No Fault; what does this mean?


No Fault; what does this mean?



There is a coverage on your New York State personal Auto insurance called “Personal Injury Protection”, abbreviated P.I P, also known as “No Fault” coverage.

          New York State is known as a “No Fault” state.  What that does NOT mean is when we are in a car accident that no one will be held at fault.  No, someone will be determined to have caused the accident.  In some cases both parties could have contributed to the accident.  This contributing factor could have one party at 100% fault and the second party at 0% fault.  It could be a 50%-50% contributing factor, or 70%-30%, or any varying combination.  This contributing factor determines whose liability insurance pays and when your own collision pays and to what extent.

          Personal Injury Protection is a coverage inside our New York State Personal Auto Insurance policy that provides coverage for us when we get injured from an automobile accident.  Our own P.I. P. coverage pays first, no matter who caused the automobile accident.  We could get hit head on from a drunk driver and our own P.I.P. coverage pays for our medical expenses and possible loss wages.  This is where the term “No Fault” comes from.  No matter who is at fault our own policies provide payment to hospitals, doctors, ambulance rides, follow up visits and rehabilitations.  This coverage pays first before your own health insurance program and before you can sue the other guy even if the other guy caused the accident.  Most people do not realize that their health insurance policy excludes automobile accidents.

          New York State made Personal Injury Protection mandatory in a New York State automobile policy in the late 1970’s.  They did this for primarily two reasons:

  1. Health insurance policies exclude coverage for injuries caused by or in an automobile.
  2. To slow down or eliminate law suites clogging up the court systems and make direct payments to doctors and hospitals.

The doctor and hospital costs were not being paid due to the exclusions in health insurance.  They may be waiting for years for law suits to work their way through the system to determine what automobile liability coverage may pay.

The minimum level for P.I.P. coverage that is mandatory in your New York State automobile policy is $50,000.  This $50,000 coverage pays all necessary medical expenses associated to the injury resulting from an automobile accident.  This $50,000 mandatory Personal Injury Protection pays first party benefits for:

  1. Medical expenses which shall consist of necessary expenses for:
    1. Medical, hospital, surgical, nursing, dental, ambulance, X-Ray, prescription drug or prosthetic services.
    2. Psychiatric, physical and occupational therapy and rehabilitation.
    3. Any non-medical remedial care and treatment rendered in accordance with a religious method of healing recognized by the laws of New York State.
    4. Any other professional health services.

These medical expenses will not be subject to a time limitation provided that, within one year after the date of the accident, it is determined that further medical expenses may be sustained as a result of the accident.

2. Work loss which shall consist of the sum of lost wages and expenses up to $2,000/month for a period of up to 3 years from the date of the accident.  We must be aware that the $2,000/month loss wages is part of the total $50,000 Personal Injury Protection coverage.  It is not $50,000 towards medical expenses and $2,000/month loss wage payments.

The basic $50,000 of Personal Injury Protection coverage is by State law mandatory and this coverage is on all New York State automobile policies.

However, we do have the option to increase this coverage for an additional premium charge.  We can increase out P.I.P. coverage to $75,000 or to $100,000 or up to $150,000.  Each of these additional levels of P.I.P coverage also increases our loss monthly reimbursement.

The increase levels and work loss coverage are as follows:

            $50,000 Basic P.I.P has up to $2,000/month work loss coverage

            $75,000 Basic P.I.P has up to $2,500/month work loss coverage

          $100,000 Basic P.I.P has up to $3,000/month work loss coverage

          $150,000 Basic P.I.P has up to $4,000/month work loss coverage

There is one more coverage option that New York State insurance law provides for us.  This coverage option is known as O.B.E.L coverage.  It stands for Optional Basic Economic Loss.  This adds an additional $25,000 of P.I.P. coverage.  This additional $25,000 can be either applied to our medical expenses or towards our work loss wage reimbursement. This coverage is so flexible it can be added to any of the four P.I.P. coverage limits.

Who is an Eligible Injured Person??

  1. The named insured and any relative who sustains personal injury arising out of the use or operation of any motor vehicle.
  2. The named insured and any relative who sustains personal injury arising out of the use or operation of any motorcycle while not occupying a motorcycle. 
  3. Any other person who sustains personal injury arising out of the use or operation of the insured motor vehicle in the State of New York while not occupying another motor vehicle.
  4. Any New York State resident who sustains personal injury arising out of the use or operation of the insured motor vehicle outside of New York State while not occupying another motor vehicle.

          I had a client here in New York State.  This client had all of their insurance with me.  There was a Farmowners policy, Business Auto policy, Personal Auto policy and an Umbrella Insurance policy.  This client had a daughter who attended college in Florida.  One day she was riding as a passenger in a friend’s car.  Their car was T-Boned in an intersection where the other car ran a red light.  It was a very serious accident.  My clients daughter was seriously hurt with multiple injuries, broken pelvis and other broken bones.  She was hospitalized in Florida for an extended period of time and resulting months of rehabilitation.  The ambulance ride, Emergency Room, operations, hospital room, Doctor visits and physical therapy were all covered by my clients Personal Injury Protection on his New York State automobile insurance policy.  It did not come from a health insurance policy or the liability coverage from her friends’ automobile policy or the liability coverage from the other driver’s automobile policy.  Luckily my client carried the full $150,000 of P.I.P. coverage and the policy paid out the full amount.

          Like any insurance policy or insurance coverage there are exclusions (the situations when it won’t pay and provide coverage) to P.I.P. coverage.  Here are two examples:

  1. When any person as a result of operating a motor vehicle while in an intoxicated condition or while his/her ability to operate the vehicle is impaired by the use of a drug.
    1. So drink, get drunk, drive a vehicle, have an accident, get hurt, no coverage.
  2. Any person who intentionally causes his/her own personal injury.

I was told the following story by an insurance company investigative adjuster:

          He was looking into an accident where a car had smashed into a bridge embankment.  The car had a single occupant, the driver.  He was a young man; still in high school.  This young man was seriously hurt.  There were numerous operations and an extended hospital stay.  This adjuster and the insurance company were having a difficult time determining the cause of the accident.

          A couple of weeks after the accident, while still in the hospital, this young man made a Facebook post about how bad his life was and that he could not even kill himself right.  It appears that high school life was not going all that well and that his girlfriend just broke up with him.  The insurance company denied the claim under intentional acts.  The family sued the insurance company.  The courts sided with the insurance company using the Facebook post as evidence.  The insurance company did not have to pay.

          I have had clients tell me that they have had financial planners advise them to lower their Personal Injury Protection on their New York State automobile policy to the mandatory minimum of $50,000.  I guess the Financial Advisor can take this little bit of savings and invest it for the client to help them become financially independent. (Heck, I’ve even heard this strategy encouraged on T.V. by so called Financial Guru’s!!).  It would take many years and an extremely high, greater than average return to become financially independent off the savings of premium between $50,000 and $150,000 of Personal Injury Protection.


  • P.I.P provides first dollar coverage-no matter who causes the accident
  • P.I.P. includes loss wage reimbursement
  • P.I.P. covers the policy holder and his/her family
  • P.I.P. covers the policy holder in someone else’s car
  • P.I.P. covers the policy holder while out of New York State
  • Health insurance does not cover car accidents

By lowering your P.I.P. coverage to the state minimum of $50,000, it would only take one car accident with injuries and you could find yourself financially destitute.