07/15/24
15 min

At Fault vs. No-Fault Systems: Coverage, Claims, and Compensation

A table littered with various items, illustrating the complexity of navigating at-fault vs. no fault systems.

At Fault vs. No-Fault Systems

Understanding the intricacies of auto insurance policies and at fault vs. no-fault systems is crucial if you’ve been involved in a car accident. In most states, the driver at fault is responsible for damages, but some states operate under a no-fault system. This means that regardless of fault, each driver turns to their insurance provider to cover medical expenses. However, if certain criteria are met, victims can still pursue legal action. 

A chart explaining the differences between at-fault vs. no fault states.

No-Fault State System

In no-fault states, drivers must have personal injury protection (PIP) insurance. PIP generally covers medical expenses, lost earnings, and other non-reimbursed costs, regardless of fault. Typically, premiums are higher due to the personal injury protection component required by no-fault laws. Most states follow the standard tort (at fault) system; however, these twelve states fall under the no-fault system: 

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah 

No-Fault States: Understanding Verbal and Monetary Thresholds

A person in an accident may still be able to file a claim against an at-fault party, even under a no-fault system. No-fault auto insurance states use either a verbal or monetary threshold to determine exceptions for suing in auto accidents, affecting how damages and injury claims are managed.  

Verbal Thresholds

This system is in place in states like Florida, Michigan, New Jersey, New York, and Pennsylvania. It restricts lawsuits for non-economic damages unless injuries are deemed serious, such as significant disfigurement or death. The definition of a “serious injury” can vary by state. It generally includes conditions like severe disfigurement, broken bones, or permanent loss of a vital bodily function. 

Monetary Thresholds

Seven no-fault states, including Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah, use a monetary threshold. Lawsuits for non-economic injuries are only permitted if medical expenses exceed a certain dollar amount. 

"Choice" No-Fault

New Jersey, Pennsylvania, and Kentucky offer a “choice” no-fault system. Motorists in these states can opt between a no-fault auto insurance policy with either a verbal or monetary threshold and a traditional tort liability policy. This choice influences how and when tort claims can be pursued following an auto accident. It provides flexibility, thereby potentially affecting the strategy for legal and financial recovery after an accident. 

At Fault State System

When it comes to at-fault accidents, the person who caused the accident is responsible for paying the damages. However, insurance premiums in these states tend to be lower on average compared to no-fault states. In states that assign fault for auto accidents, drivers get liability insurance to avoid out-of-pocket costs for damages caused by crashes they’re responsible for. This setup ensures that the insurance of the driver at fault covers damages from the incident. Fault determination affects insurance payouts and premiums, with specific negligence laws influencing compensation eligibility based on the claimant’s fault level​. 

Deciphering Negligence: How Fault and Compensation Are Determined

Understanding the distinctions between different negligence systems is crucial. These concepts directly impact how fault is determined and what compensation an injured party might receive. Here’s a quick breakdown of the most common types:  

Pure Comparative Negligence

Every party involved in an accident can collect damages, but the amount is reduced by their percentage of fault. For instance, if a person is found to be 10% at fault in an accident, they can still recover compensation. However, the amount would be reduced by 10%.  

Modified Comparative Negligence

This model is similar to pure comparative negligence, but with a key restriction. Parties can only recover damages if their fault is below a certain percentage, typically 50% or 51%. This means a person who is more than 50% or 51% at fault (depending on the state) for an accident cannot recover any damages from other at-fault parties.  

Contributory Negligence

Contributory negligence is one of the strictest forms of negligence law. If the injured party is found to be at all responsible for the accident, even just 1% at fault, they cannot recover any damages.  

Negligence Rules by State

Negligence Type

Description

State(s)

Pure Comparative Negligence

You can recover compensation from the at-fault party even if you are 99% at fault. The amount you recover is reduced by your percentage of fault.

