How Does No Fault Insurance Work?


After an accident, finances often cause substantial worries. You may have serious medical issues that need time in the hospital and qualified medical care—all of which costs money. Not only that, you may see a drop in your income due to inability to work while you recover from your accident. With no-fault insurance, however, you can cover your medical bills and ensure that you have the income you need in the event of an accident.

What is a No-Fault State?

Minnesota, like several other states (including Florida, New York, and Pennsylvania), uses a no-fault policy to cover accidents. That doesn’t mean that no one is at fault for the accident, and the responsible party will still need to pay to repair the other party’s vehicle. If you cause an accident, you may also face points on your license and fines and penalties. No-fault insurance, however, does mean:

Every driver in the state must carry no-fault insurance. No-fault insurance is designed to provide financial protection in the event of an accident. Typically, no-fault insurance has a policy limit of up to $20,000. The policy will, in the event of an accident, pay your initial medical bills up to $20,000. The policy may also provide coverage for lost time at work: generally 85% of your income up to approximately $500 per week, depending on the policy.

No-fault insurance kicks in regardless of who caused the accident. If you suffer injuries in an accident you caused, you have the right to seek coverage for those injuries and for lost time at work related to the accident. If you suffer injuries in an accident caused by someone else, you will still seek compensation through your insurance company.

A no-fault insurance policy helps provide protection in an accident regardless of who causes it. In Minnesota, around 11.5% of drivers do not carry insurance, and that statistic does not include the drivers who carry inadequate insurance that would provide inadequate coverage to other drivers injured in the accident. With no-fault insurance, on the other hand, every driver receives protection—and each driver bears responsibility for seeking the coverage they need.

What Does No-Fault Insurance Cover?

The full extent of no-fault insurance coverage will depend on your individual policy. Talk with your insurer to determine what your policy includes and what its limits are. However, in general, no-fault insurance covers:

Your medical expenses. This includes any and all medical expenses related to the accident:

  • Ambulance transport to the hospital
  • The emergency room bill
  • Hospitalization
  • Any tests or procedures you undergo while in the hospital
  • Physical therapy
  • Assistive medical devices, including crutches, scooters, and wheelchairs
  • The need for qualified nursing care in-home after your accident

Your lost time at work. If you cannot return to work after your accident, or if you need extensive time to recover from your injuries, your no-fault insurance policy covers much of your lost time at work. You may receive 85% of your usual income, up to $500 per week. While this amount may not fully compensate you for the income you lose after an accident, it will enable you to pay important bills and keep up with your financial obligations while you recover.

Services you must pay for due to your accident. Most of the time, you take care of cleaning your home or mowing your lawn yourself. Unfortunately, after your accident, you lack the ability to take care of those basic tasks. If you must hire someone to take care of them for you, your no-fault insurance may help provide coverage. Take a look at your policy or discuss it with your adjuster as soon as possible to better understand your rights under the terms of your policy.

What Should You Do After an Accident?

After an accident, you should seek medical care first and foremost. A doctor can evaluate your injuries, let you know how serious they are, and provide a treatment plan that will help get you back on your feet as soon as possible. From there, you should:

Keep track of all the paperwork involving your medical care and expenses after the accident. Keep track of all of your expenses related to the accident. In many cases, your no-fault insurance will help provide coverage for those bills, which will make your life easier.

Contact your own auto insurer, they will typically be your no-fault insurance provider. When you signed up for your policy, you may not have carefully reviewed the exact coverage you would receive in an accident. After you suffer injuries, however, you need to know what your insurance policy will cover. Contact your insurance provider as soon as possible to discuss the limits of your policy and what advantages it can provide you.

Talk to a lawyer, if needed. If you need more assistance or if you struggle to get your no-fault insurance provider to pay according to the terms of the policy, contact a lawyer to discuss your injuries.

What Happens if You Have More Bills Than the Policy Covers?

In some cases, you may experience such significant injuries that your no-fault insurance policy fails to cover the damage.  Once your own no fault insurance is exhausted, your bills should go to your health insurance carrier.  It is important to remember that your health insurer may have a right to be paid back for the bills they pay if and when you recover from the at fault drivers insurance.

What About Claims Against the Driver that Caused the Crash?

If you were not at fault for the accident, you will end up dealing with the other driver’s insurance company.  The at fault driver’s insurer will be responsible for helping to cover your injuries, up to the amount of those policy limits.  That claim is known as a “liability claim” and will include medical expenses, future medical expenses, wage loss, future wage loss, pain and suffering, and future pain and suffering.  The liability claim against the at fault drivers insurance is a one time lump sum, and must include all damages, so trying to settle that claim too early is like betting on your poker hand when you only have two cards.  Talking to a lawyer, however, will help you better understand the value of that claim, and amount you can expect from the insurance company.

Do you need legal help after a serious accident? Any time you suffer serious injuries in an accident, you may need legal help to seek the full compensation you deserve. Contact us today to learn more about your legal rights following an accident, including how no-fault insurance works and how it can impact your claim.