Do no-fault states really cost more? Comparing premiums by system

On average, yes, by a modest margin: in the National Association of Insurance Commissioners' (NAIC) 2023 figures, the states it labels no-fault average about $160 more per insured vehicle than the traditional tort states. But that average hides a spread from $808 to $1,865 inside the no-fault group alone, and it moves a lot depending on which states you count. The fault system is one ingredient in a state's price, and it is rarely the largest one.

The question matters because "no-fault" is often blamed for high premiums in the news, and the same label is also credited with keeping small claims out of court. Both stories cannot be fully true. The sections below lay out the numbers, what each system actually pays for, why the groups are so uneven, and a method for reading any chart that sorts states by system.

What the 2023 NAIC numbers show

The NAIC's 2022/2023 Auto Insurance Database Report, adopted in December 2025, publishes an average expenditure for every state: total written premium for liability, collision and comprehensive, divided by the number of insured vehicles that carry liability. The countrywide figure for 2023 was $1,281.92, and the median state was $1,114 (NAIC Auto Insurance Database Report). The same report classifies each state's law as tort, no-fault or add-on in its Table 40, using 2022 law.

Taking the NAIC's own labels, we computed a simple, unweighted average of the states in each group (every state counts once, regardless of size). This is our arithmetic on the NAIC tables, not an NAIC statistic.

On this cut, no-fault is higher than tort by roughly $160 at the average and $210 at the median. That is a real difference, but look at what the table also says. The most expensive tort state, Louisiana, costs more than every no-fault jurisdiction except Florida, and the cheapest no-fault state, North Dakota, is the cheapest in the country. A reader who said "no-fault means expensive" would be wrong about North Dakota, Hawaii and Kansas. A reader who said "tort means cheap" would be wrong about Louisiana, Georgia and Rhode Island.

The ranking at the extremes is mixed too. Five of the ten highest-expenditure jurisdictions carry the NAIC's no-fault label (Florida, New York, the District of Columbia, New Jersey and Delaware), but so do two of the ten lowest (Hawaii and North Dakota).

The answer changes with the classification

The labels themselves are contested. The Insurance Information Institute (III) counts twelve no-fault states plus Puerto Rico, and its list includes Pennsylvania, which has a no-fault option with a verbal threshold, but not Delaware or the District of Columbia (III background on no-fault). The NAIC table instead lists Pennsylvania as a tort state with a "choice" threshold and counts Delaware and D.C. as no-fault.

Swap to the III list and the same 2023 data give a no-fault average of about $1,258 against $1,170 for everyone else, a gap of roughly $90 instead of $160. The medians are $1,162 and $1,113. If a result shrinks by almost half when you move a few states between columns, it is fragile.

How each system pays for injuries

The systems differ in two things: who pays your medical bills and lost wages first, and whether the law limits your right to sue the other driver for pain and suffering.

The III describes the tort threshold as the trade: people give up some lawsuits in exchange for faster payment from their own insurer, and the stated goal is to take small claims out of court. The system works as intended only when the threshold is strict and the benefits are priced sensibly. Our guide to no-fault vs at-fault states covers the mechanics, and Add-on no-fault: PIP benefits without a limit on suing explains how add-on states sit between the two.

What "mandatory PIP" means varies enormously by state, which is the first reason the group is not uniform:

• Florida requires $10,000 in medical and disability benefits plus a $5,000 death benefit. Medical benefits pay 80% of reasonable expenses for necessary services when initial treatment starts within 14 days, and disability benefits pay 60% of lost gross income (Florida Statutes s. 627.736, 2025).
• New York defines "basic economic loss" as up to $50,000 per person for medical costs, lost earnings and other listed expenses, and defines "serious injury" by a list of categories such as a broken bone, a significant disfigurement or a lasting loss of use of a body part (N.Y. Insurance Law s. 5102).
• Pennsylvania requires first-party medical benefits with a $5,000 minimum, together with $15,000/$30,000 bodily injury liability and $5,000 property damage liability; uninsured motorist coverage is optional there (Pennsylvania Insurance Department auto guide).
• Michigan is the outlier on the generous side. Before 2019 its PIP medical benefit was unlimited for life, and since the 2019 reform drivers choose among limits that run from a Medicaid-coordinated tier through $250,000 and $500,000 up to unlimited; read the details in Michigan PIP: the fee schedule, attendant care limits and the MCCA.

A no-fault label can therefore mean a $3,000 monetary threshold in one state and an unlimited lifetime medical benefit in another. NAIC Table 40 lists Utah's threshold at $3,000 and Michigan's as verbal. Treating them as the same "system" is the core problem with any bar chart that groups them.

