Does cheap no-fault auto insurance exist?

If you live in one of the 12 no-fault states, auto insurance laws require you to purchase additional coverage limits beyond traditional liability policies, like personal injury protection (PIP).

Fortunately, cheap no-fault auto insurance does exist, and our guide will help you find it. Nationally, PIP coverage costs around $174.87 annually. 

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You cannot sue the at-fault driver for medical damages below a specific dollar amount in no-fault states. Instead, you must use your PIP insurance to cover those losses.

PIP also pays for lost wages, funeral expenses, survivor’s benefits, and even rehabilitation services that result from an accident.   

Keep reading to see average costs and tips for finding cheap auto insurance, regardless of if you live in a true no-fault state, a choice no-fault state, or one of the tort states that must offer PIP coverage.

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Find the best cheap no-fault auto insurance company near you by entering your ZIP code into our free quote tool above.  

What is the average cost of no-fault auto insurance?

No-fault auto insurance refers specifically to PIP insurance. To understand PIP insurance’s average cost, we need to look at the pure premium cost for this insurance coverage type. 

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A pure premium refers to how much money it costs an insurance provider on average to pay for certain types of claims in 12 months.

Companies use pure premiums to calculate auto insurance rates for the different types of coverages.

Usually, customer rates are slightly higher than the pure premium because pure premiums do not include overhead costs.

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The national average pure premium cost of PIP insurance is $174.87 annually, according to a data report by the National Association of Insurance Commissioners (NAIC). The data set includes “choice” no-fault states and tort states that offer PIP coverage.

In other words, the national average cost an insurance company pays for all PIP claims in one calendar year is $174.87 per incident. Customers likely pay slightly more than this.  

See the pure premium cost for PIP coverage by state from the same NAIC data report in the table below. States are labeled based on the auto insurance laws. 

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Folks living in states with low pure premiums can easily secure cheap no-fault auto insurance rates. However, PIP insurance costs more in states with higher pure premiums.  

There are dozens of different factors that affect auto insurance rates besides coverage limits, including your age, driving record, and even the type of vehicle you drive.

Every company uses a different method for calculating costs.

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To help you buy cheap no-fault auto insurance, compare quotes from multiple providers before choosing a company.   

Where can you find cheap no-fault auto insurance?

You secure cheap no-fault auto insurance quotes from most major insurance companies. However, some companies are less expensive on average in individual states than others. 

In the table below, see the cheapest auto insurance company in each of the states that sell PIP coverage, as well as the average annual auto insurance cost. 

USAA only sells insurance products to military personnel and their families. We’ve provided the second cheapest option in those states to accommodate every driver.

Now that you know what companies offer cheap PIP auto insurance in your state, remember that each company offers different deals to attract consumers like you to buy their products.

Depending on your unique situation, some deals will be more enticing than others. You can’t trust everything you hear about specific companies, plans, or promotions.

Put in the research and always compare quotes from multiple providers when shopping for auto insurance.

Affordable no-fault auto insurance exists; you just have to know where to look.

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What is no-fault auto insurance?

Auto insurance laws vary by state. You must carry your state’s minimum insurance requirements to drive on the roads legally. According to the Insurance Information Institute (III), liability insurance is required in virtually every state.

However, in the 12 no-fault states, an additional coverage known as PIP insurance is also required. See the different legal insurance limits by state in the table below.

Before July of 2020, Michigan required drivers to purchase unlimited PIP coverage, causing the rates to skyrocket.

However, Michigan residents can now choose from six different coverage limits. 

Question: Why is PIP insurance required in a no-fault auto insurance state?
Answer: Laws are in place that limit your rights to sue other drivers for damages caused by injuries from a car accident below a specified threshold. 

Drivers instead are required to purchase PIP insurance, and you receive medical monetary compensation and other losses through your own auto insurance provider.

It is important to note that this type of coverage does not pay for any repairs to your vehicle.  

If injured in an accident, you file a PIP insurance claim through your provider. Your insurer will compensate you for losses up to your policy limits.

In some states, filing a PIP claim can cause your rates to increase when your policy is up for renewal. However, it depends on the laws and regulations where you live.  

Medical payments coverage (MedPay) also compensates drivers injured in an accident regardless of fault, but the coverage is more limited than PIP.

Do you need Medical Payments coverage on your auto insurance if you have PIP coverage? No, purchasing both policies is often unnecessary.

If you happen to live in a no-fault state, you may feel like you got the short end of the deal because you can’t sue for damages if someone is determined to be at fault in an accident.

