What Does No-Fault Insurance Mean?


Personal Injury Protection (PIP), also known as No-Fault Insurance is a requirement for auto-owners in Florida.

Floridians often hear the term No-Fault Coverage or No-Fault Insurance when dealing with or purchasing auto insurance, but many don’t know exactly what it is that they are paying for. Florida is one of the 15 states in the nation that mandates this coverage, also known as Personal Injury Protection.

This means if you or a passenger are injured in an accident, your insurance company pays for a portion of the medical bills or lost wages as a result of the accident, regardless of who is at fault. It does not, as is sometimes believed, cover damage to your vehicle or personal property as that coverage is separate.

The reason that no-fault insurance exists is to protect the consumer from the subrogation process (one insurance company suing another insurance company on your behalf for damages) in the immediate aftermath of an accident where determining fault would determine personal injury payments. This does not completely eliminate the right to seek recovery for damages, no-fault laws allow for the right to seek recovery for damages not covered by the primary first-party insurance.

The original Florida no-fault law expired on October 1, 2007 but the legislature reinstated the provision with a new law effective January 1, 2008. In 2012, a RAND Corporation study found that no-fault system states had higher liability premiums on average, stating, “premiums have been consistently higher in no-fault states, and the gap has widened over time. By 2004, premiums under no-fault were 50 percent higher than those under tort [fault determination system].”

No-fault systems are becoming less popular, mostly due to the hefty premium costs associated with them. Of the 24 states that had at one time enacted no-fault laws, only 15 remain. Whether a no-fault system will remain in Florida is yet-to-be-seen, but for now, higher premiums for newcomers to the state will continue.