No-fault insurance is intended to pay your medical expenses and loss of income if you are involved in an automobile accident, no matter who is to blame. Some states compel drivers to have no-fault auto insurance coverage, while others make it voluntary. No-fault insurance is often known as personal injury protection, abbreviated as PIP.
Standard no-fault auto insurance covers medical expenditures, lost income if injuries hinder you or your passengers from working, crucial services like child care, and burial costs. Liability coverage covers medical fees and related costs if you harm someone in an accident where you are determined to be at fault. If you are involved in an accident, this coverage will not cover your or your passengers' medical expenses. This is where the PIP component of a no-fault policy comes in.
Understanding No-Fault Car Insurance
No-fault insurance means your car insurance coverage will pay all or some of your out-of-pocket or economic losses if you suffer injuries in a car accident. This will happen regardless of who was responsible for the accident. You can file a no-fault claim through the provisions of your car insurance policy or personal injury protection (PIP). PIP coverage is mandatory in no-fault states. However, you could also buy PIP coverage on top of traditional liability coverage in a non-no-fault state.
A no-fault state has an insurance system that requires motorists injured in car accidents to turn to their insurance coverage first. Laws in no-fault states vary, and acquiring no-fault insurance coverage is mandatory in some states. The first option for injured motorists and passengers is participation in the no-fault scheme when making an injury claim. Car owners can exit the no-fault system and adopt liability-based coverage. You can do this when making injury claims following an accident or buying a car insurance policy.
How a No-Fault Car Insurance Claim Works
If you live in one of the dozen no-fault car insurance states, the process for submitting an insurance claim is streamlined. You submit your claim to your insurance company instead of filing a third-party claim or a lawsuit against the liable party. Your insurer then compensates you for damages associated with your car accident injuries, regardless of who caused the crash.
When you file a no-fault car claim, you do not have to worry if your insurer will compensate you. You also do not need to prove to the insurance adjuster that the other party is liable for the accident.
Typically, PIP covers the following losses resulting from a car accident:
- Reimbursement of some costs incurred because of the accident. For example, you can hire someone to do housework after sustaining injuries. You will also incur transport expenses to and from your medical appointments. You can seek compensation for these expenses because they are directly associated with your injuries.
- Lost income because of inability to work because of your accident injuries
- Medical bills arising from vehicle injuries
- Burial or funeral costs if the covered person or policyholder dies as a result of the car accident
The PIP does not cover the following:
- Physical or mental suffering resulting from the accident
- A car accident resulting from criminal conduct or caused intentionally
- Vehicle damage or injuries suffered by other motorists or passengers in another vehicle
The claims process generally works the same way as liability insurance, despite the differences between the no-fault, PIP, and other types of vehicle insurance. You will typically need to do the following when seeking compensation after a car accident:
- File a claim with your insurance company
- Cooperate with your insurance company and provide evidence of your losses
- Know the next step to take in case your no-fault insurance fails to cover all of your costs
Filing Your Claim With Your Insurance Company
You should notify your insurer immediately if you have been involved in a car accident. If you have no-fault coverage, the company representative will help you understand the process of filing a no-fault claim. You could file via your company's website or over the phone.
The first step is to let your insurance company know everything about the accident. You should understand the documentation you should submit when you speak with the representative. The documentation will help you substantiate your damages. This could include:
- Evidence of lost income and wages
- Receipts or invoices for other expenses associated with your injuries and
- Your medical expenses
You should also inquire with your insurer about the time it will take to process your claim and access reimbursement for your damages.
Cooperate With Your Insurance Company in a No-Fault Claim
Victims often deal with the at-fault driver's insurance company if they have been injured in a car accident and are pursuing compensation. In this case, a claimant must observe what he/she says or agrees to do. The at-fault driver's insurance company usually focuses on eliminating and reducing the financial liability attributed to their client.
However, it is a different case with a no-fault claim. In a no-fault claim, you work through your own insurance company to receive the compensation it promised you under your agreement with it. You should read your agreement and understand the conditions attached to it. However, each vehicle insurance agreement needs the policyholder to cooperate in certain ways with their insurer's claims investigation. This could involve being truthful about your injuries and the accident, providing requested documents, and answering questions.
