What’s the Difference Between Tort Insurance and No Fault Insurance?

In an effort to reduce insurance costs by reducing the number of accidents that go to a courtroom trial some states have switched to a no fault insurance system where each driver is immediately responsible for their own injuries and damages, regardless of who is at fault in the accident. In a tort system, the repairs and injuries are the responsibility of the at-fault driver.

No-fault insurance is also referred to as PIP coverage, because it generally includes insurance to pay for the injuries to you and your passengers. On the surface it appears that your insurance pays for your injuries whether you are at fault or not, but the truth is that insurance companies use independent arbitration to resolve claims after the fact. Using a method of restitution request known as subrogation, insurance companies file claims against each other to resolve the fault, without involving the individuals unless there is a dispute over the coverage of the at fault person.

Both systems allow for additional coverage such as collision or comprehensive coverage. Both of these types of insurance are used to pay for your property regardless of who is at fault in the incident, and comprehensive is used to pay for damages that do not have a specific fault, such as a rock hitting your windshield while driving down the road, or vandals painting a gang emblem on your car while it is parked overnight. If an at-fault individual is located, the insurance company can sue for reimbursement of the settlement, but you will be protected either way.

If you are accustomed to one type of coverage and moving to an area that uses the other, it might be a good idea to use an online insurance quote site to get an idea of what your new premiums will look like. Online quotes let you configure the policy to have the exact coverage you need, which is often more extensive than the minimums required by law, and you can even sign up for a new policy on the spot if you find the best deal on the right coverage.

Posted in Car Insurance.