Reader question:

I live in New Jersey and we have no fault auto insurance laws. What’s the difference between no fault and tort laws?

Hunter

Good question.

No fault laws are designed to lessen the costs upon the insurance companies and to make the whole process easier by putting the onus of the medical expenses for anybody involved in a car accident, no matter who is to blame, on the shoulders of their own car insurance company. This has resulted in a decrease in car insurance prices in most no fault insurance states. However, many experts say that this won’t last for long. No fault insurance is more likely than other types of insurance to foster insurance fraud, and New York is a great example of this.

If you live in a state with no fault insurance, you cannot sue the other party in an accident for damages and pain, or, well, anything else. You can only do that with tort laws. The idea is that the insurance company should cover everything, and that all the lawsuits are expensive and clogging up the court system. Tort laws are also kind of like at fault laws, where the one who caused the accident ends up paying out more of the money, or their insurance company does.

Some states allow you to choose one or the other. You can get no fault, and have cheaper premiums; or you can get tort, have higher premiums but still have the option to sue. Still, in some states there is a middle of the way option that involves being able to sue up to a certain threshhold and getting slightly lower premiums. If you are in New Jersey, get an auto free insurance NJ quote to find out which is the best for you.

Cheers,

Fashun Guadarrama.