No-fault or Personal Injury Protection (PIP) insurance coverage is meant to ensure that no driver is without coverage should an accident occur involving an uninsured driver. It allows all injured parties to receive the necessary medical attention without having to wait for lawsuits and insurance company approval. While no-fault car insurance provides some benefits to some drivers, it also increases the cost of vehicle insurance for all drivers. The rules that govern no-fault insurance law differ by state, and New York's are some of the toughest.
Your no-fault coverage kicks in immediately whenever an accident and injury occurs. There is no investigation or proof of cause required to make a claim, although an investigation into the specifics of the accident may occur later on in the process. Anyone involved in a car accident in New York State as a driver, passenger or pedestrian is covered automatically as long as any of the drivers involved — or the victim herself — has a valid auto insurance policy. No-fault coverage will pay for healthcare, loss of work income, family expenses, child care and household expenses for as long as you are affected by the injury incurred. In cases where death results, no-fault insurance will often cover the expense of burial.
Although the minimum no-fault coverage required in NY State is $50,000 per person, you can opt for more if you wish to pay the additional premium. If a claim runs over the limit of a given policy, you can then also sue the driver who caused the accident. You will have to prove that the driver was at fault and that your injuries are serious enough to warrant more than the existing coverage. While you await the results of the suit, you can file an additional no-fault claim with your own policy carrier, the carrier of any other active policy in your household, or the Motor Vehicle Accident Indemnification Corporation if no other coverage exists. No-fault policies cannot come with a deductible, according to New York State law, and can only charge up to $200 if a member of the household other than the policyholder makes a claim. Insurers must make payments on any no-fault claim within 30 days or pay a rate of 2 percent interest on the claim for every month overdue.
Despite its intent to cover everyone, no-fault insurance does have its limits. For example, motorcycle riders are not eligible to collect no-fault benefits since motorcycles are viewed as a hazard in themselves and riders cannot expect other carriers to ensure their safety. Drivers who are impaired by alcohol or substances are not eligible, nor are those running from the police, driving a stolen car, racing, or using the vehicle on business-owned property, or if the operator doesn't have a current policy.
The lack of a guilty party in no-fault cases makes the potential for fraud without blame too tempting for many to resist. According to the Insurance Research Council, about one out of every three no-fault claims in New York State are fraudulent or staged accidents. Accident injury and disability payments make up the largest segment of no-fault fraud and result in higher costs for all drivers throughout the state. In the spring of 2012, the New York State Senate passed several laws aimed at reducing the amount of no-fault fraud in the state by increasing jail time, allowing insurance carriers to cancel fraudulent policies after the fact, and punishing medical professionals who inflate health-care costs for no-fault victims.
- Department of Financial Services: No-Fault Insurance
- Fox Business: Why Does Everyone Hate No Fault Car Insurance?
- Auto Insurance Coverage-Personal Injury Protection (No Fault)
- CNN Money: Understand Car Insurance Coverage
- Department of Financial Services: Article 51 of the New York Insurance Law
- New York State Senate: Senate Passes Tough Auto Insurance Fraud Measures
Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.