No-Fault Car Insurance: What's Covered and What's Not
With "no-fault" car insurance, also called "personal injury protection" or "PIP", the insurance company ("insurer"), pays for a covered person's "economic losses" after a car accident, which include things like medical expenses and lost wages, up to the limits of the no-fault/PIP coverage.
States that follow a no-fault car insurance system require drivers to carry no-fault or PIP insurance, while other states require that insurers offer it and let vehicle owners decide if they want to buy it.
In states that require PIP coverage, there are variations when it comes to who is covered, what types of damages are recoverable in a claim, and more.
Where no-fault/PIP is not required under state law, the coverage details will be spelled out in the individual policy. No-Fault Basics There are four basic requirements that must be met before a no-fault/PIP car insurance claim can be filed over car accident injuries: someone sustained an accidental bodily injury a "motor vehicle" was involved the motor vehicle was being used as a motor vehicle at the time of the accident, and there was a sufficient connection between the motor vehicle and the injury The workings of a no-fault insurance system (or even of a particular car insurance policy) can be complicated, so it's critical that you understand the no-fault laws in your state and/or the fine print of your policy if you're involved in an accident.
Who's Covered? Generally, no-fault/PIP insurance covers the policyholder (the vehicle owner who purchased car insurance coverage) and others who might foreseeably be injured in an accident involving the covered vehicle. For example, in Michigan, PIP benefits are available to: the policyholder any family member living in the policyholder's house (even when the family member is a passenger in another person’s car, or is injured in a traffic accident as a pedestrian) any passenger or pedestrian who does not have their own no-fault policy, and gets hurt in an accident involving the policyholder's car, and any motorcyclist who is hurt in a traffic accident involving the policyholder's car.
What Vehicles are Covered? In order for PIP benefits to be payable, the claimant must have been injured by a "motor vehicle." Generally, motor vehicles are defined by no-fault statutes as vehicles having more than two wheels. Most no-fault laws base their definitions of "motor vehicle" on the state motor vehicle registration requirements, and then either narrow or expand the definition. For example, motorcycles normally have to be registered, but a no-fault law could specifically exclude motorcycles, or limit the definition of "motor vehicles" to "those having more than two wheels," which, in effect, excludes motorcycles. Because of the statutory differences on this issue, it's critical that you check your state's no-fault laws to see if a particular vehicle is covered.
Having said all that, in most states: motorcycles and farm vehicles are generally excluded from no-fault/PIP coverage commercial and business vehicles are usually excluded from coverage private (non-commercial, non-business) trucks, pick-up trucks, and vans are typically covered specialty vehicles, like off-road all-terrain vehicles ("ATVs") and snowmobiles are generally excluded, but some states include coverage when these vehicles are being operated on public roads. Just because a vehicle is excluded from the no-fault laws does not necessarily mean that there can be no PIP benefits. For example, if you have a car and a motorcycle, and your state excludes motorcycles from coverage, but you are injured when your motorcycle collides with a pick-up truck, you might be able to get PIP benefits from the insurance policy covering your car, or maybe from the policy covering the pick-up truck.
How was the Motor Vehicle Being Used? In order for no-fault/PIP benefits to be recovered, the vehicle must have been in use as a motor vehicle at the time of the injury -- that is, the vehicle was being used for "transportation," which is the primary function of a "motor vehicle." For example, a camper that can be driven is no longer a motor vehicle once it is parked at a campsite. So,if kitchen appliances inside the camper malfunction, causing injuries to occupants, those injuries would not be covered under no-fault/PIP law because the camper was not being used as a motor vehicle at the time. Have a insurance question? Get answers from local attorneys. It's free and easy. Ask a Lawyer Are the Injury and the Vehicle "Connected?" Before no-fault/PIP benefits can be claimed, there has to be some connection or "nexus" between the injury and the ownership, operation, maintenance, or use of a motor vehicle.
When an injured person was either the occupant of a motor vehicle or a pedestrian, whether on or off the road, and he or she was injured as a result of a collision with a motor vehicle, there's generally a sufficient connection between the injury and the motor vehicle. In most states, merely being in, on, or near a motor vehicle when an injury occurs is insufficient to trigger no-fault/PIP coverage. For example, if one passenger mishandles a gun and accidentally shoots and injures another passenger, the vehicle is simply the "situs" of the injury and there is no real connection between it and the injury. So, PIP benefits generally would be denied. But, injuries sustained while an occupant is entering or exiting ("alighting") a vehicle, or loading or unloading goods from a vehicle, could provide a sufficient connection.