Whether You Can Settle a No-Fault Claim
The only benefits you will receive from a no-fault claim are lost earnings and medical bills. You could also receive compensation for replacement services for household services you cannot carry out because of your injuries.
A no-fault settlement is often limited because the amount of lost earnings and medical bills is limited. Sometimes, your insurance company can refuse to compensate you for certain damages.
Consider this. Your lost earnings could be $2,000 and $3,000 in medical bills after a car accident, and both costs fall within the no-fault insurance limits. Your insurance company will pay the lost earnings and medical bills, as it is obligated to do so as long as you provide evidence of the earnings. Your insurer will not settle any additional damage because it has paid all the no-fault damages to which you are entitled.
When You Can Receive Less Settlement Than What You Are Asking For
You would typically settle a no-fault claim when there is no serious issue between you and your insurance company. Most insurers ask whether the lost earnings or medical bills are reasonable.
For example, you could have a medical bill of $12,000 that is within your no-fault insurance limits. However, you could have incurred half of the bill after the doctor allowed you to resume work. In this case, your insurance company can argue that your medical treatment after resuming work was unnecessary. Your insurance company could also allege that the medical bills are inflated.
The law allows your insurance company to challenge the cost of your medical treatment or necessity. In addition, the insurance company will pay reasonable and fair medical bills. However, your insurance company can refuse to compensate you if your medical bills are too high. After a settlement negotiation, you, your doctor, and your insurer could agree to settle the no-fault claim.
In this no-fault settlement type, the disputed amount will not be sent to you if the contested issue is unpaid medical bills. The amount will be sent to the health care provider.
Denial Of No-fault Car Insurance Claim
Regarding receiving damages for your car accident, not all is lost if your insurance company rejects your claim. No-fault claims are rarely denied because your insurance policy is a binding agreement between you and your insurance company. Your insurance company has a duty under the law to fulfill the promises made in the policy. Laws exist outlining how insurance companies should deal with policyholder's claims.
However, your insurance company could deny your claim because of the following reasons:
- If you are not covered under the car insurance policy
- If your car is not listed on the car insurance policy
- At the time of the accident, there was no policy in effect
- If your claim is beyond the coverage limits
- If you gave false information to the insurance company while applying for coverage or during the claim process
- You failed to promptly notify your insurance company about the accident
- Your injuries existed before, or your car damage was not caused by the accident
- You were driving without a license or were under the influence of alcohol or drugs
- The investigations of the insurance company concluded that your accident was not covered
You should take the following steps if your insurance company denies your no-fault claim:
- Hire an attorney
- Provide evidence to support your claim
- File an appeal if you have submitted all the evidence
Insurance Company Denying No-Fault Claim In Bad Faith
Under the law, the insurance company has a duty to act in good faith to resolve no-fault claims. When you buy an insurance policy, insurance companies always promise to act in good faith to resolve claims covered by the policy. Therefore, your insurer owes this duty of good faith to you as an insured policyholder. However, your insurance company can sometimes deny your injury claim or negotiate in bad faith.
The law defines bad faith in different ways. Sometimes, you must provide evidence that the insurance company acted intentionally; negligence alone cannot suffice. You must show the following to prove a bad-faith claim:
- The insurance company failed to pay you the benefits due under your policy
- The refusal to pay was intentional and unreasonable
It is hard to prove bad faith. You and your insurer could have different opinions regarding the value of a claim. Having different opinions does not mean that your insurer acted in bad faith. Similarly, a minor claim processing error does not amount to bad faith. The actions that can qualify as acting in bad faith include:
- Conducting a hasty, substandard investigation or refusing to investigate an insurance claim
- Misrepresenting policy terms to avoid paying a claim
- Ignoring evidence that supports a payment and considering only evidence that supports a claim denial
- Refusing to settle when liability and damages are clear
- Making a very low settlement offer or denying a claim without any reasonable explanation
- Other improper actions your insurer deliberately and knowingly takes to avoid its duty according to the insurance policy.
