The laws and regulations governing auto insurance, and the ability to sue at-fault drivers for personal injury damages, vary by state. There are two primary systems in use for addressing liability - the tort liability system and the no-fault system, but some states have adopted hybrid systems, resulting in each state falling within one of four main categories:
Tort states are those which permit lawsuits to redress damages caused as a result of auto accidents. A tort is a civil wrong not arising out of a contractual obligation, such as negligence, for which an action for damages may be brought. In relation to auto insurance, an example of a tort is an inattentive driver who fails to stop at a red light and collides with another vehicle with right of way, causing bodily injury to the driver of the other vehicle. The driver at fault might also have committed a criminal act (running a red light), but the focus of tort law is the redress of civil wrongs—in this case the negligence in failing to stop and exercise due care. The injured driver could sue for damages, including medical expenses, pain and suffering, rehabilitation, and loss of earnings.
According to the Legal Information Institute, five elements are generally required to establish a prima facie case of negligence:
A total of 28 states have adopted a tort system for auto accident liability claims and these are listed below, together with links to their respective state insurance department:
No-fault states have a legal system which:
The payment of no-fault, first-party benefits means that each driver injured in an accident makes a claim to his or her own insurance company for first-party injury benefits, regardless of who is at fault. Unlike in a tort state, you cannot make a claim against another driver (or their insurance company), even if it is accepted that they caused the accident.
This type of coverage is known as Personal Injury Protection (PIP). In no-fault states, PIP insurance is compulsory, and each state has specific requirements regarding the type and minimum level of coverage each driver is required to hold for PIP benefits.
PIP benefits provide coverage for the driver and any passengers in the car, and may include:
These states also place limitations on the right to sue for damages for personal injury. Lawsuits are generally prohibited in all but the most serious injury cases. In order to make this distinction between cases, thresholds exist, above which a lawsuit may be taken against an at-fault driver. Depending on the state, the threshold will be either:
A state with a monetary threshold permits lawsuits if the aggregate value of damages equals or exceeds a specified dollar amount. A state with a verbal threshold permits lawsuits if the injuries sustained are of a particular nature, as described in law.
The no-fault system only applies to liability personal for bodily injury—it does not apply to third-party property damage. Therefore, the at-fault driver is still responsible for any damage caused to another person’s vehicle or other property. In these states you may still sue (or be sued) for property damage.
Nine states have adopted a no-fault system for bodily injury liability arising out of auto accidents and these are listed below, together with links to their respective state insurance department:
Of the above states Florida, Michigan and New York apply qualitative (verbal or descriptive) thresholds, and the remainder apply quantitative (monetary) thresholds for the ability to sue for personal injury damages.
Choice states allow drivers to choose between tort liability and no-fault auto insurance policies. Drivers with tort liability policies are permitted to sue at-fault drivers in auto accidents. Drivers with no-fault policies must make first-party claims from their own insurance company if they are injured in a car accident, and they are restricted in their ability to sue at-fault drivers for personal injury damages as in no-fault states. Drivers may change from a tort liability policy to a no-fault policy simply by cancelling their existing policy and taking out a new one under the alternative system.
Three states have adopted a choice system for auto insurance and these are listed below, together with links to their respective state insurance department:
Kentucky applies a quantitative (monetary) threshold for tort claims, and New Jersey and Pennsylvania have qualitative (verbal or descriptive) thresholds.
When applying for auto insurance in Kentucky and New Jersey, the applicant will be assigned a no-fault policy by default, unless they explicitly request a tort-based policy. In Pennsylvania the opposite is true - applicants are assigned a tort-based policy system unless they explicitly request a no-fault policy.
The District of Columbia has also adopted the choice system, but with one significant difference. Following a car accident, a policyholder with a no-fault policy has a period of up to 60 days in which to decide whether to claim PIP benefits under that policy or to instead sue the other party under the tort system.
Add-on states provide for first-party PIP benefits, but they do not place any limitations on the ability to sue for tort liabilities. Therefore, PIP benefits are effectively an ‘add-on’ to the auto insurance policy. In some add-on states PIP coverage is compulsory, while in others it is optional.
Regardless of whether or not PIP coverage is compulsory, drivers in all add-on states may choose to sue at-fault drivers for bodily injury arising from a car accident. Drivers with PIP coverage may choose to claim PIP benefits directly from their own insurance company rather than sue the at-fault driver.
A total of 10 states have adopted an add-on system for personal injury liability arising from auto accidents and these are listed below, together with links to their respective state insurance department:
Of the above states, PIP coverage is compulsory in Arkansas, Delaware, Maryland and Oregon, but optional in the remainder.