No-Fault vs. Fault Insurance

No-Fault vs. Fault Insurance

Florida is one of a minority of states that applies a “no-fault” auto insurance system to car accident claims. Other states apply “fault” rules to auto accident liability. The differences between these two systems surround an injury victim’s ability to file a lawsuit, file insurance claims, and the types of damages available when they suffer an injury.

Traditional Fault-Based Insurance Systems

Traditional Fault-Based Insurance Systems

No-fault auto accident insurance is a legal innovation that has only been around for a few decades. The older traditional “fault” system offers both advantages and disadvantages compared to the no-fault system. In most cases, victims are better off under a “fault” system and at-fault drivers are better off under a “no-fault” system.

Insurance Coverage

In a fault state, drivers must purchase a certain amount of liability insurance for both bodily injury and property damage. This insurance does not cover injuries to the policyholder, but to other people who the policyholder might have harmed through negligent, reckless, or intentional conduct.

Some fault states require their drivers to purchase uninsured and underinsured motorist insurance that covers their own injuries if the at-fault driver lacks sufficient insurance or fled the scene of the accident.

Third-Party Claims

If you suffer an injury at the hands of an at-fault driver in a fault state, you can file a “third-party claim” against the at-fault driver’s liability insurance company. You are a “third party” because you are not a part of the insurance contract between the first two parties (the at-fault driver and the liability insurance company.)  You can negotiate with the insurance company, agree to a settlement, and receive funds from the insurance company.

Lawsuits

If you are unsatisfied with the progress of settlement negotiations, you can sue the at-fault driver. The insurance company will help the at-fault driver defend the claim. A court can award you a verdict that the insurance company will have to pay, up to policy limits. The at-fault driver will bear liability for any amount that remains. 

Damages

Whether you settle your claim or win a trial verdict, you can seek the following types of damages:

Punitive damages (in unusual cases where the defendant’s actions were outrageous).

Florida’s “No-Fault” Insurance

Florida’s no-fault insurance is a typical example of how no-fault insurance works. The no-fault system differs from the fault system in terms of the type of insurance required, the opportunity for dispute resolution, and the damages available.

Personal Injury Protection (PIP) Insurance

Florida requires all drivers of four-wheeled vehicles registered in the state to purchase PIP insurance with minimum coverage of at least $10,000. PIP insurance covers your own bodily injury, regardless of whose fault the accident was. Likewise, the PIP insurer for the other driver will cover their injuries even if the accident was their fault. Motorcyclists must comply with a separate set of insurance rules.

Who does PIP cover?

PIP covers:

  • You (the policyholder);
  • Your children;
  • Your household; and
  • Passengers in your vehicle who lack their own PIP because they don’t own a car.

PIP protects you even when you are a passenger in someone else’s vehicle, and even when you are the victim of a pedestrian accident.

PIP coverage limits

Following are the general limits on recovery under Florida’s no-fault system:

  • PIP does not cover non-economic damages; 
  • You cannot sue the at-fault driver; and
  • You cannot file a third-party claim against the at-fault driver’s insurance policy.

An exception exists if your injuries are “serious” (see below).

Exiting no-fault and filing a lawsuit or filing a third-party claim

If your injuries are “serious”, you can exit Florida’s no-fault system. 

Under Florida no-fault insurance law, a “serious injury” means:

  • Permanent loss of an important body function;
  • Permanent injury;
  • Permanent scarring or disfigurement; or
  • Death (which opens the way for eligible family members to file a wrongful death lawsuit).

Once you exit Florida’s no-fault system, you can file a third-party insurance claim or a lawsuit, and you can claim non-economic damages such as pain and suffering, just as you could under a fault-based system. 

Property Damage Liability (PDL) Insurance

To register a car in Florida, you must purchase PDL insurance with maximum coverage of at least $10,000. Florida is not a no-fault state when it comes to property damage such as damage to your vehicle. After an accident, you can file a third-party claim against an at-fault driver’s PDL policy. 

Contact a Lawyer If You Have an Auto Accident Claim

You probably don’t need a lawyer for a fender-bender. On the other hand, you definitely do need a lawyer if your loved one died in an accident caused by someone else’s misconduct. Between these two extremes is a gray area. Injuries defined as “serious” under Florida law will probably render your claim large enough to justify the hiring of a personal injury lawyer. 

Yes, you can afford a lawyer. Almost any personal injury lawyer will only charge you if they win your case. More importantly, a lawyer will give you the best chance of winning your case. Your lawyer will help you determine your options for filing insurance claims and lawsuits and ensure you receive a fair damages award for your losses. Contact an attorney today for a free consultation.