The three types of no-fault insurance are pure no-fault, choice no-fault, and add-on no-fault. No-fault insurance refers to a legal system that requires drivers to use personal injury protection (PIP) insurance to pay for their medical expenses after any accident and restricts their ability to sue an at-fault driver. The main differences between the three types of no-fault insurance have to do with their exact PIP requirements and lawsuit restrictions.
Types of No-Fault Insurance
Pure No-Fault
Policyholders are required to have personal injury protection and can only sue the at-fault driver if they are severely injured or incur a significant financial loss. Used in nine states.
Choice No-Fault
Policyholders are required to have PIP but may opt-out of the no-fault system that restricts lawsuits. Used in three states.
Add-on
PIP is either required or optional, and there are no restrictions in place regarding lawsuits. Used in eight states and the District of Columbia.
If you don't live in a state where no-fault insurance is available, you can instead purchase medical payments coverage (MedPay). This type of insurance provides coverage that is similar to PIP, but it is not considered “no-fault” insurance because it is not available in any of the no-fault states.
To learn more, check out WalletHub's guide to no-fault insurance.