After a car accident in a no-fault car insurance state, how does an injured passenger's claim differ from a claim brought in a traditional fault-based state? To answer this question, we’ll take a brief look at how no-fault insurance works, and then explain how an injured passenger might go about making a claim for medical bills, lost income, and other out-of-pocket losses stemming from a car accident.
No-fault car insurance (sometimes referred to as "personal injury protection" or PIP coverage) means that when a driver is involved in a car accident, his or her automobile insurer will pay for certain types of damages, like medical bills and lost earnings (up to certain monetary thresholds), regardless of who was at fault for the accident.
No-fault car insurance is mandatory, or is the preferred option, in about a dozen states. At some level, these states aim to keep car insurance costs low by favoring a no-fault system. No-fault insurance involves something of a tradeoff. On the one hand, the injured person will get some or all of his/her medical bills and lost earnings paid almost automatically (and usually pretty quickly), regardless of who was at fault for the accident.
But the flip side of no-fault is that the injured person is generally not allowed to make a claim against the negligent driver for "non-economic" damages (which includes pain and suffering) unless his or her medical bills reach a certain level, or the injury is deemed sufficiently serious.
In traditional, fault-based states, a passenger's car accident injury claim is just like any other type of car accident claim, except that the passenger would probably want to make the claim against both drivers (assuming it was a two-car accident), unless fault for the crash rested clearly with only one driver (as in a rear-end accident).
After the accident, the passenger should get the insurance information for each driver and file "third party" claims with each driver’s insurance company, under each driver's liability coverage, and let the insurance companies sort out fault and who will be responsible for paying the injured passenger's claim.
In a no-fault car insurance states, chances are that an injured passenger would be covered under the no-fault/personal injury protection (PIP) coverage of the driver of the vehicle in which the passenger was riding. The injured passenger would likely have no recourse under the other driver's car insurance coverage, unless the passenger's injuries meet the state's statutory thresholds for taking a claim out of no-fault (in that case, a liability claim against the other driver would be an option).
Let’s take an example. Let’s say that you were a passenger in a car accident where both drivers appear to be partially at fault. Let’s say that your accident involves the following facts and no-fault laws:
In this case, you could try to make a claim against both drivers’ insurers, but your no-fault claim would be against the driver of the car that you were in (we'll call him Driver 1).
Driver 1’s insurer would pay all $5,000 of your medical bills. This is because you have no health insurance, and the limit is $8,000. Driver 1’s insurer would also pay you $2,500 toward your lost earnings. This is half of the first $5,000 of lost earnings, which is the limit for lost earnings.
That is the no-fault claim. Then, because you had more than $4,000 of medical bills, you met your state’s minimum medical bill requirement for filing a claim against the negligent driver, and so you can make a personal injury claim against both drivers.
One important thing to remember in a no-fault claim is that you must cooperate with the no-fault insurer. Depending on the state, the no-fault insurer might be able to require you to give a recorded statement, and will generally be able to require you to attend an independent medical examination with a physician of the insurer's choice. If you fail to cooperate with the no-fault insurer, the company is generally entitled to deny your claim.