Published: February 1, 2022Updated: August 15, 2022

Liability vs. No-Fault Auto Insurance

Two people get into a car accident. Who has to pay?

Liability, otherwise known as at-fault insurance, means that the person at fault in a car accident has to pay for the other party’s injuries and property damages. In no-fault states, they’re only on the hook for the victim’s property damage; each party’s insurance provider covers their own injuries. In this article, we’ll compare and contrast liability and no-fault auto insurance, give a brief history of these rules, and explain the nitty-gritty of each system, from serious injury thresholds to negligence laws.

Liability vs. No Fault

If you get into a car accident in a no-fault state like Florida (otherwise known as a liability state), your experience will be very different from an accident in an at-fault state like Alabama.

Similarities

Differences

  • Medical payments: In no-fault states, each party pays for their own medical expenses under medical coverage, also known as personal injury protection (PIP). In at-fault states, the party at fault would be responsible for the other party’s medical expenses.
  • Auto insurance premiums: Auto insurance costs are higher on average in no-fault states.
  • Right to sue: In no-fault states, the victim can only sue for noneconomic damages, such as injuries. In at-fault states, the victim can sue for both economic and noneconomic damages.1

At-Fault vs. No-Fault States

Wondering if you live in a no-fault state or an at-fault state? Check out your state’s fault system below.

State Fault system
Alabama At fault
Alaska At fault
Arizona At fault
Arkansas No fault
California At fault
Colorado At fault
Connecticut At fault
Delaware No fault
District of Columbia At fault
Florida No fault
Georgia At fault
Hawaii No fault
Idaho At fault
Illinois At fault
Indiana At fault
Iowa At fault
Kansas No fault
Kentucky Optional
Louisiana At fault
Maine At fault
Maryland At fault
Massachusetts No fault
Michigan At fault
Minnesota No fault
Mississippi At fault
Missouri At fault
Montana At fault
Nebraska At fault
Nevada At fault
New Hampshire At fault
New Jersey Optional
New Mexico At fault
New York No fault
North Carolina At fault
North Dakota No fault
Ohio At fault
Oklahoma At fault
Oregon At fault
Pennsylvania Optional
Rhode Island At fault
South Carolina At fault
South Dakota At fault
Tennessee At fault
Texas No fault
Utah No fault
Vermont At fault
Virginia At fault
Washington No fault
West Virginia At fault
Wisconsin At fault
Wyoming At fault2

History of No-Fault Systems

When the U.S. auto insurance industry began, all states had at-fault insurance systems. However, many people were unsatisfied with their insurance coverage, as the process of determining who was at fault in a car accident was lengthy and expensive. As a result, some states introduced no-fault legislation.

Here’s a brief history of no-fault auto insurance systems.

  • 1960s: In 1965, University of Virginia law professor Jeffrey O’Connell and Havard law professor Robert E. Keeton proposed the Keeton-O’Connell Plan, a no-fault accident compensation system. Under this system, drivers at fault in car accidents could file claims under uninsured motorist coverage. In addition, the plan would have prevented drivers who were not at fault from being sued or suing the at-fault party. This plan laid the groundwork for future no-fault systems.
  • 1970s: It wasn’t until the ’70s that the first no-fault legislation passed, allowing accident victims to recoup financial losses such as hospital expenses, medical expenses, and lost wages from their own insurance providers.
  • 1980s: A consumer nonprofit organization called Project New Start developed legislation that would allow people to choose between liability and no-fault systems, which is the current model in New Jersey, Pennsylvania, and Kentucky.
  • 1990s: The concept of “pure no fault” came about, which would have prohibited personal injury lawsuits related to car accidents. Pure no-fault systems would have led to fewer wasted resources in the crowded liability system and more affordable medical care and rehabilitation. To pay for no-fault auto insurance, legislators introduced a “pay at the pump” system where drivers would pay a gas fee, but opposition to this fee killed attempts at pure no-fault systems.3
  • 2000s and beyond: Today, 34 states (including Washington, D.C.) have at-fault systems, 14 states have no-fault systems, and three states let drivers choose between at-fault and no-fault coverage.

Pros and Cons of No-Fault Insurance

Although “no fault” sounds like a positive term, it actually leads to higher costs for the policyholder. But let’s start with the good.

