At Fault vs No Fault Auto Insurance

Car insurance is something all drivers in the United States need to have, well if you are the lucky few in a couple states that don’t need it, then you’re fine. 

But if you see yourself in a state where you are required car insurance, you will either be one of the following: not at fault insurance or at fault insurance. The difference between these type of insurance coverages are very different and can be quite confusing for you to follow. ShineInsurance explains the difference between the two in the video below. But if you don’t want to watch the couple minute video, you can read the transcript as well.  

Jeremy: Hey, this is Jeremy from Shine Insurance. Today, we’re going to address At-Fault versus No-Fault auto insurance. Auto insurance policies are set up based on the rules of your state. There are two very different approaches. Obviously, those two are At-Fault or No-Fault. Let’s start with At-Fault. In At-Fault states, fault is the primary factor in accidents. You’re sitting at a stoplight and someone drives up and hits the backend of your car, they rear-end you. The fault is likely to be on them. That is fault. We’ve determined whose fault the accident is. In an At-Fault state, this would be a major factor in how the insurance policies payout.

The insurance policy on the vehicle that was at fault is responsible for damages. That means damage to their car and their own injuries as well as damage to your car and your injuries. No-Fault states, flip that around, they say, “In these states, fault is not a primary factor.” In that same accident, the damage and injuries of each involved party would be paid for by their own insurance policy, no matter whose fault it was. Even if someone rear-ends you while you’re sitting at a stoplight, if you live in a No-Fault state, your insurance policy is going to pay for damage to your car and injuries to you, while their insurance policy is going to pay for damage to their car and injuries to them.

Why the difference? It has everything to do with Ambulance-Chasing Personal Injury attorneys. No-Fault states are trying to avoid all the litigation that happens around auto-accidents. There is tons of it. Those No-Fault states are saying, “Hey, there is way too much litigation around all of this. It’s costing everyone money. It’s very hard to figure out. It’s not really fair,” and all this kind of stuff. They say, “Look, we’re going to have No-Fault insurance policies and take that piece of the puzzle right out of the situation.” However, almost everyone can agree that At-Fault approach is really more fair. If you’re sitting still at a stoplight and someone rear-ends you, the fact that your own insurance policy has to pay for damage to your car and your own injuries, which probably means that your insurance rates will go up, really isn’t fair. It wasn’t your fault. You didn’t do anything in the situation, and it’s not fair that you have to deal with all of it.

Both approaches have their pros and cons. I think I’ve just explained why there are the two different approaches. Are you in an At-Fault state or a No-Fault state? It’s very easy to find out. Hop over to Google. Just type in, “What type of auto insurance is in my state?” It’ll give you a list of At-Fault states versus No-Fault states. You should be able to find out very, very quickly. Then, you’ll know whether you live in an At-Fault auto insurance state or a No-Fault auto insurance state. That’s it. If you want to know more about how auto insurance actually works, now that you know which one you are, check out some other videos on our channel. We’ve got the At-Fault video and then we have the No-Fault videos. We’ll break down your insurance policy, how it works in more detail based on the state that you live in.

Then, on a completely different topic, if you are looking to purchase a home, especially if you’re a first-time homebuyer, I would definitely encourage you to watch this video. We walk you from beginning to end through the process, from the moment that you say, “Hey, maybe I want to buy a house,” all the way through the closing and your actual ownership of that new house. If you haven’t checked out that video and you’re interested in homeownership, definitely, head over there and watch that video.

What’s next? As always, the last step in this video, two of them actually. One, we hope you go over and subscribe to our channel. We try and create great, simple, easy to understand content. Oftentimes, it’s about insurance but not always. Just like our new homebuyer’s guide. We’ll get that into your inbox right when we post it. Finally, if you learned something during the process of this video, we hope that you’ll share it on your social media channels. I always say, “Good information is only great if it’s shared with others.” Please do share this information with other folks in the social media worlds you live in. I hope you gained a little bit of information. We will see you next time.