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No-Fault vs. At-Fault Insurance

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No-Fault vs. At-Fault Insurance

No-Fault vs. At-Fault InsuranceThe 50 states and Washington, D.C., have all instituted their own auto accident insurance systems. Two forms of auto insurance prevail—no-fault insurance and at-fault insurance.

The no-fault system applies in at least a dozen jurisdictions, including New York, and the at-fault system applies in the remainder. These two systems can lead to very different outcomes for car accident compensation.

New York’s Minimum Auto Insurance Requirements

New York’s Minimum Auto Insurance Requirements

Every driver with a vehicle registered in New York State must purchase at least the following insurance coverage:

New York offers other forms of optional insurance as well.

The No-Fault System

Under the no-fault system, each driver looks to their own insurance to cover their losses. There is no need to prove fault because it doesn’t matter. New York’s PIP insurance, for example, covers:

  • Reasonable and necessary medical expenses.
  • Up to 80% of your lost earnings, up to a maximum of $2,000 per month for three years after the accident.
  • Up to $25 per day for miscellaneous expenses arising from your accident, such as child care.
  • Up to $2,000 in death benefits for the probate estate when a covered driver dies in an accident. This amount typically covers funeral and burial expenses.

PIP does not cover non-economic damages such as pain and suffering, even though these damages typically amount to more than half of the value of a personal injury claim that goes to court.

Who Is Covered?

Covered individuals include you, anyone driving your car with your permission, any passengers in your car, and any pedestrian your car collides with.


Normally, you cannot file a personal injury lawsuit if you suffer a car accident in New York. Instead, you must file a claim against your own PIP insurance. The purpose of this restriction is to lower auto insurance rates by keeping compensation low and bringing small claims out of the court system.

An exception applies if your injuries are serious, as defined by state law. For example, most states allow you to sue if you suffer the permanent loss of an important bodily function, such as the ability to speak.

Is Your Injury Serious Enough?

An important issue arises here. Which injuries are sufficiently serious to justify a lawsuit? Your lawyer will argue that your injuries are serious, while the opposing party’s lawyer will argue that they are not.

The distinction between a serious and non-serious injury is inherently ambiguous, leading to inconsistent application of the law and significant uncertainty. Of course, if someone dies in the accident, the estate executor can file a wrongful death lawsuit without worrying about whether a fatal injury qualifies as “serious.”

Once you prove that your injuries are serious, you can file an ordinary personal injury lawsuit against the at-fault driver. Alternatively, you can file a third-party claim against the at-fault driver.

Either way, you can seek the full suite of damages, including non-economic damages. Both at-fault and no-fault states allow you to immediately file a lawsuit for property damage, such as damage to your car.

The At-Fault System

Under the at-fault system, which still applies in about three-quarters of all states, you do not need to purchase PIP insurance, although it is optional in some of them. Instead, you must purchase bodily injury and property damage liability insurance.

If you suffer an auto accident injury, you can directly file a third-party claim against the at-fault driver. Although you can also file an immediate lawsuit, most claimants prefer to file an insurance claim and negotiate a private settlement if possible. When this happens, you can file a lawsuit at any time. The credible threat of a lawsuit over a strong claim gives you bargaining power in negotiations.

Comparative Negligence

When two parties to an accident share the blame, comparative fault is a way of apportioning damages between them. New York, for example, applies a “pure comparative negligence” system.

A court will decide both parties’ percentage of fault and deduct that exact percentage from each party’s damages. Many other states impose a cutoff of 50% or 51%, at which point such a party receives no damages at all.

When in Doubt, Seek Legal Advice from a New York City Car Accident Attorney

If you seek compensation for a car accident that you believe was somebody else’s fault, you could have a long road ahead of you if you try to represent yourself. The right New York City car accident lawyer can increase the value of your compensation enough to more than compensate you for the legal fees you will pay.

Contact or call our Manhattan law office to schedule your free consultation with an experienced New York car accident lawyer from the Law Offices of Jay S. Knispel Personal Injury Lawyers at (212) 265-5658.

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