  • Property damage only: If you’re at fault in an auto accident, you’ll appreciate only having to cover the other party’s property damages, not their bodily injuries.

  • Fewer lawsuits: Since victims in no-fault states can only sue for noneconomic damages, there are fewer lawsuits in no-fault states.

  • Better claims process: When insurance companies don’t have to determine fault, it makes the claims process shorter. [Learn more about insurance claims and how the process works.]

  • Higher costs: When it comes to the bottom line, auto insurance costs more in no-fault states than in at-fault states. Policyholders in no-fault states pay 5 percent more than the rest of the country for auto insurance, whereas people in no-fault states pay 3 percent less than the national average.

DID YOU KNOW?

Noneconomic damages include anxiety, pain, and suffering.

State insurance laws Average yearly spending on car insurance in 2018 Percentage higher than national average (rounded to nearest whole number)
At fault $964.11 -3%
No fault $1,055.43 5%
Optional $1,104.58 10%4

How to File a Claim

The first step in filing a claim is looking up your insurance provider’s and the other party’s provider’s contact information. For your convenience, we’ve provided it below.

Auto insurance providers A-Z Email address Phone number Mailing address URL
21st Century claims
documents@
farmersinsurance
.com
888-244-6163 P.O. Box 268994

Oklahoma City, OK 73126-8994

Medical/PIP documents involving FL, NJ, NY:
P.O. Box 268995

Medical/PIP documents involving all other states: P.O. Box 268993

www.21st.com/
contact-21st-century-
insurance.htm
AAA None Enter ZIP code to find claims number:

www.aaa.com/stop/

The Auto Club Group Claim Department

P.O. Box 9001

Royal Oak, MI 48068-9826

www.aaa.com/stop/
AARP None 800-243-6860 The Hartford

P.O. Box 14219

Lexington, KY 40512

https://www.
thehartford.com/aarp/
car-insurance/how-to-
file-claim
Allstate None 800-255-7828 Allstate Insurance Company

P.O. Box 660636

Dallas, TX 75266

www.allstate.com/
auto-insurance/
auto-claims-info.aspx
Amica None 800-242-6422 Amica Scan Center

P.O. Box 9690

Providence, RI 02940-9690

www.amica.com/
en/customer-service/
contact-us.html
Autopom info@autopom.com 800-654-8455 Autopom Office

22651 Lambert St., Suite 102

Lake Forest, CA 92630

www.extended-vehicle-
warranty.com/
mercury-insurance-claim/
Bristol West None 800-274-7865 Bristol West Claims Service

P.O. Box 258806

Oklahoma City, OK 73125-8806

www.bristolwest.com/
home/claims
Carchex None 877-227-2439 Carchex

118 Shawan Road, Suite 210

Baltimore, MD 21030

www.carchex.com/
auto-warranty/
how-to-file-a-claim/
Carshield ClaimsDocs@
american
autoshield.com
800-531-1925 1597 Cole Blvd., Suite 200

Lakewood, CO 80401-3418

https://
americanautoshield.com/
report-a-claim/
Clearcover None 855-444-1875 None https://
clearcover.com/
claims/
Concord None Maine: 800-482-7443

Massachusetts: 800-422-5246

New Hampshire: 800-888-6050

Vermont: 800-660-3838

Concord Corporate Office

4 Bouton St.

Concord, NH 03301

www.concord
groupinsurance.com
/claims/
report-a-claim
Dairyland None 800-334-0090 None www.dairyland
insurance.com/
auto/claims
Direct None 800-403-1077 Direct Auto Insurance Claims Department

P.O. Box 1623

Winston Salem, NC 27102

www.directauto.com/
claims/make-a-claim
Endurance None 877-414-0134 Endurance Corporate Headquarters

400 Skokie Blvd., Suite 105

Northbrook, IL 60062

www.endurance
warranty.com/learning-
center/company-resources
/best-practices-
for-filing-a-claim-
with-endurance-warranty/
Erie None 800-367-3743 Erie Branch Claims Office

P.O. Box 13002

Erie, PA

16514-3002

www.erieinsurance.com
/support-center/
claims/auto
Esurance None 800-378-7262 Esurance Customer Service

P.O. Box 5250

Sioux Falls, SD 57117-5258

www.esurance.com/
file-a-claim-online
Farmers None 800-435-7764 Farmers Customer Service

6301 Owensmouth Ave.

Woodland Hills, CA 91367

www.farmers.com/
cmp/s/filealoss?
SO=01
Foremost None 800-274-7865 None https://claims.
bristolwest.com/
cmp/s/filealoss?SO=04
GAINSCO None 866-424-6726 GAINSCO Inc.

