Is no-fault car insurance in New York as safe as it sounds? Learn more about the pros and cons of this coverage and how they impact you.
New York is one of only 12 no-fault insurance states in the nation. This means that insured drivers are reimbursed by their coverage provider for injuries when there’s an accident—and they don’t have to go through the court process to do it—regardless of who is actually at fault for the incident.
There’s one very important point when it comes to this policy, however: your car isn’t protected. You’ll need to buy collision coverage for that. Our guide walks you through how no-fault works, what it covers, and reveal the pros and cons involved.
No-fault car insurance 101
It is legally required for drivers in New York State to have a minimum amount of auto coverage. This means $25,000 for bodily injury to one person, $50,000 for bodily injury to all persons, and $10,000 for property damage in any one accident. Mandatory “no-fault” coverage of $50,000 is also necessary.
No-fault coverage is also called Personal Injury Protection insurance (PIP). It helps by paying out toward any medical expenses you and/or your passenger(s) incur in a car accident, plus contributes towards other potential costs. This can be a big help in certain situations but there are also some downsides.
The pros of no-fault car insurance in New York
No-fault status means New York State gets things moving fast after an accident. In many states and scenarios, the claims process can be protracted because determining blame can be difficult. No-fault states streamline this because insurers focus primarily on helping policy holders recoup any personal-injury-related expenses without pointing fingers.
Insured New York drivers, their passengers, and other parties can be reimbursed for (or simply receive, in the last instance):
- Medical expenses including transportation to and from care facilities
- Lost income
- Household services required due to the effects of an accident
- Childcare expenses
- Funeral costs
- Survivor’s loss payments — an amount received by dependents of someone killed in an auto accident. This typically pays out for 3 years at a variable rate calculated by considering the deceased’s income and the survivor’s level of financial dependence.
It must be made clear that not every one of these reimbursements is guaranteed. Some will happen, others will be limited in scope, and some may not apply at all.
Further no-fault advantages
No-fault covers your passengers, but it also kicks in if you’re the passenger in someone else’s vehicle. Coverage also extends to rental vehicles in New York but only in excess of the rental company’s existing insurance. You don’t even need to have PIP or be in a car to be protected. Injury expenses incurred by a vehicle that struck you while you were a pedestrian or cyclist are also covered by the driver’s insurer.
No-fault states limit the capacity to sue, which offers some degree of protection to whoever caused the incident. However, this isn’t an airtight protection and is just one of several cons in the no-fault scenario.
Con #1: Someone Is ALWAYS to blame
No-Fault has some inbuilt limitations and the biggest one is that “no-fault” doesn’t mean that nobody is at fault. Someone — possibly both parties — caused the accident. Insurers pay out regardless of who is to blame, but that doesn’t mean culpability is left undecided. If you’re found at fault and the personal injury claims exceed coverage limits, you can be subject to a lawsuit and have to pay.
Con #2: Litigation is still possible
Drivers have limited capacity to sue each other but litigation can nonetheless occur, at least in New York State. Any impacted party done serious enough harm (or their survivors) can seek pain and suffering damages. The no-fault threshold must be met for such litigation, and the New York State Bar recognizes 9 categories ranging from permanent disability to death as being serious enough circumstances under which to sue.
Con #3: Time is money and claims can be costly
The clock is also against no-fault claims in New York State. Benefits are not automatic, meaning drivers have only 30 days from the date of the accident to file for compensation. Further financial stress occurs when injured parties realize they must draw on their personal insurance even when the other driver is to blame. This could increase the blameless party’s premiums through no fault of their own.
Con #4: Extra liability coverage is used for other contingencies
No-fault coverage won’t pay out for damage to someone else’s vehicle or property. Purchasing property damage liability coverage is necessary to guard against that (and umbrella coverage is an excellent backup). No-fault is also limited in how much it pays out to reimburse medical expenses. Again, PIP won’t cover expenses which exceed your coverage limits; a ceiling that can be raised by speaking with your insurer.
Some more resources for New York drivers
The New York State Department of Financial Services offers many helpful links that help drivers further understand New York’s no-fault stance. These resources also assist with navigating various aspects of the no-fault claim application process such as verifying medical treatment, confirming lost income, dealing with a denied claim and much more.
Sometimes it helps to speak directly to someone who appreciates how stressful any kind of auto claim can be. Our team is here to help New Yorkers get the information they need with a minimum of fuss.
NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review, just drop us a line, visit our offices Monday to Friday 9 to 5, or call (516) 544-0006.