No-fault insurance is a type of insurance policy that provides protection and indemnification for the insured; even should the actions of the insured didn’t directly result in the loss related to the claim made.

The insurance of this type is going to be most likely associated with that of auto insurance and helps to protect the insured’s from losses due to the negligence of an uninsured party. Dependent upon the policy provisions; as well as the jurisdictional insurance regulations, the insurance provider may be able to file for some damages in order to recoup some or all of the loss.

No-Fault Clause

Virtually every auto insurance policy worldwide is going to have one form or another of a no-fault clause; however, depending on where you live and even the insurance agency sometimes it might be known by something different. In the United States it is sometimes referred to as your underinsured/uninsured motorist protection.

When it comes to legal recourse against the uninsured party the insurance company is usually always the one that has the legal right to go after the uninsured motorist as they paid you off on your claim per the policy and they then have the right to try to recoup their losses.

When judgment goes in favor of the insurance company such legal remedy might include the garnishing of the uninsured’s wages until the debt is paid in full.

The Goal of No-Fault Insurance

The minimization of lawsuits that come from parties that don’t carry auto insurance is one of the goals of no-fault insurance.

The supposition behind it is that the accomplishment comes by providing compensation to the insured in exchange for a covenant to not seek further legal recourse. The insurance company will first look towards making some type of a payment arrangement with the guilty party. When this is made then it avoids any legal remedy needing to be taken by the insurance company.

Should the mediation for payment arrangements not work; however, then the insurance company will readdress their situation and follow guidelines of the no-fault insurance laws that are in the jurisdiction of the uninsured party.

Critics of No-Fault Insurance

There are those that find the no-fault insurance to be very effective; it is still not without its critics. The critics make the claim that no-fault insurance does little to nothing to reduce the number of lawsuits that are filed. Though they do agree that the coverage does minimize the insured party to file a lawsuit the action then puts the insurance company in the position to file their own lawsuit.

The additional criticism is that even though the insurance company can take the action to recover their loss the likelihood of the insured’s premium going up is still fairly good; regardless of them not being at fault and even if the insurance company does successfully recover their losses from the uninsured responsible party.

Considerations

With all of this information in hand; when you’re offered the no-fault insurance policy you should make sure to read the terms and conditions carefully. Both read and understand; become familiar with both the laws and regulations that would govern any potential legal action that could be involved in the settlement of a lawsuit involving a no-fault insurance claim on your policy.

By considering all of this information it will help you to make the decision as to whether or not the coverage is worth the premium cost you’ll be paying. Also should you have to use the coverage what can you as the insured expect with regards to the repercussions in your increased premium as a result of filing the claim and being paid out on the claim.