P.O. Box 199023

Dallas, Texas 75219-9023

www.gainsco.com/
customers/
report-a-claim/
GEICO None 800-841-3000 None www.geico.com/
claims/
GMAC Claims@NGIC.com 800-468-3466 None https://claims.
nationalgeneral.com/
report
Good2Go Claims@
good2go.com
800-727-6664 Good2Go Auto Insurance

P.O. Box 1930

Blue Bell, PA 19422-0479

https://mypolicy.
good2go.com/
account/login#
Infinity customer.service
@ipacc.com
800-334-1661 Infinity Insurance

200 E. Randolph St., Suite 3300

Chicago, IL 60601

www.kemper.com/
claims/report-a-
claim
Kemper None 888-253-7834

For California customers: 800-508-5833 (formerly Alliance United) 800-234-3606 (formerly Kemper Specialty California)

Kemper Claims

P.O. Box 2855

Clinton, IA 52733

www.kemper.com/
claims/report
-a-claim/report
-a-claim-auto
Lemonade carclaims@
lemonade.com
844-733-8666 (for claim emergencies) None www.lemonade.com/car
Liberty Mutual None 800-225-2467 Liberty Life Assurance Company of Boston

100 Liberty Way

Dover, NH 03820

https://
fileaclaim.
libertymutual.com/
Mercury None 800-503-3724 Mercury Insurance

1700 Greenbriar Lane

Brea, CA 02921

www.mercury
insurance.com/claims
/auto-claim.html
MetLife — Farmers Auto Insurance None 800-435-7764 Farmers Insurance Customer Service

6301 Owensmouth Ave.

Woodland Hills, CA 91367

www.farmers.com/
cmp/s/filealoss?
SO=01
Metromile None 888-595-5485 None https://claims.
metromile.com/
Nationwide None 800-421-3535 None https://claimsselfservice.
nationwide.com/
claims/index.html#/
file-claim
Omega contactus@
omegaautocare.com
877-850-0443 None www.omegaautocare.
com/claims/
Plymouth Rock None 844-346-1225 Plymouth Rock Assurance

P.O. Box 55165

Boston, MA 02205

https://efnol.
plymouthrock.com/#/login
Progressive None 800-776-4737 None www.progressive.com/
claims/auto-process/
Protect My Car None 844-256-4762 None https://blog.protectmy
car.com/claim-
protect-my-car
Root None New claims: 866-980-9431

Existing claims: 866-489-1985

Root Insurance Claims Department

80 E. Rich St., Suite 500

Columbus, OH 43215

www.joinroot.com/
claims/
Safeco None 800-332-3226 None https://fileaclaim.
safeco.com/
State Farm None 800-732-5246 None www.statefarm.com/
claims/file-a-claim
The General None 800-280-1466 None www.thegeneral.com/
car-insurance/
basics/claims/
Toco info@
tocowarranty.com
855-298-8626 Toco Warranty

8501 Fallbrook Ave., Suite 225

West Hills, CA 91304

www.tocowarranty.com/
file-a-claim
Travelers None 800-252-4633 None www.travelers.com/
claims/report-claim
USAA None Shortcut mobile number: #8722

210-531-8722 or

800-531-8722

USAA

9800 Fredericksburg Road

San Antonio, TX 78288

www.usaa.com/
inet/wc/auto-insurance
-claims

Read on to learn how to file a claim, step by step.

How to File a Claim in a No-Fault State

If you file a claim in a no-fault state, the property damage portion needs to be a third-party claim, meaning it’s with the other party’s insurance provider. Follow these steps:

  1. If you’re at fault in the accident, contact the other party’s insurance provider and file a property damage claim. Make sure you have a police report for your insurance claim.
  2. If you have injuries, file a first-party claim with your insurance provider.

