Reader’s Question:

Hey, my cousin in New Jersey recently got into an accident. He rammed straight into the backside his neighbor’s parked car when he ran over this pot-hole at pretty high speeds. What’s weird is my cousin’s insurance company didn’t have to pay for the repairs to his neighbor’s car. Why? I thought if you were at fault, you’d have to pay for everything?

Nina

Charlotte, NC

There is a type of accident insurance in some states in the US that indemnifies the policy-holder whether he or she is at fault or not. This is called a no-fault vehicle insurance policy. You could ram into another person’s car, and everyone would pay for their own damage regardless of who’s at fault.

The justification behind this accident insurance scheme is that it minimizes the length of time and monetary costs required to find out who’s really at fault. Determining who’s the liable party in a traditional tort (or fault-based) vehicle insurance policy is a messy legal affair, and what you’ll end up paying a lawyer in a lengthened legal battle would probably be more than the damage you’ll have to pay in the first place.

It may sound good for a person who gets into an accident, but the same happens for the guy who gets into an accident. Those who aren’t at fault and under a no-fault vehicle insurance policy will not be able to seek recovery from the parties responsible for the damages. That means if you get rammed by another driver, and you end up pretty messed up, you can’t pursue the other guy in court.