OT: Can someone explain what No-fault insurance is?

[infinity5]

I have my car insurance under state farm, and besides liability/propertydamange/bodilyinjury, all of which it think my state requries, there is also "No-Fault" listed and it costs nearly 1/4 of my entire monthly premium... i've done reserach online but all i come back with is information about 'no-fault states', which i think i understand, but that doesn't make sense in the context of my personal insurance policy charging me for it.

no-fault states limit your ability to sue other drivers for pain/suffering and mecical bills, and instead your individual insurance company pays for your bills. but thats a state policy, not an option on an individual policy that i should be paying for, right? or am i only "protected" by this no-fault policy if i pay for the insurance?

*shrug*

[dave b]

It basically means that instead of fighting about who should pay what, each insurance company covers their own driver.

From what I understand about insurance (which is limited), when you are in a wreck, you call your insurance company and they repair your car for you. In a regular state, the insurance then tracks down whoever was responsible for the wreck and their insurance covers the entire bill. Then, their insurance goes up. Administrative costs are higher, but at least the insurance company gets reimbursed. The customer loses because we pay higher premiums for the administrative costs, while bad drivers are punished with higher rates. Really bad drivers with lots of wrecks face high insurance costs, so they forgo insurance, thus the customer's pay high uninsured motorist rates and there are lots of hit and runs. Like here in LA!

If you are in a no fault state, then when there is a wreck, your insurance company pays for your damages, the other guy's insurance covers his damages, and the administrative costs are less because no one is fighting over who did what. You lose because all rates are higher and whenever you're in a wreck they'll raise your rates.

If you are unhappy with your rates, call around, then play the rates off of each other. I fould that the rates are pretty negotiable.

Good luck,
Dave