How does no-fault insurance work?

No-fault insurance means that you are responsible for covering your own injuries regardless of who is at fault for the accident was. There are three types of no-fault insurance coverage: Modified, Add-On, Choice no-fault insurance policies. Each comes with a different price, so enter your ZIP code below to start comparing no-fault insurance rates for free.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 21, 2021

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Here's what you need to know...

  • There are three main types of no-fault car insurance.
  • In a state with no-fault car insurance laws, you are responsible for your own injuries regardless of whose fault the accident was.
  • Whether you are purchasing auto insurance in a no-fault state or not, you should compare quotes online to find which companies offer the best value for your needs.

What does it mean to have no-fault insurance? With no-fault insurance, claims for bodily injury incurred in a car accident are paid by the insurance company of the car owner, regardless of who is at fault.

With traditional insurance, fault is determined and the insurance company for the party at fault will pay for the damages incurred by the other party through no fault of their own.

To obtain car insurance quotes for no-fault insurance, type your zip code in the box above!

One of the major reasons this type of system was put into place was to stem the flow of lawsuits in the case of minor car accidents. It was also to help lower the cost of premiums that were skyrocketing due to lawsuits.

The 3 Types of No-Fault Insurance


There are three types of no-fault insurance: modified no-fault, add-on plans, and choice no-fault. Each is explained below.

  • Modified no-fault – This is not a pure type of no-fault insurance because the victim of an accident may still have the right to sue, depending on the situation. This is the way it works in about half the American no-fault states. Typically, if medical bills total more than the limits of liability, the injured party can sue.
  • Add-on plans – These plans allow drivers in such states to decide whether or not they want to carry such coverage. There are no restrictions on lawsuits with this type of plan.
  • Choice no-fault plans – You choose to add the plan at renewal or when you purchase your policy. Such policies are typically less expensive but also have limited rights to sue in the case of an accident.

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Car Insurance You Should Buy in A No-Fault State

Car insurance in a no-fault state is still mandatory. Like other states, there are state-required minimum amounts of coverage that you must carry. They typically include:

  • A fixed amount of liability insurance to coverage losses above and beyond a certain limit, personal injury protection to cover medical expenses, lost wages, funeral expense
  • Other bodily injury related costs that you or occupants of your vehicle may incur in an accident
  • Uninsured motorist coverage to protect you from drivers who choose not to carry insurance at all or who flee the scene of an accident

If you want physical damage to your car covered in the case of an accident, you will need to carry collision and comprehensive insurance coverage.

No-fault insurance will not take care of personal property damage unless you specifically have that type of coverage.

Of course, if you happen to have a vehicle that is financed, your lienholder will require you to carry collision and comprehensive coverage to protect its investment.

Purchasing No-Fault Insurance


If you are in the market for no-fault insurance, you need to shop around. Take the time to get a variety of quotes from different insurers in your area, just like you would with any type of car insurance.

Get a wide variety of quotes and compare them carefully on multiple factors before choosing the policy you want to carry.

By using a free online car insurance quotes tool you can get all the quotes you need to do effective comparison shopping quickly and easily.

You simply input your zip code and then answer the questions the quote tool will ask. When you have provided the necessary information, it will be simultaneously submitted to various insurers offering coverage in the area where you live.

Once you have the quotes you will need to carefully compare them. Begin by making sure that all quotes are based on the same type of policy.

While there may be some small differences that are specific to certain companies, for the most part, exclusions, duration, and limits should all be the same.

Next, you will need to narrow down your choices based on your budget. Refrain from giving in to the temptation of simply choosing the lowest priced policy. Look into each company on your short list carefully before making the final decision.

The company should have a high level of quality customer service. Check their complaint ratio with the state department of insurance to get a feel for this.

An online search for reviews and complaints of the company will also give you consumer feedback on the service they receive, which is very valuable.

You also need to check the economic stability of the company by learning its grade from one of the independent insurance ratings companies. A. M. Best, Standard & Poor’s and Weiss Ratings are among the top ones who assign such grades.

Click here to get competitive, affordable no-fault car insurance quotes!

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