What does a no-fault insurance policy entail?

A no-fault insurance policy entails that each party involved in an accident pays for their own damages, regardless of who is at fault. This system is designed to simplify the claims process and eliminate the need for determining fault, which can often lead to contentious disputes between insurance companies and insured parties. By ensuring that individuals receive compensation for their medical expenses and other losses directly from their own insurance provider, it aims to expedite the claims process and reduce the number of personal injury lawsuits that occur as a result of accidents.

Under this system, while parties retain the right to seek compensation for non-economic damages such as pain and suffering, they typically cannot pursue legal action against the other driver unless certain thresholds—such as severe injuries—are met. This promotes a more efficient handling of accident-related claims and provides individuals with quicker access to benefits, making it particularly beneficial in high-traffic areas or states with dense populations.