Alaska, Arizona, California, Kentucky, Louisiana, Mississippi, Missouri, New MexicoNew YorkRhode IslandWashington

Modified Comparative Negligence

You can only recover compensation from the other party if you are less than 50% at fault, or 51% in some cases. 

If you hold any fault when seeking compensation, your compensation may be reduced by your percentage of fault.

For example, if the court awarded you $110,000 dollars, but you are found 30% at fault, you would only receive $77,000 — 30% less than the total amount.

Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New HampshireNew JerseyNorth Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South CarolinaTennessee, Texas, Utah, Vermont, West VirginiaWisconsin, Wyoming

Slight / Gross Comparative Negligence

In South Dakota, negligence may be considered either “slight” (minor) or “gross” (excessive).

To recover compensation, the other person’s negligence must be considered “gross.” In addition, you must either not be found negligent, or your negligence must be “slight.”

South Dakota

Contributory Negligence

You cannot recover compensation if you hold even 1% of fault.

Alabama, Maryland, North CarolinaVirginia

How Does Negligence Impact Fault and Compensation?

Understanding fault revolves around the legal notion of negligence, which mandates that every road user must act in a manner that prevents harm to others. When this expectation is not met, it may constitute negligence. There are a few different types of negligence, each impacting the determination of fault and the subsequent compensation for the injured party. Here’s a simplified breakdown:  

  • Duty of Care: This foundational element requires that all road users, whether they are drivers, cyclists, or pedestrians, behave in a way that avoids causing harm to others.  
  • Breach of Duty: If a road user fails to uphold this duty of care—say, by breaking traffic laws or driving distractedly—they have breached their duty.  
  • Causation: For negligence to be actionable, there must be a direct link between the breach of duty and the accident. This means showing that the accident occurred as a result of the individual’s failure to exercise proper care.  
  • Damages: The final element involves proving that the accident led to quantifiable harm, such as physical injuries, emotional distress, or property damage.  

Economic vs. Non-Economic Damages

Compensatory damages awarded to an accident victim are categorized into two main types: economic and non-economic damages. These categories are crucial in understanding the scope of compensation available in personal injury lawsuits, and their application can vary significantly depending on whether the case is adjudicated within a fault or no-fault insurance system. 

Economic Damages

Economic damages are typically straightforward to calculate as they are based on actual expenses or losses experienced by the person. Receipts, bills, and employment records serve as documentation to support these claims. These types of damages refer to quantifiable losses resulting from an injury or accident. They cover: 

  • Medical expenses: Includes past, present, and future medical treatments.
  • Lost wages: Compensation for the income lost due to the inability to work.
  • Property damage: Costs to repair or replace property damaged in an accident.
  • Other out-of-pocket expenses: Any quantifiable financial losses incurred due to the injury. 

Non-Economic Damages

Calculating non-economic damages is more complex, as there’s no direct financial expenditure or loss to reference. The determination often involves considering the severity of the injury, the duration of pain and suffering, and the overall impact on the plaintiff’s quality of life. Non-economic damages are intangible and more subjective, covering: 

  • Pain and Suffering: Physical discomfort and emotional distress.
  • Emotional Distress: Psychological impact of the injury, including anxiety, depression, and trauma.
  • Loss of Consortium: Damages awarded for loss of companionship or inability to maintain a sexual relationship, typically in cases involving spousal relationships.
  • Loss of Enjoyment of Life: Compensation for the inability to engage in leisure activities or hobbies. 

How Senft Injury Advocates Can Help

At Senft Injury Advocates, we understand that navigating the complexities of fault, negligence, and compensation after a car accident can be overwhelming. Whether you’re in a fault or no-fault state, the nuances of insurance policies and legal standards for negligence directly impact your rights and potential compensation. Senft Injury Advocates stands ready to support you in securing the compensation you deserve. With expertise spanning the gamut of auto accident claims, we’re committed to advocating for your rights and recovery every step of the way. Contact us today, and let us advocate for your rights, guide you through the legal process, and work to secure the compensation you deserve.