What benefits does auto liability (No fault) insurance cover?

Liability insurance actually consists of two types of auto coverage:

  • Bodily injury liability protection (commonly abbreviated as “BI”) pays the other party’s medical expenses if it is determined that you are to blame for the accident. In certain circumstances, it might even cover the victim’s lawsuit expenses and/or lost wages. Bodily injury insurance covers harm to a third party caused by the collision. This could include:
    • Medical bills
    • Prescriptions
    • Lost wages
    • Pain and suffering
    • Funeral expenses
  • No-fault auto insurance can expedite the claims process and payment, but it does not cover “pain and suffering” or other non-financial effects of the collision.One of the most important features of the no-fault system is the fact that you cannot include pain and suffering compensation in your claim.
  • Property Damage Liability Protection, commonly abbreviated as “PD,” applies to any property damages that result when you are at fault for a covered accident and cause them. It might also cover the costs of repairing or replacing the other party’s car in addition to any other property that might have been damaged in the collision, such as fences, buildings, phone poles, and other types of property. Additional benefits can include:
    • A rental car is provided while the other person’s car is being fixed.
    • The gap between the car’s value prior to the damage and its value after repairs is known as diminished value.

You can choose to leave the no-fault system if your injuries are sufficient to qualify for no-fault auto insurance in your state.

If your injuries fall under the category of serious/significant injury and you want to seek compensation for all categories of losses, including pain and suffering (which, once again, isn’t covered by a no-fault or PIP claim), you can file a third-party liability claim or personal injury lawsuit against the at-fault driver.

When does auto liability (No fault) insurance not cover an accident?

For no-fault insurance coverage to be available, several criteria must be met. Knowing when no-fault insurance does not apply to an accident is crucial.

No-fault insurance is not available to motorcycle riders (your policy may include MedPay coverage with more narrow benefits). Your no-fault claim may also be rejected for the following reasons:

  • You were driving while you were high. 
  • You were doing crimes while you were driving, like evading the police. 
  • You participated in a driving test or drag race. 
  • You were driving a stolen car on purpose. 
  • You were harmed while performing car repair work on a vehicle on the property of an auto repair shop.

Instead of liability coverage, collision insurance typically assists with the cost of fixing damage to your own car that arises from an accident. It also costs money to fix damage caused by other events, like hail, theft, etc.; this is where comprehensive insurance comes in.

Liability insurance does not cover your own injuries, even while it helps pay for the medical costs of someone you hurt. You might wish to consider medical payments coverage or personal injury protection depending on the state in which you reside.

Contact your insurer if you have any questions about auto liability insurance or the required protection required by your state.


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Dr. Nakul Karkare

I am fellowship trained in joint replacement surgery, metabolic bone disorders, sports medicine and trauma. I specialize in total hip and knee replacements, and I have personally written most of the content on this page.

You can see my full CV at my profile page.