Question: What is no fault auto insurance?

Answer: No fault insurance is a system that has your insurance company pay for medical bills in an accident even if the accident is the other drivers fault. This system was designed to reduce the amount of lawsuits that were being brought against other drivers.

Since no fault insurance was designed to reduce the amount of money that insurance companies were paying out in court by suing one another the premiums of no fault insurance should, in theory, be lower.

The pros of no fault insurance is that if you cause the accident or if you are hit by an uninsured motorist then your insurance company will pay for any injuries received in the accident.

The problem with no fault insurance is that there are strict limits as to how much money your insurance will pay out per accident. Any medical bills greater than the limits of your policy will have to be sought from the other driver.

In this case you or your passengers may sue the other driver, but only if the medical bills are greater than the limit which is set by the individual state.

No fault insurance is offered in twelve states currently. New Jersey residents may opt in or out of the no fault system.