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What is No-fault Insurance?

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 08/31/2017

Q: A friend of mine that lives in a different state told me they have no fault car insurance. What is that and do I have it also?

A: No fault insurance is also called PIP coverage. It is personal injury protection coverage that pays for your injuries whether you were at fault for the accident or not, this is why it is called no fault insurance. For one state in particular, this type of coverage came about because the number of fraudulent car insurance medical claims reached astronomical levels.

Large organized groups of people would box an innocent driver in and then one of the vehicles would cut them off and slam on their brakes so that the innocent driver would rear end them. The people in the other cars would then give statements as witnesses stating that the innocent driver was actually driving too close and that’s how they rear ended the front driver. No matter how much the innocent driver claimed the truth of what really happened, they were outnumbered by the people in the front vehicle and the fake witnesses in the vehicles that boxed them in.

In addition to the accident set up, there were also doctors involved that confirmed injuries that were fake and attorneys that help set the stage for settlements. Everyone got a payout from this fake claim.

When these rings were finally busted the state stepped in and started changing coverage laws to help stop this car insurance fraud from happening.


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Michele Wilmonen

Michele's first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she's earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

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