. No-fault insurance is considered as a convenient one because it saves the time spent in court and you have direct access to funds in the moment you need them. The most important thing covered by the no-fault insurance is the medical expenses. For example, if you do not have no-fault insurance and you break a hand in an accident you may not be able to pay the medical bill (this is in case that you do not have any funds available) before you file your claim in the court and it is accepted and the damages are recovered. The no fault insurance will help you in this case by providing you with the money for the medical bill much faster than if you have standard insurance. If you are so injured in the accident that you are unable to show up for work, the no-fault insurance will cover the wages you lose. The insurance also covers some replacement services. For example if you performed certain duties at home, that you are not able to do anymore while you recover from the car accident, the insurance company may pay someone who will replace you. For example it may pay for a nurse to substitute you, if you were taking care of an ill relative.


Here are the main advantages of having no-fault insurance policy:

• Saves you money – if you have standard insurance you will probably spend a good amount of money before you get your compensation no matter who has caused the accident. If your car damages are covered by the provisions of the no-fault law, you will not have to wait to get the money that you need to repair your car in case that you do not have such funds in the budget right now.
• Saves time – you do not have to waste your time with claims and lawsuits. Sometimes it takes weeks or even months before your claim is collected if you are a standard policy holder.
• Relief – if you are blamed for the accident you will only be held responsible for your own damages. When a no-fault policy holder is reimbursed by his/her own insurance company, he/she will be restricted to file a lawsuit in court against you for the caused losses. Lawsuits may be filed only if predetermined conditions exist.

There are also some disadvantages associated with this type of insurance.

• Payment difficulties – Because insurance companies work for profit and because of the high level of insurance fraud, nowadays it is harder to get the money for your claim. Insurance companies may try to avoid payment.
• No consequences for the drivers who cause accidents – some of the critics of this type of insurance argue that the responsibility of the drivers is reduced by no-fault insurance. Irresponsible drivers escape court because of this insurance. An accident may not have as big of an impact on them to realize that they need a change in their behavior on the road because their fault might only result (if there no extreme reasons for a lawsuit) in higher insurance fees.
• Unclear medical provisions – some people argue that no-fault insurance cases do not give enough details concerning the medical part of the claim, and these result in a negative outcome for the claims of some insurance policy holders who try to look for a medical service.
• Inflating costs – doctors, mechanics and other people involved in helping the policy holder with his/her injuries and damages may tend to increase the bills knowing that the insurer is a big company and this results in more load for the system and higher fees for the drivers.
• Limitations for the lost wages – the insurer may put limitations on the amount they will recover in case of lost wages. On the contrary, an at-fault driver would be liable for the whole amount if the payment is a result of a lawsuit.
• Ineffective – some critiques argue that the new provision do not stop the drivers from filing lawsuits and looking for compensation through courts. This is causing a lot of confusion and complication in case a no-fault driver would like to seek compensation for a car accident.

As with other types of insurance one of the best ways to find good deals is to compare insures to meet your needs. Calling a few insurance companies to get their rates, or going online to compare the different rates can save you a great amount of money and time.

The car (vehicle) insurance is a form of insurance designed to protect cars, trucks or other types of vehicles from losses and liability that result from auto accidents. The policy holder, who is usually the buyer, is protected from a financial loss in the event of a car accident and in return pays a monthly fee to the company that insures him/her. Some factors such as what the vehicle model is, the driver’s age, previous accidents, clean driver’s license and location will play a key role in determining the auto insurance cost. Some of the main factors include:

• Gender – it is considered that women drive less than men, thus resulting in fewer incidents. As a result a discount is offered to young female drivers, though the cost for adults is generally equal.
• Age – inexperienced teenage drivers cost more to insure because they have been statistically proven to be more likely to be involved in an auto accident then older more experienced drivers.
• Driving history – includes information about the driver such as how many traffic violations and auto accidents a person has been involved in. If the history shows a pattern that makes that person statistically more likely to make an auto claim then they will have to pay more to be insured.
• Vehicle type and model – The fees will be determined by the level of risk and the value of the vehicle. For example more expensive autos are made with more expensive parts so they cost more to repair. A sports car or motorcycle can cost more to insure because the risk of being involved in a high speed accident is greater, though other factors, such as safety features, like air bags can affect rates as well.
• Distance – For example driving daily 100 miles will bring more risks then driving 20 miles to the mall during weekends. Not all insurers include this factor in their rates, though some do.

The public policy is different everywhere in the world and even differs from state to state in the US, but in many jurisdictions it is required to buy vehicle insurance before driving your car.
In the US each state has different requirements for car insurance coverage. Some states require additional insurance protection while others only require liability vehicle insurance. Some states are considered “no-fault” states.

Here is a list of most common types of vehicle insurance:

- Auto liability insurance – this insurance is mandatory in almost all states and it is the minimum requirement if you want to drive a vehicle. Auto liability insurance comes in two types, as the first concerns the liabilities from bodily injuries and the second one covers property damage. The bodily injury liability is paying for the medical bills and salary lost in case of accident. There are some limitations in terms of coverage per person and total amount of coverage. The property damage liability covers the damages caused to someone’s property and it also covers legal and settlement fees if there are any. The liability insurance is usually presented as set of three numbers. For example it might look like this: 25,000/50,000/25,000. The first number is the maximum amount the insurer pays per injured person the second one is the maximum amount the insurance company will pay for all bodily damages in one accident and the third one shows the maximum amount that will be paid for property damage. Of course all these are minimum required amounts and you can choose a higher level of coverage since sometimes the medical expenses might reach thousands of dollars, though increasing coverage will cost more money.

