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Most states have the traditional fault-based
auto insurance policy system. Currently, New York, New Jersey,
Washington DC, Florida, Hawaii, Kansas, Kentucky, Massachusetts,
Michigan, Minnesota, North
Dakota, Pennsylvania and Utah
operate under the no-fault auto insurance policy system, also known
as Personal Injury Protection (PIP). According to the Insurance
Information Institute (III), no-fault auto insurance policy allows
each policyholder to recover
financial loss from his or her own insurance company following
an accident—regardless of fault. The no-fault system
was set up in an attempt to take the fault out of liability
and
have the accident victims' medical expenses paid by their
own
insurance companies.
This would reduce the
long and costly court battles that may be required to
determine who was at fault in an accident.
Some of the no-fault states
also have limited tort, restricting the right to sue
in an accident. Under a no-fault auto insurance policy system, when you have
an
accident, your auto
insurance policy provider automatically pays for your damages
(regardless of fault) up to a specified limit. In exchange
for this guaranteed payment, you must forego some of
your rights to sue the other driver involved in the accident.
You are also protected from being sued
in the event you are at fault in an accident.
Monetary limits and medical benefit
limits of the no-fault auto insurance policy system can vary widely
depending on which state you buy auto insurance policy. In state with
higher than average PIP benefits, fraud is a constant problem.
Fraud rings claim phony and expensive
medical
treatments
causing of auto insurance rates to go up for everyone
in those states. No-fault auto insurance policy still
carries some of the highest auto insurance quote in the
nation—and the highest instances of fraud and abuse. Inadequate
regulation and flawed no-fault auto insurance policy laws may be the
two major reasons why New Yorkers
pay the
second highest auto insurance rates in the country.
No-fault auto insurance policy can also be expensive due to many
liability issues. Presently, there are no ‘pure’ no
fault systems, or policies which completely cover all costs
regardless of fault and prevent all lawsuits. Instead, a
blend of traditional and no fault systems give drivers coverage
of certain types of damage and protection against many, but
not all lawsuits.
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