How to File a Claim in an At-Fault State

If you’re involved in an accident, the claims process in at-fault states is a bit complicated compared to no-fault states.

  1. File both third-party property damage and bodily injury claims.
  2. If you have any property damages or injuries and you have optional collision coverage or medical payments coverage, file first-party claims for your property damage and injuries.
  3. Your insurance company will complete the rest of the process to determine fault in the accident. You could be found either fully at fault, partially at fault, or not at fault.

How Fault Is Determined in a Car Accident

Just how do insurance companies figure out fault in a car accident?

Once you submit your claims, you’ll work with either an insurance adjuster or claims representative, who will assess the damages either in person or through photos. They will also review your notes and the police report. Then, the adjuster will determine fault. However, exactly who will have to pay and how much depends on your state’s negligence laws, as listed below.

Types of Negligence

Depending on what state you live in and your percentage of fault, you’ll be responsible for all or some of the victim’s compensation. It all depends on your state’s negligence laws, which are either comparative or contributory.

Comparative Negligence

Comparative negligence laws allow for partial fault between both parties, meaning that they can split the costs according to their degrees of fault. Comparative negligence can be further divided into pure and modified comparative negligence.

  • Pure comparative negligence: Accident victims can recover some money for their injuries no matter how negligent they were, even if they’re more responsible for the accident than the defendant.
  • Modified comparative negligence: Accident victims’ recoveries are limited only if their fault exceeds a certain percentage. For example, in Colorado and Georgia, victims can only receive any money if they’re less than 50 percent responsible for the accident.

Contributory Negligence

Contributory negligence means that if the plaintiff (victim) is found to have had any level of negligence, they can’t receive any compensation.

Negligence Laws by State

Check out the negligence laws in your state below.

State Type of negligence laws
Alabama Contributory
Alaska Pure comparative
Arizona Pure comparative
Arkansas Modified comparative
California Pure comparative
Colorado Modified comparative
Connecticut Modified comparative
Delaware Modified comparative
District of Columbia Contributory
Florida Pure comparative
Georgia Modified comparative
Hawaii Modified comparative
Idaho Modified comparative
Illinois Modified comparative
Indiana Modified comparative
Iowa Modified comparative
Kansas Modified comparative
Kentucky Pure comparative
Louisiana Pure comparative
Maine Modified comparative
Maryland Contributory
Massachusetts Modified comparative
Michigan Modified comparative
Minnesota Modified comparative
Mississippi Pure comparative
Missouri Pure comparative
Montana Modified comparative
Nebraska Modified comparative
Nevada Modified comparative
New Hampshire Modified comparative
New Jersey Modified comparative
New Mexico Pure comparative
New York Pure comparative
North Carolina Contributory
North Dakota Modified comparative
Ohio Modified comparative
Oklahoma Modified comparative
Oregon Modified comparative
Pennsylvania Modified comparative
Rhode Island Pure comparative
South Carolina Modified comparative
South Dakota Slight/gross negligence comparative
Tennessee Modified comparative
Texas Modified comparative
Utah Modified comparative
Vermont Modified comparative
Virginia Contributory
Washington Pure comparative
West Virginia Modified comparative
Wisconsin Modified comparative
Wyoming Modified comparative

NOTE

South Dakota’s slight/gross negligence comparative laws mean that the victim can only collect damages if their negligence was slightly at fault, like if they were jaywalking when they were hit by a car.5

Monetary and Serious Injury Thresholds by State

In some states, the plaintiff must meet a monetary threshold (a dollar amount) and/or a serious injury threshold in order to sue a defendant for car accident damages. Other states don’t have these thresholds.

State Serious injury threshold Monetary threshold
Washington, D.C. Substantial permanent disfigurement or scarring

Substantial permanent impairment

Substantially total impairment lasting 6 months

PIP benefit amount
Florida Permanent injury

Significant and permanent scarring or disfigurement

None
Hawaii Significant and permanent loss of use of a bodily function or body part