- Auto insurance collision coverage – This insurance covers damages to your car in case you collide with another vehicle and is a required to have in most states if your car is on lease or financed. If you have an accident there are deductibles that you will need to pay up-front that range from $100 to $1,500. This is also known as an excess payment. If you choose a higher deductible then your insurance costs will be lower but if you want low deductible they will be higher. This insurance is more popular with newer vehicles where the repair fees are considerably higher, so if you have an older vehicle this may be an unnecessary expense.

- Comprehensive car insurance or full coverage car insurance – This is considered a full coverage insurance that protects your vehicle from theft, some natural disasters, vandalism, fire etc. It covers your vehicle and other vehicles that might be involved in an accident with your car. This insurance also has predetermined deductible fees. Most finance companies and most state laws will require you to have such insurance if you finance or lease your car especially if it is new. You can decide what the amount of the insurance will be.

- No fault auto insurance – This insurance will pay medical bills for an injury that resulted from an accident, regardless of who has caused it. These insurance plans are available in some states and cover the policy holder and sometimes their passengers. This auto insurance law is acting in Puerto Rico, Florida, Hawaii, Kansas, Michigan, Massachusetts, Minnesota, New York, North Dakota and Utah. In New Jersey, Pennsylvania and Kentucky drivers can choose between the no-fault or the traditional insurance. For more information on No-fault insurance please refer to this article (link).

- Uninsured/Underinsured coverage – This insurance is designed to protect you in the case that an uninsured driver causes the accident. This insurance is mostly limited to covering the medical bills that resulted from injuries and in rear cases some damages as well. This insurance is only required in some states and usually it is not very expensive. Estimates show that one in four drivers will drive without insurance so if you do not have a full coverage plan but only a liability insurance it may be a good idea to have this one as well.

Basics of Car Insurance

Car Insurance is a mechanism that transfers the liability of the vehicle owner to the insurance service provider in case of an accident or any damage to the subject, insured car. Insured cars are a lot safer indeed in terms of the claim that an owner can file in case of damage. On payment of a premium amount a car can be insured and the risk is transferred from the insured to the insurance service provider. Trusted insurance service providers are operational across the globe and one can get to choose their insurance partner at will.

Process of Getting Your Car Insured

It is simple to get your car insured from a leading insurance service provider on the go. It is highly recommended to shop around with multiple insurance providers in order to get competitive premium rate and terms. Insurance contract should clearly highlight the terms, risk amount covered and other details.

Getting your car insured won’t take much time and effort. One of the scenarios is mentioned below:

1. Ideally one needs to speak to the insurance company’s helpdesk and get the information on the different documents required for getting the car insured.

2. Some of the relevant documents include – Personal identity proof, car receipts, odometer reading, personal health records, driver’s license number, Vehicle identification number and various other documents.

3. After submission of documents with the insurance company they are scrutinized for authenticity and calculation of premium based on various risk factors.

4. Details are communicated to the information seeker and insurance contract becomes valid between both the parties post acceptance of terms, risk covered and other relevant conditions.

Insurance Policy Underwriting – Basis of Determining Premium

Depending on the insurance services provider, the premium amount would vary for a given set of risk factors. For instance, for a 25 year old woman with no accidental records and 25,000 km odometer reading might be required to pay a different premium amount with different insurance service providers.

Some of the factors on which the premium would be arrived at are listed below:

· Driver’s Gender

Male drivers are perceived to be more careless than their women counterparts. Males might be required to pay slightly higher than the women considering all other factors remain constant for both.

· Driver’s Age

An applicant with new driving history or older applicants might end up paying more premium than the young adults.

· Car’s Manufactured Date

Newer cars carry lesser premium payment.

· Driver’s History and Driving License details.

Drivers who have recorded an accident or claimed for risk covered might be required to pay more.

· Medical Health Report of Driver

Drivers who have improper night vision, diabetic or blood pressure patients and suffering from some ailments generally end up paying more premiums for their car insurance.

· Domicile

Places which are more volatile with civic unrest or other related factors might draw more premium payment.

· Odometer reading

Insurance service providers calculate the premium based on the distance covered in Km or miles before finalising the insurance premium amount.

· Marital Status

Generally it is perceived that the singles indulge in rash driving more often than the married professionals. Married can get discounts on the premium payment.

· Vehicle Classification

Depending on the type of the car – Sports utility Vehicle (SUV), MUV, Compact car or Luxurious car, premium is calculated accordingly.

Filing for Claim

In case of any damage to one’s car they should get in touch with the helpdesk of the insurance service provider and file for the claim. Necessary details like place of accident, circumstances, damaged caused and other relevant details must be provided to the insurance company. Insurance company would investigate the incident and claim amount adjustors will finally provide their report. The claimant is notified about the claim status and the cheque is issued in his or her name.