No-fault insurance means policyholders can file claims to their insurance company after an auto accident, regardless of whether they caused the accident. In addition, no-fault auto insurance policies limit the rights of a party involved in a crash to sue for pain and damages. While some states mandate that drivers registered in the state purchase no-fault auto insurance coverage, as of December 2010, North Carolina was not one of them.
No-Fault Insurance
Under the no-fault system, parties have only a limited right to sue for injuries sustained in an accident. To be able to sue, the damage sustained must surpass one of two types of thresholds: verbal or monetary. A verbal threshold is a description of a particular type of injury, such as a broken bone or a contusion. A monetary threshold is the cost of treating the injuries incurred in the accident.
North Carolina Insurance Requirements
North Carolina does not require drivers to have no-fault insurance. However, like all states, it does require drivers to buy a minimum amount of liability insurance. Each driver must purchase $30,000-worth of coverage for injury to one person, other than the driver; $60,000-worth of coverage for injury to multiple people; and $25,000-worth of property damage. A person who drives without insurance in North Carolina faces fines and a possible suspension of his license.
States That Require No-Fault Insurance
As of December 2010, 12 states had laws that either mandated or allowed some form of no-fault auto insurance. Florida, Michigan, New Jersey, New York and Pennsylvania retain a verbal threshold, while Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah have a monetary threshold. Kentucky, New Jersey and Pennsylvania drivers have the option of agreeing to either a verbal or monetary threshold; however, drivers are allowed to reject this threshold and sue for damages.
Considerations
Sometimes, a driver from one state is involved in a crash with a driver from another state. In this case, the insurance companies use the auto insurance laws of the state in which the accident occurred. For example, if a driver from Michigan, a no-fault state, crashed into a driver in North Carolina, the insurance companies would arbitrate the case using North Carolina laws. To accommodate this, individual auto insurance policies adjust when a driver crosses state lines.
Tags: North Carolina, auto insurance, driver from, monetary threshold, no-fault auto
