In a car accident, an at fault driver’s bodily injury liability policy is meant to cover the physical injuries suffered by a victim, while his property damage liability policy is intended to pay for the victim’s damaged properties. This is how things work in tort states, that is, states where tort-liability policy is the type of car insurance coverage required of all drivers.
In tort states, compensation to the victim is paid by the liable driver’s insurance provider. Often, a lawsuit is filed by the driver who claims to be a victim in the accident. The purpose of this lawsuit is to prove the other driver’s liability, show the extent of damages caused by the accident and to seek the compensation the victim may be deemed worthy to claim.
The case is totally different in states where the no-fault or personal injury protection (PIP) coverage is mandated. Besides the non-necessity of filing a lawsuit, compensation is paid by the drivers’ respective insurance providers, regardless of who is at fault in the accident. At present, of the 48 states where carrying car liability insurance is a mandate, the following impose the no-fault car insurance law: Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota, and Utah. While the no-fault car insurance is also recognized in the states of Pennsylvania, New Jersey and Kentucky, drivers are still given the option to choose either this policy or the tort policy.
It is only in the states of New Hampshire and Virginia where carrying car insurance is not mandated. In these two states, drivers are simply required to demonstrate capability (by posting a bond or cash) to provide sufficient funds in case of an accident that is due to their fault.
The mandate to carry car liability insurance, also called the financial responsibility law, however, is not followed by all drivers. In fact, according to the Insurance Research Council, 1 in every 8 drivers in the US still drives despite being uninsured. The reason? They (or at least most of them) find insurance policies too expensive.
While there is truth to this claim, any independent car insurance company would agree and say that not carrying insurance can prove to be much more expensive (than carrying one) in the event of an accident. Wausau, Wisconsin car accident attorneys, specifically, advise drivers to seek the assistance of an independent car insurance agency, which can help them identify the best possible policy deals and rates regardless of their driving history, vehicle make and model, and, most important of all, budget.