Why the group is so uneven: four pairs

Michigan and Utah

Both are no-fault states in the NAIC table. Michigan's 2023 expenditure was $1,444.01, twelfth highest among the 50 states and D.C.; Utah's was $1,168.93. Michigan's design is unusual: until the 2019 reform every policy carried unlimited lifetime medical benefits, and as of 2024 nearly 30% of drivers had chosen a lower limit, according to an actuarial report for the state summarized by Bridge Michigan. Michigan also has one of the larger uninsured shares: the Insurance Research Council estimated 22.3% for 2023, the fourth highest, against 6.2% in Utah (III summary of the IRC study). Utah has a dollar threshold and a smaller benefit structure. Same label, different cost drivers.

The Michigan trend is also instructive: its average expenditure was $1,498.59 in 2019 and $1,444.01 in 2023, down about 4%, while the countrywide figure rose from $1,075.08 to $1,281.92, up about 19%. The 2019 reform shows up in that data, and it shows a no-fault state's price moving independently of its label.

Pennsylvania and Florida

Pennsylvania's 2023 expenditure was $1,154.57 and Florida's was $1,864.63, the highest in the nation. Depending on whose list you use, both are no-fault or choice no-fault states with verbal thresholds, so the system cannot be what separates a gap of about $710. Florida is 91.5% urban in the NAIC's census table and has 1.84 million vehicle miles per mile of road, against 76.5% and 0.82 for Pennsylvania, and Pennsylvania drivers can also choose whether to accept the threshold at all.

New Jersey and Kentucky

Both are listed as choice states, yet New Jersey's expenditure was $1,573.21 and Kentucky's was $1,045.66. New Jersey's urban share is 93.8% and its miles driven per mile of road, a density measure, is among the highest in the country; Kentucky's urban share is 58.7%. Those numbers come from the same NAIC report, which publishes them as context for premium differences.

Hawaii and the District of Columbia

Hawaii is no-fault and cost $888.07 in 2023. D.C., which the NAIC also lists as no-fault, cost $1,676.99. D.C. is 100% urban in the NAIC's census table. Hawaii's urban share is 86.1%, so density alone does not explain it either; the point is that no single factor does.

What actually moves the numbers besides the system

The NAIC report lists the factors it considers important for state differences: the types and amounts of coverage bought, telematics use, weather, driving locations, accident rates, traffic density, vehicle theft, repair costs, population density, medical and legal costs, income, rate-filing laws, liability requirements and traffic laws. Its authors add a caution that comparisons between states should be treated with a high degree of caution because the figures do not account for differences in tort law, rate-filing law, traffic conditions or demographics.

The NAIC singles out three variables that correlate with premiums: urban population, miles driven per mile of roadway, and disposable income. Its graphs show that high-premium states tend to be highly urban, with higher wages and prices and heavier traffic. That is the main confounder for the no-fault comparison. Using the NAIC's census and Federal Highway Administration tables, the 13 no-fault jurisdictions average 81.5% urban population against 70.1% for the 33 tort states, and about 1.17 million vehicle miles per mile of road against 0.71 (our averages of the state values). The system and the density travel together, so a raw comparison credits the system with what density did.

Other confounders matter on top of that:

1. Fraud and litigation incentives. The III notes that PIP has been a target for dishonest clinics in some no-fault states, and that verbal thresholds can erode through broad court interpretation. New York is the standard example; No-fault medical mill fraud: what New York's rules aim to stop covers it.
2. Medical prices. A 2004 Insurance Research Council study of PIP claims in Colorado, Florida, Michigan and New York found that chiropractors billed an average of $254 per visit in Florida and $223 in Colorado, against $125 in Michigan and $83 in New York, and that claimants in some states used far more treatment than in others (Insurance Journal report on the IRC study, November 2004). The data are old, but they show how two states with the same label can pay very different amounts for similar injuries. Michigan's fee schedule for treating crash injuries, added by the 2019 reform, is the modern version of the same lever.
3. Uninsured drivers. More uninsured drivers mean more claims against uninsured motorist coverage and PIP. The IRC's 2023 estimates range from 5.7% in Maine to 28.2% in Mississippi (III summary), and the no-fault group contains states on both ends.
4. Coverage bought. Average expenditure divides all premiums by liability exposures, so a state where more people carry collision and comprehensive looks more expensive without any change in risk.