Permanent and serious disfigurement resulting in emotional or mental distress

PIP benefit amount
Kansas Permanent disfigurement

Fracture of weight-bearing compound or bone

Comminuted, displaced, or compressed fracture of any bone

Permanent injury

Permanent loss of a bodily function

PIP benefit amount
Kentucky Permanent disfigurement

Fracture of weight-bearing compound or bone

Comminuted, displaced, or compressed fracture of any bone

Permanent injury

Permanent loss of a bodily function

$1,000
Massachusetts Permanent and serious disfigurement

Fractured bone

Substantial loss of sight or hearing

$2,000
Michigan Serious impairment of a bodily function

Serious and permanent disfigurement

None
Minnesota 60 days of disability

Permanent injury

Permanent disfigurement

$4,000
New Jersey Dismemberment

Significant scarring or disfigurement

Loss of a fetus

Displaced fractures

Permanent injury other than disfigurement or scarring

None
New York Bone fracture

Significant disfigurement

Permanent limitation of use of a body part or organ

A significant limitation of a bodily system or function

Substantially full disability for 90 days

None
North Dakota Permanent and serious disability

Disfigurement of at least 60 days

$2,500
Pennsylvania Serious injury None
Utah Permanent disfigurement

Permanent disability

Bone fracture

$3,0006

Minimum Car Insurance Requirements

Before you buy car insurance, it’s important to know the minimum coverage your state requires. If you don’t meet this threshold and drive without insurance, you could face financial and legal penalties, including license suspensions, which affect car insurance. [Read our auto insurance guide to find your state’s requirements.]

Recap

When it comes to auto insurance laws, liability is the name of the game. To learn more, read our articles on liability coverage and full coverage vs. liability.

While you can’t change your state’s laws, you can arm yourself with the best liability auto insurance. Keep reading for answers to more auto insurance FAQs.

Frequently Asked Questions

Deciphering your state’s auto insurance laws is no easy feat. To help you, we’ve answered some of the most common questions.

Liability coverage (property damage and bodily injury liability) does not completely cover no-fault insurance. Liability only covers property damage, but those in no-fault states also need medical bills coverage, which is different from bodily injury coverage. While bodily injury liability covers the other party’s injuries, in no-fault states, each party covers their own injuries, which requires medical payments coverage.

Here are the differences between no-fault and full coverage:

Coverages Full coverage No fault
Bodily injury Yes Yes, except in Florida and New Jersey
Property damage Yes Yes
Medical payments Yes Yes
Collision Yes No
Comprehensive Yes No

If your car is totaled and you only have liability coverage, assuming you’re at fault, you’ll have to pay for a new car out of pocket. That’s because liability coverage only includes bodily injury and property damage coverage, which apply to the other party’s injuries and damages. You would only get your car replaced if you had collision coverage, which is optional in every state.

If you weren’t at fault in the accident and only had liability insurance, you could get a new car reimbursement if the other party has property damage coverage. However, if the other party lacked property damage coverage and you only had liability coverage, you wouldn’t be able to recover your losses. For that, you’d need uninsured motorist coverage as well.

If someone hits you and they have property damage insurance, then liability insurance covers your car. However, if you lack uninsured motorist coverage and get hit by another vehicle with no or insufficient coverage, then liability insurance would not cover your car. For that, you’d need collision coverage and/or uninsured motorist coverage.

Citations

  1. What Is the Difference between No-Fault and At-Fault Insurance States? HG.org Legal Resources. (2022).
    https://www.hg.org/legal-articles/what-is-the-difference-between-no-fault-and-at-fault-insurance-states-35152

  2. What states have no-fault insurance? Nationwide. (2022).
    https://www.nationwide.com/lc/resources/auto-insurance/articles/no-fault-insurance-states

  3. Background on: No-fault auto insurance. Insurance Information Institute. (2018, Nov 6).
    https://www.iii.org/article/background-on-no-fault-auto-insurance

  4. 2018/2019 Auto Insurance Database Report. National Association of Insurance Commissioners. (2022).
    https://content.naic.org/sites/default/files/publication-aut-pb-auto-insurance-database.pdf

  5. Understanding South Dakota’s Slight/Gross Rule. Wilka, Welter, & Ash. (2015, Aug 19).
    https://wilkawelterashlaw.com/2015/08/19/understanding-south-dakotas-slightgross-rule/

  6. No Fault Car Insurance: States with Monetary Thresholds. Nolo. (2022).
    https://www.nolo.com/legal-encyclopedia/no-fault-car-insurance-states-with-monetary-thresholds.html