Also, physical contact with the motor vehicle is not necessary to trigger PIP benefits: The focus is on whether the accident arose from the use of a motor vehicle. So, when an insured pedestrian was hurt when he tried to avoid being struck by an out-of-control car, but he is not actually hit by the car, the pedestrian should be able to recover no-fault/PIP benefits. In general, the courts will consider several factors to determine if a motor vehicle "caused" an injury: physical proximity, that is, how close the injured party was to the vehicle the conduct of the injured person, that is, whether the injured person performing a task necessary for the operation, use, or maintenance of the vehicle, and whether the injury was intentional: most no-fault laws expressly exclude coverage for injuries that are caused by the insured's intentional acts. Is Vehicle Damage Covered Under No-Fault? Usually, the answer is no. Most states' no-fault laws either exclude or do not discuss property damage (including damage to a vehicle resulting from an accident). For example, Minnesota's No-Fault Automobile Insurance Act (at Minnesota Statutes section 65B.44) specifically excludes "benefits for physical damage done to property including motor vehicles and their contents." One exception is Michigan, where the "Property Protection Insurance" component of a no-fault policy will pay up to $1 million for any damage your car does to other people’s real property in Michigan -- for example, if your car hits a house or a fence.
Note that this PPI component will only pay for damage your car does to another vehicle if the vehicle was properly parked. PPI won't apply to vehicle damage caused by an accident between moving vehicles in Michigan, and it will never apply to damage sustained by your own vehicle. You'll need collision coverage and/or comprehensive coverage for those kinds of damages. Learn more about no-fault car insurance and vehicle damage. Other Matters Relating to Coverage If your state requires motor vehicle owners to carry no-fault insurance coverage, your failure to do so can result in various penalties, such as: suspension of your driver's license fines and other administrative sanctions, and being barred from recovering certain kinds of damages (like compensation for "pain and suffering") if you're injured in an accident and want to sue the at-fault driver.
The no-fault/PIP provisions of a motor vehicle insurance policy usually provide coverage both within the state where the motor vehicle is registered and in any other state or territory of the United States. Some policies provide coverage for travel throughout Canada. But travel can present problems. There is no consistent, uniform rule on when out-of-state residents can recover for injuries sustained in motor vehicle accidents while traveling through no-fault states. Some courts allow the victim to recover PIP benefits, while others do not. Similarly, there is no agreement as to which insurer has to pay when an insured from a no-fault state travels and is injured in another no-fault state. Some states require payment from the insurer in the state where injury occurred, while others require the victim's insurer to pay. Questions for Your Attorney Do I need to have no-fault car insurance? What will happen if I don't have it? If I'm injured while riding my motorcycle, can I receive no-fault PIP benefits? Is my mobile home covered by the no-fault laws? I was injured in a car accident while I was on vacation in another state. Can I get no-fault/PIP benefits? Should I call my insurance company or the other driver's?
Where no-fault/PIP is not required under state law, the coverage details will be spelled out in the individual policy. No-Fault Basics There are four basic requirements that must be met before a no-fault/PIP car insurance claim can be filed over car accident injuries: someone sustained an accidental bodily injury a "motor vehicle" was involved the motor vehicle was being used as a motor vehicle at the time of the accident, and there was a sufficient connection between the motor vehicle and the injury The workings of a no-fault insurance system (or even of a particular car insurance policy) can be complicated, so it's critical that you understand the no-fault laws in your state and/or the fine print of your policy if you're involved in an accident.
Who's Covered? Generally, no-fault/PIP insurance covers the policyholder (the vehicle owner who purchased car insurance coverage) and others who might foreseeably be injured in an accident involving the covered vehicle. For example, in Michigan, PIP benefits are available to: the policyholder any family member living in the policyholder's house (even when the family member is a passenger in another person’s car, or is injured in a traffic accident as a pedestrian) any passenger or pedestrian who does not have their own no-fault policy, and gets hurt in an accident involving the policyholder's car, and any motorcyclist who is hurt in a traffic accident involving the policyholder's car.
What Vehicles are Covered? In order for PIP benefits to be payable, the claimant must have been injured by a "motor vehicle." Generally, motor vehicles are defined by no-fault statutes as vehicles having more than two wheels. Most no-fault laws base their definitions of "motor vehicle" on the state motor vehicle registration requirements, and then either narrow or expand the definition. For example, motorcycles normally have to be registered, but a no-fault law could specifically exclude motorcycles, or limit the definition of "motor vehicles" to "those having more than two wheels," which, in effect, excludes motorcycles. Because of the statutory differences on this issue, it's critical that you check your state's no-fault laws to see if a particular vehicle is covered.
