This type of insurance is known as no-fault auto insurance. It is government-mandated auto insurance where an injured party who was involved in an automobile accident can choose to recover a specific amount of damages from their own insurance policy, regardless of who was at fault in the accident. The amount of damages that can be collected is based on their insurance policy’s liability limits. Recoverable damages can be it the form of lost wages, medical care or any other accident related expenses.

A condition of a no-fault insurance claim is that the injured party cannot sue the other driver for any emotional distress, pain and suffering, or any other additional damages. No-fault insurance was designed to alleviate the burden of long and costly court battles over which party was at fault in the accident and to what degree of fault.

As of December 2010, there are 12 states, along with Puerto Rico, that offer some form of no-fault auto insurance. The amount of coverage provided to an insured varies by each state.
1. Florida
2. Hawaii
3. Kansas
4. Kentucky
5. Massachusetts
6. Michigan
7. Minnesota
8. New Jersey
9. New York
10. North Dakota
11. Pennsylvania
12. Utah

A few states have adopted system that is called an optional modified plan. If you live in one of those states, then you have a choice of being insured under a no fault insurance plan. One benefit to the no fault option is that you cannot be sued by another driver due to an accident in which you are at fault. The downside is that you also cannot sue a driver if you have expenses over the insurance coverage limit. The other option in those states is to forego the no fault insurance. This allows you to retain the right to sue if necessary.

In many states you must be offered personal injury protection (no-fault insurance) and if you decide not to enroll in it you must decline it in writing. If you don’t sign the rejection then the insurance company is required to add it to your policy and it will be reflected in your premiums. Additionally, some insurance companies require you to cover all vehicles or none with no-fault insurance.

When you have health insurance that would cover medical expenses and life insurance or savings for funeral expenses, consider whether or not you need this additional coverage.

Keep in mind that this insurance policy covers the driver whose name appears on the policy and household members who are related to the driver. If non-related passengers or pedestrians are injured in accident then they are included in the coverage as well.

To determine if this coverage is right for you discuss it with your insurance agent or lawyer so they can give you advice for your specific situation.