Places Where People Are Sue-Happy

When it comes to buying car insurance, knowing what kind of coverage to get is about as simple as gazing into a crystal ball to try and see the future. Should you prepare for the worst and buy the mega-premium car insurance policy, or should you get the most basic of liability car insurance? CoverHound took a look at all 50 states in the U.S. and came to one conclusion: car insurance costs greatly depend on where you live.

This is because each state sets its own insurance laws. It’s not so much that there are places where people are sue-happy as it is there are places where it’s easier to sue. If your state mandates that you carry fault or no-fault liability car insurance, here are some things you need to know.

Fault vs No-Fault

You’re probably thinking that determining who pays for an accident is simple, right? Whoever caused the accident is who should pay – or so it might seem. The problem is that it’s not that simple. The state you have the accident in will have a lot of influence in determining fault in the accident.

In states that have a fault-based system, also called tort liability, insurance companies must pay according to the degree of fault of each party. For example, if you’re driving down the road in your own lane and someone crosses the median and hits you, they are clearly at fault. So, their liability car insurance will be responsible for any car repairs, medical expenses or other losses.

According to the Insurance Information Institute (III), in states with no-fault insurance laws, drivers are required to carry personal injury protection insurance, also referred to as PIP. In states that use this system, when a car accident takes place, each driver’s insurance provider pays for medical expenses up to a certain threshold.

However, property damage is still fault-based, which means that repairs are covered by the insurance of the at-fault driver. The drawback to this system is that even if you weren’t the one that caused the accident, you can’t sue the other driver for emotional distress, pain, suffering or any other inconvenience you incurred due to the accident if you live in a state with a limited tort option.

Why Do States Adopt a No-Fault System?

The fault system is called a tort system. A tort is another term for a lawsuit and the states that have adopted a no-fault system have done so because of the long and costly lawsuits that have come out of determining who is at fault and to what degree.

When Can You Sue Another Driver?

Some no-fault states have an option where drivers can choose between a no-fault policy and a policy that is based on tort liability law. This basically means that in these states the driver never gives up their right to sue. Three of the nine no-fault states have this option. They are:

• Kentucky
• New Jersey
• Pennsylvania

When a person chooses to file a tort action against another driver they can sue for non-economic damages, such as pain and suffering. You can check online with sites like Lawyers.com to learn about the specific laws of the state you live in. This is important information to have because the type of injury you may have sustained in an accident and the resulting medical expenses are subject to an injury threshold and monetary threshold, respectively. They do this so that a person will not sue over every single little injury that is sustained in an accident; only the most serious injuries are meant to be sued over in this system.

The Impact of Fault

If you live in a state with a fault-based system, which is the majority, how does fault impact your insurance rates? Well, your insurance company will investigate the accident. If you are found to be the driver at fault, that doesn’t necessarily mean your insurance rates will go up. It differs by insurance provider, but for the most part, insurers look at your driving record and the circumstances of the accident. They will then decide if your rates should increase or not. If you are impacted by the accident and your rates rise, it will be a couple of years before you see them begin to level out again.

The Bottom Line

Where you live has a large impact on whether you run the risk of being sued in the event of a car accident. The best thing to do is to understand the laws of the state you are insured in and what you need to do in order to protect yourself from lawsuits that may arise. If you have questions, talk to your insurance provider.