If you believe your insurance company acted in bad faith, you should consult an attorney with experience in such cases.
No-Fault Insurance And Car Accident Lawsuits
Injured motorists and passengers can leave the no-fault system and file third-party insurance claims, even in no-fault car insurance. You could file a lawsuit against the at-fault party when:
- The accident caused substantial injury as defined under the law
- The accident resulted in medical bills above a particular dollar threshold
Severe Injury Threshold
No-fault insurance providers have their definition of what amounts to a severe injury in the no-fault system. If you suffer injuries in an accident and have no-fault insurance coverage, your mandatory personal injury protection (PIP) coverage will pay for your damages. Your insurer will compensate you regardless of who was liable for the accident. However, you can file an insurance claim or personal injury lawsuit against the liable party if your injuries are severe. Severe injury threshold in no-fault insurance can include:
- Death
- Permanent injury within a reasonable degree of medical probability
- Permanent and significant disfigurement or scarring
- Permanent or significant loss of an important bodily function
- Bone fractures
- Disability lasting at least 90 days during the 180 days following the injury
- Permanent damage to organs, systems, or functions
- Loss of a fetus
Monetary Threshold
The law allows individuals to pursue a lawsuit or insurance claim if their lost wages or medical expenses exceed a monetary threshold set by their insurer.
When You Exceeding The Limits Of Your No-Fault Or PIP Coverage
The amount of compensation you can obtain from no-fault coverage would be based on the legal requirements of your area. It also depends on whether you pay a higher premium for extra coverage. If your accident's financial expenses exceed your no-fault coverage limit, you could receive compensation for the remaining amount by doing any of the following:
- Filing a personal injury lawsuit against at-fault motorist
- Filing a third-party car insurance claim
However, there could be some restrictions on your ability to sue an at-fault party. You could be stopped from doing so, depending on the applicable law, unless you meet the following:
- A monetary threshold that includes medical costs of at least a few thousand dollars
- A severe injury threshold like permanent disability, fractured bones, or
- A combination of the two requirements
Unfortunately, there is no guarantee that you will receive a settlement, even if you meet the above requirements for making an insurance claim.
The Difference Between No-Fault Insurance And Liability Insurance
No-fault, or PIP, insurance covers policyholders, their families, and passengers for car accident injuries and related harm. Liability insurance covers other people's damages when the policyholder or insured motorist causes an accident. Motorists must carry liability insurance to protect other people from accidents they cause. Unlike no-fault insurance or PIP, liability insurance does not cover the policyholder. It is only applied when the insured motorist causes an accident, and other individuals sustain:
- Injuries that are covered by bodily injury liability coverage or
- Car destruction that is covered by property damage liability coverage
No-Fault Insurance And Health Insurance
If you have health insurance, you could use it with no-fault insurance rather than depend on no-fault insurance coverage alone. For example, your health insurance plan could have a $1,500 deductible. If you suffer injuries in an accident and your medical bills exceed $1,500, you could use no-fault insurance to cover the deductible, while health insurance covers the rest.
Sometimes, it can be difficult to figure out how health and no-fault coverage work together when seeking compensation for your injuries. You should understand both policies and consult your insurance company to explain the details.
You can use your health insurance to cover medical care for car accident injuries. However, a no-fault policy is best if:
- You want to protect yourself against repercussions that no-fault and health insurance do not cover, like lost income because of a car accident injury
- You are concerned about the quality of your health coverage
- You do not have health insurance
Find a Personal Injury Attorney Near Me
You should file a claim with your insurer if you have no-fault insurance coverage and suffer injuries in an accident. You do not have to prove the liable party to access compensation. Our experienced attorneys at Orange County Personal Injury Attorney can help you file a no-fault insurance claim. We have helped many clients file no-fault insurance claims for years with outstanding results. We will go out of our way to ensure you receive the best compensation. Contact us at 714-876-1959 to speak to one of our attorneys.
