No-Fault Insurance

Business, Legal & Accounting Glossary

Definition: No-Fault Insurance


Quick Summary of No-Fault Insurance


Car insurance laws that require the insurance companies of each person in an accident to pay for medical bills and lost wages of their insured, up to a certain amount, regardless of who was at fault. The effect of no-fault insurance laws is to eliminate lawsuits in small accidents. The advantage is the prompt payment of medical bills and expenses. The downsides are that the amounts paid by no-fault policies are often not enough to fully cover a person’s losses and that no-fault does not compensate for pain and suffering.



What is the dictionary definition of No-Fault Insurance?

Dictionary Definition


n: a type of automobile insurance required of car owners by law in 19 states (New York, Michigan, Massachusetts, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Kansas, Kentucky, Maryland, Minnesota, New Jersey, North Dakota, Oregon, South Carolina, South Dakota) and the District of Columbia, in which the persons injured in an accident are paid basic damages by the company that insured the vehicle in which they were riding or by which they were hit as a pedestrian. The amount of damages to be paid by the insurance is limited to actual medical and rehabilitation expenses, lost wages and necessary expenses (such as loss of use of the vehicle) with a low maximum and for a limited period. In addition, an injured person can sue the negligent driver for medical costs above the amount of the insurance, pain and suffering if the injuries required medical treatment or resulted in permanent injury, broken bones or disfigurement, or wrongful death. All registered automobiles must be insured. The benefits of no-fault include rapid payment of all medical expenses in most cases; elimination of lawsuits except in cases involving lesser injuries, very serious injury or death; and elimination of extensive and costly investigation, proof of negligence, medical reports and depositions. The statutes vary in states requiring “no-fault” insurance. There have been legal challenges to the statutes, primarily suggesting that limitations on the right to sue or establishment of narrow categories of injury for which a claim of “pain and suffering” may be included in a lawsuit are unconstitutional. State courts have struck down those restrictions which were arbitrary or prevented legitimate claims. The fight over no-fault insurance laws continues state by state, with the insurance companies and some court reform advocates (who believe “no-fault” alleviates a clogging of the courts) favouring it, and trial attorneys either opposing the proposal outright or wanting much more leeway for filing lawsuits.


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Definition Sources


Definitions for No-Fault Insurance are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th April, 2020 | 1 Views.