Having said all that, in most states: motorcycles and farm vehicles are generally excluded from no-fault/PIP coverage commercial and business vehicles are usually excluded from coverage private (non-commercial, non-business) trucks, pick-up trucks, and vans are typically covered specialty vehicles, like off-road all-terrain vehicles ("ATVs") and snowmobiles are generally excluded, but some states include coverage when these vehicles are being operated on public roads. Just because a vehicle is excluded from the no-fault laws does not necessarily mean that there can be no PIP benefits. For example, if you have a car and a motorcycle, and your state excludes motorcycles from coverage, but you are injured when your motorcycle collides with a pick-up truck, you might be able to get PIP benefits from the insurance policy covering your car, or maybe from the policy covering the pick-up truck.
How was the Motor Vehicle Being Used? In order for no-fault/PIP benefits to be recovered, the vehicle must have been in use as a motor vehicle at the time of the injury -- that is, the vehicle was being used for "transportation," which is the primary function of a "motor vehicle." For example, a camper that can be driven is no longer a motor vehicle once it is parked at a campsite. So,if kitchen appliances inside the camper malfunction, causing injuries to occupants, those injuries would not be covered under no-fault/PIP law because the camper was not being used as a motor vehicle at the time. Have a insurance question? Get answers from local attorneys. It's free and easy. Ask a Lawyer Are the Injury and the Vehicle "Connected?" Before no-fault/PIP benefits can be claimed, there has to be some connection or "nexus" between the injury and the ownership, operation, maintenance, or use of a motor vehicle.
When an injured person was either the occupant of a motor vehicle or a pedestrian, whether on or off the road, and he or she was injured as a result of a collision with a motor vehicle, there's generally a sufficient connection between the injury and the motor vehicle. In most states, merely being in, on, or near a motor vehicle when an injury occurs is insufficient to trigger no-fault/PIP coverage. For example, if one passenger mishandles a gun and accidentally shoots and injures another passenger, the vehicle is simply the "situs" of the injury and there is no real connection between it and the injury. So, PIP benefits generally would be denied. But, injuries sustained while an occupant is entering or exiting ("alighting") a vehicle, or loading or unloading goods from a vehicle, could provide a sufficient connection.
Also, physical contact with the motor vehicle is not necessary to trigger PIP benefits: The focus is on whether the accident arose from the use of a motor vehicle. So, when an insured pedestrian was hurt when he tried to avoid being struck by an out-of-control car, but he is not actually hit by the car, the pedestrian should be able to recover no-fault/PIP benefits. In general, the courts will consider several factors to determine if a motor vehicle "caused" an injury: physical proximity, that is, how close the injured party was to the vehicle the conduct of the injured person, that is, whether the injured person performing a task necessary for the operation, use, or maintenance of the vehicle, and whether the injury was intentional: most no-fault laws expressly exclude coverage for injuries that are caused by the insured's intentional acts. Is Vehicle Damage Covered Under No-Fault? Usually, the answer is no. Most states' no-fault laws either exclude or do not discuss property damage (including damage to a vehicle resulting from an accident). For example, Minnesota's No-Fault Automobile Insurance Act (at Minnesota Statutes section 65B.44) specifically excludes "benefits for physical damage done to property including motor vehicles and their contents." One exception is Michigan, where the "Property Protection Insurance" component of a no-fault policy will pay up to $1 million for any damage your car does to other people’s real property in Michigan -- for example, if your car hits a house or a fence.
Note that this PPI component will only pay for damage your car does to another vehicle if the vehicle was properly parked. PPI won't apply to vehicle damage caused by an accident between moving vehicles in Michigan, and it will never apply to damage sustained by your own vehicle. You'll need collision coverage and/or comprehensive coverage for those kinds of damages. Learn more about no-fault car insurance and vehicle damage. Other Matters Relating to Coverage If your state requires motor vehicle owners to carry no-fault insurance coverage, your failure to do so can result in various penalties, such as: suspension of your driver's license fines and other administrative sanctions, and being barred from recovering certain kinds of damages (like compensation for "pain and suffering") if you're injured in an accident and want to sue the at-fault driver.
The no-fault/PIP provisions of a motor vehicle insurance policy usually provide coverage both within the state where the motor vehicle is registered and in any other state or territory of the United States. Some policies provide coverage for travel throughout Canada. But travel can present problems. There is no consistent, uniform rule on when out-of-state residents can recover for injuries sustained in motor vehicle accidents while traveling through no-fault states. Some courts allow the victim to recover PIP benefits, while others do not. Similarly, there is no agreement as to which insurer has to pay when an insured from a no-fault state travels and is injured in another no-fault state. Some states require payment from the insurer in the state where injury occurred, while others require the victim's insurer to pay. Questions for Your Attorney Do I need to have no-fault car insurance? What will happen if I don't have it? If I'm injured while riding my motorcycle, can I receive no-fault PIP benefits? Is my mobile home covered by the no-fault laws? I was injured in a car accident while I was on vacation in another state. Can I get no-fault/PIP benefits? Should I call my insurance company or the other driver's?
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