Why bodily injury numbers mislead in no-fault states

The NAIC also publishes claim frequency and severity by coverage, and it exposes a trap. In 2022 Michigan's bodily injury liability claim frequency was 0.20 claims per 100 insured car-years, against 0.82 countrywide, while its average bodily injury claim was $77,661 against $28,919 countrywide. That does not mean Michigan drivers are unusually safe or that injuries are unusually costly. It means most ordinary injury claims never reach the bodily injury liability line, because PIP pays them first, so the few that do are the serious ones. Florida shows the opposite pattern: 1.37 claims per 100 car-years with a $28,242 average, close to the national severity (NAIC report, Tables 8C and 8D).

The practical lesson: never compare the liability line of a no-fault state to the liability line of a tort state. The injury costs are in different coverages. Average expenditure, which sums everything, is the fairer measure, and even that depends on coverage choices.

A worked example: reading a chart grouped by system

Suppose a news graphic shows three bars: no-fault $1,314, add-on $1,108, tort $1,155. Here is a way to interrogate it.

1. Count the states in each bar. Ours were 13, 5 and 33. A five-state bar is easily moved by one state, and the add-on bar here would shift sharply if Maryland were reclassified.
2. Ask whose labels the chart uses. The NAIC, the III and state insurance departments do not agree on Pennsylvania, Delaware or D.C., and a different classification changed our no-fault gap from about $160 to about $90.
3. Check whether the bar is an average of states or of drivers. Ours was a simple average of states. A weighted average would give Florida, New York and New Jersey, with large populations, more influence.
4. Look at the spread, not just the bar. A bar that hides a $1,000 range is telling you less than it seems.
5. Remove the obvious outliers. Dropping Florida, New York, New Jersey and D.C. from the no-fault group leaves nine states averaging about $1,135, almost level with the tort average of $1,155. That is a sensitivity test, not a verdict, but it shows how much of the headline gap sits in four dense, high-cost jurisdictions.
6. Ask what is not on the chart: density, income, weather, fraud, uninsured rates and coverage choices.

If a chart cannot survive steps 1 through 5, treat it as a talking point, not evidence. Our guide on how to read car insurance rate studies and average-cost claims applies the same habits to other kinds of rankings.

What this means if you live in or move to a no-fault state

The system affects your policy more than it affects your rank on a chart. In a threshold state, your own PIP pays first, which means the PIP limit, the deductible and how it coordinates with your health insurance are real decisions. In a choice state you decide whether to accept the limit on suing, a decision our guide to Choice no-fault: New Jersey, Pennsylvania and Kentucky walks through. Ask the insurer or agent:

• What PIP limit and deductible does this quote include, and what does a higher limit cost?
• Does PIP pay before or after my health insurance, and can I coordinate the two?
• Does my state let me choose a lawsuit limit, and what does it change on the premium?
• Does the quote include uninsured and underinsured motorist coverage, and at what limits?

Rules differ by state and change; check the state car insurance requirements lookup tool and your state insurance department's consumer pages for the current requirements.

Common questions

Do strict no-fault thresholds lower costs?

The III says high-threshold systems tend to reduce costs and delays, and that verbal thresholds remove the incentive to inflate claims that a dollar target creates. It also warns that dollar thresholds lose force as prices rise and that verbal thresholds can be broadened by courts. The effect depends on how the law is written, how courts read it and how generous the PIP benefits are.

Is the no-fault system the reason Florida and New York are expensive?

It may contribute, but it is not the only driver. The NAIC's list of factors includes urban density, medical and legal costs, theft and weather, and both states score high on several. Louisiana, a tort state, is second highest in the 2023 data, which shows that high premiums occur without no-fault.

Which system is cheapest to buy under?

The data do not support a single answer. The three lowest-expenditure jurisdictions in the NAIC table are North Dakota (no-fault), Maine (tort) and Idaho (tort). What you pay depends mostly on your state's mix of driving conditions and claim costs, then on your own record, car and coverage choices.

Can I change my state's system?

Only through the state legislature. As an individual, you can usually choose among options the system allows: PIP limits where they are optional, a lawsuit limit in choice states, and higher liability limits.

Key takeaways

• In the NAIC's 2023 data, no-fault states average about $160 more per vehicle than tort states, but the gap falls to about $90 under the III's classification and disappears when four dense jurisdictions are removed.
• The no-fault group runs from $808 (North Dakota) to $1,865 (Florida); five of the ten priciest and two of the ten cheapest jurisdictions carry the no-fault label.
• Density, income, fraud, medical prices, uninsured rates and coverage choices all move premiums, and they correlate with the system, so a raw comparison credits the label with their effect.
• Do not compare bodily injury liability lines across systems: in Michigan, PIP absorbs most injury claims, leaving rare, large ones on the liability line.
• Before trusting a chart grouped by system, count the states, check whose labels it uses, and look at the spread.