No-Fault Insurance

No-Fault Insurance

As the name suggests, no-fault insurance is a type of auto insurance in which fault is not assigned when an accident occurs. In this type of insurance, each driver’s insurance company pays for the damages to the car that it insures.

As compared to other forms of car insurance, no-fault insurance is designed to lower premiums by avoiding expensive litigation and disputes over the cause of an accident while also providing quick payments for injuries. The victim’s insurance company pays out a claim to the victim while the other driver’s insurance company pays out a claim and may charge a higher premium, as that party is now believed to be at higher risk.

The victim’s insurance company may be at a disadvantage during an accident, since there is a good chance that in another accident, the at-fault driver may be insured by the same agency. As the at-fault driver’s insurance company gets to recoup the claims quicker through raised premiums, everything should even out if the drivers from both sides are equally likely to be at fault at any point.

There are critics of no-fault insurance. The main complaint is that reckless or negligent drivers are not punished sufficiently since they only pay raised premiums and receive a higher risk rating. Proponents of the system are quick to note that car accidents, whether recklessly or negligently caused or not, are inevitable and so at-fault drivers should not necessarily be punished. They also note that liability insurance insulates the reckless drivers of the world from the financial disincentives of litigation. The reckless drivers know that their insurance company will pay in the event of an accident, potentially reducing their financial incentive to drive safely.

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For more information on choosing the right form of auto insurance for your needs, contact the Chicago auto insurance agents of Insure on the Spot by calling 1-888-972-7283.