No-Fault

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Definition - What does No-Fault mean?

No-fault refers to an auto insurance policy that awards a claim to the insured regardless of the fact that they might be responsible for an accident. By accepting the claim, the insured is refrained from suing a third party for injuries involving the accident.

Insuranceopedia explains No-Fault

The no-fault policy came about as an answer to the lengthy lawsuits involving vehicular accidents. Thirteen states in the US decided that a no-fault insurance should be sold to avoid these long and costly court procedures and also to pay the medical expenses for injuries through a speedy awarding of insurance money.

The insured, however, is banned from taking any legal action against another person (usually another motorist) in the accident. This ban can be lifted if the insurance policy is not enough to pay for the medical bills or when the insured suffers a serious, life-altering injury or death.


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