However, your insurance premiums don’t have to cover as many legal fees as tort states, leading to lower rates.

What is Personal Injury Protection or PIP insurance?

As previously mentioned, no-fault insurance states always mandate PIP plans; this is the reason that cheap no-fault auto insurance plans can be challenging to find.

PIP policies can sometimes be more expensive than standard insurance policies. 

Personal Injury Protection covers most injury-related expenses that result from an auto accident, regardless of fault. PIP covers doctor bills, hospital costs, lost wages, funeral expenses, and other compensation.

In reality, this type of coverage includes elements of personal medical, life, and employment insurance, which is why it can be an expensive part of your insurance plan.

However, some PIP plans have higher limits than others. Depending on how much or how little the plan covers, your auto insurance premiums may be significantly higher or lower.

What is the difference between no-fault auto insurance and tort auto insurance?

No-fault auto insurance differs from tort auto insurance in several important ways.

For example, in a no-fault state, your policy provider pays for your insurance rather than the driver’s policy provider determined to be at fault. In a tort state, you’d go through the at-fault driver’s insurance. 

Some claim that a no-fault policy is less stressful than a tort policy because involving courts always takes more time and energy.

However, it’s everyone for him or herself out on the roads, and defensive driving is more of a necessary skill in a no-fault state than following the official rules of the road.

You may worry more about making sure you don’t get into an accident on the streets in a no-fault state.

Contrary to popular belief, no-fault auto insurance policies are not necessarily more expensive than tort policies.

Many tort policy providers do a lot of advocacy and legal work to ensure that the other policy provider has to pay the bill, but this work costs money.

In a no-fault state, you’re saving money on policy rates by not going through as many lawsuits as tort states.

The legal budget for companies in no-fault states doesn’t need to be as large as at-fault states. Ideally, customers should see lower average auto insurance costs as a result. 

In any case, whether you are getting a no-fault or a tort insurance policy, you will pay significantly less for your premiums if you stay out of accidents and keep your driving record clean.

What is the difference between “choice” no-fault and no-fault auto insurance?

There are three significant insurance provider categories: true no-fault coverage, “add-on” no-fault coverage, and tort or at-fault coverage. 

Additionally, three of the 12 at-fault states offer “choice” no-fault, which gives you the option of signing up for the state’s true or add-on no-fault plan, or you can choose a tort plan.

We’ve previously covered how no-fault states have laws in place limiting your litigation rights. However, in some of the 12 states, you can sue for monetary losses if your medical expenses go beyond a tort threshold.

You can seek legal compensation for verbal tort thresholds, or extreme injuries, in the other states, including death, disfigurement, fractured bones, dismemberment, or loss of pregnancy. 

Take a look at the threshold laws for the 12 no-fault states:

• Florida – Verbal
• Hawaii – $5,000
• Kansas – $2,000
• Kentucky – $1,000
• Massachusetts – $2,000
• Michigan – Verbal
• Minnesota – $4,000
• New Jersey – Verbal
• New York – Verbal
• North Dakota – $2,500
• Pennsylvania – Verbal
• Utah – $3,000

The three states with a “choice” no-fault system are Kentucky, New Jersey, and Pennsylvania. In these ‘choice’ no-fault states, you can choose to retain your litigation rights.

You make this choice at the time of purchasing an auto insurance policy. Often, keeping your tort rights causes your auto insurance costs to increase.

No matter what choice you make in Kentucky, you’ll still be required to purchase PIP coverage for any passengers or pedestrians.  

Finally, The states that offer “add-on” no-fault insurance, which consists of tort insurance with a few elements of the no-fault system are:

• Arkansas
• Delaware
• Washington, DC
• Maryland
• New Hampshire
• Oregon
• South Dakota
• Texas
• Virginia
• Washington
• Wisconsin

All of these states have at-fault auto insurance laws in place. However, some of them still require PIP coverage, including Delaware and Oregon. 

Ultimately, tort providers may end up costing more money overall than no-fault providers. The differences between no-fault and tort insurance, when it comes to how you should handle yourself on the road and the premiums you pay, are minimal at best.

In other words, it’s not about whether your state is tort or no-fault. It’s about whether your auto insurance policy is a good deal or not.

Regardless of the state laws, your best auto insurance company will provide you with affordable rates without compromising your coverage needs. Shop around and compare quotes from various providers before purchasing a policy.

You can compare and buy cheap no-fault auto insurance right now for free by entering your ZIP code into our quote tool below.