Most people have heard about “at-fault” and “no-fault” states, yet few understand what these terms mean.  Whether your insurance policy is governed by an “at-fault” or “no-fault” system can have a direct and significant effect in how a claim is handled and the compensation that a person may receive after being injured in an automobile accident.  

The differences

The main difference between “at-fault” and “no-fault” systems is whether a person injured as a result of a car accident has a right to file a lawsuit.  Another difference is who must pay for the injured person’s damages.

What it means to be an “at-fault” state

Most states, including Texas, use an “at-fault” system of automobile insurance.  This type of system is based on tort liability, which means the driver who caused the accident is responsible for the injuries and damages resulting from the accident.  The insurance company for the person or entity who caused the collision pays for the damages sustained according to its insured’s degree of fault.  

In an at-fault state, the insurance company for the “at-fault” party (the one that caused the crash) will offer to settle the injured person’s claim for an amount of money.  And if the injured person believes the offer is inadequate, that person may file a lawsuit for damages – medical expenses, pain, mental anguish, impairment, disfigurement, loss of earnings – and allow a judge or jury to determine fault and the amount of damages.

What it means to be a “no-fault” state

In this type system, each individual insurance company compensates its policyholder for injuries regardless of who is at fault.  This type of insurance system can provide a limited right to sue. Typically, states that have a no-fault system will establish thresholds for the minimum amount of damages necessary to file a lawsuit.  There are many variations of no-fault systems that differ by state. No-fault states include Florida, Kansas, Kentucky, Michigan, New Jersey, New York and Utah.

A variation is what is known as a “choice” state which allows drivers to choose either an “at-fault” or a “no-fault” insurance policy.  If the driver has an at-fault insurance policy, the claims procedure typically works the same as a traditional at-fault system.    

Texas’ Fault System by the Numbers 

As an “at-fault” state, Texas requires drivers to have a minimum level of auto insurance.  As of 2019, the minimum amount required in Texas is $30,000 in bodily injury coverage per person, $60,000 in bodily injury coverage per accident, and $25,000 of coverage for property damage.  The “at-fault” driver’s insurance policy must pay the other individual’s bodily injury claim and property damage if it is determined its driver is at fault for the accident.  

What About Accidents With Shared Fault?

In Texas, if more than one driver is at-fault for the accident, it is still possible to file a claim and receive compensation.  Texas is a comparative fault state which means that a claimant can recover damages as long as their level of fault for the collision is 50% or less.  If a claim cannot be settled, the percentage of each driver’s fault will be determined by a judge or jury. And that percentage will effect how much and whether a person makes a financial recovery. 

Let’s take a look at an example to clarify shared fault.  Consider a situation in which the judge or jury determines a claimant is 15% at fault for an auto accident, the defendant is 85% at fault, and the total amount awarded to the claimant is $100,000.  Taking into account the proportionate responsibility, the claimant’s net award is $85,000. If, however, the claimant’s was determined to be 51% or more at fault, then the claimant’s award would be $0.

Conclusion

The above is a very general introduction to “at-fault” and “no-fault” insurance systems, and is specifically not intended as legal advice.  There are many nuances and complexities to each system that vary from state to state. If you or a loved one have been injured in a motor vehicle accident, contact a licensed attorney in the state where the crash happened to determine your legal rights.