Glossary

No-fault insurance

A system in which your own policy pays your injury costs after a crash regardless of who caused it, with limits on suing the other driver.

Also called: no-fault, no-fault auto insurance, no-fault system

No-fault insurance is a way of handling crash injuries in which each person's own policy pays their medical bills and lost income, up to a limit, no matter who caused the crash. The coverage that does this is personal injury protection (PIP). In exchange for those guaranteed benefits, the state restricts lawsuits: you can sue the at-fault driver for pain and suffering only if your injuries pass a tort threshold.

According to the Insurance Information Institute, 12 states and Puerto Rico have no-fault laws. Florida, Michigan, New Jersey, New York and Pennsylvania use a verbal threshold that describes qualifying injuries; Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah use a monetary threshold based on medical costs. In New Jersey, Pennsylvania and Kentucky, drivers can choose to keep the full right to sue.

"No-fault" applies to injuries, not cars. Vehicle damage is generally still paid by the at-fault driver's property damage liability or your own collision coverage (Michigan has its own rules), and fault still affects your premium. Some at-fault states require or include PIP without limiting lawsuits; these are called add-on states. See no-fault vs at-fault states.

Last reviewed October 4, 2026

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Related terms

Personal injury protection (PIP) Coverage that pays medical bills, part of lost income and related costs for you and your passengers after a crash, no matter who caused it. Tort threshold The level of injury or medical cost a crash victim in a no-fault state must reach before suing the at-fault driver for pain and suffering. Verbal threshold A no-fault rule that lets crash victims sue for pain and suffering only if the injury fits a legal description, such as permanent injury or death. Monetary threshold In some no-fault states, the amount of medical expenses an injured person must exceed before suing the at-fault driver for pain and suffering. Choice no-fault A system that lets drivers pick limited lawsuit rights for a lower premium or full rights to sue, used in New Jersey, Pennsylvania and Kentucky. Add-on state A state where your policy includes or offers injury benefits like PIP that pay regardless of fault, with no limit on suing the at-fault driver.

Related guides

Choice no-fault: New Jersey, Pennsylvania and Kentucky How New Jersey, Pennsylvania and Kentucky let drivers trade the right to sue for a lower premium, what each default is, and how to choose. First-party vs third-party claims The difference between claiming on your own policy and claiming against the at-fault driver's insurer, and how to choose when the other driver caused the crash. Why Florida car insurance is so expensive Florida had the highest average car insurance spending in the U.S. in 2023. Why, what the 2023 tort reform changed, and why rates are now falling. Why Michigan car insurance costs what it does Michigan's no-fault system, unlimited PIP and MCCA fee made it one of the costliest states. What the 2019 reform changed and the choices that set your price. Michigan's no-fault reform explained What Michigan's 2019 auto insurance law changed: PIP choice levels, a Medicare-based medical fee schedule, a smaller MCCA fee and limits on rating factors. The most and least expensive states for car insurance NAIC data ranks Florida, Louisiana and New York as the costliest states for car insurance in 2023 and North Dakota the cheapest. The top and bottom 10, and why.

Related tools

State car insurance requirements lookup Minimum car insurance, fault rules, PIP and uninsured motorist requirements and the regulator's hotline for any state, or two states side by side.