What Are “No-Fault” Benefits?

No-fault benefits are offered by insurance companies to cover certain damages incurred by their insured no matter who is at fault. In typical insurance systems, insurance will only pay out to cover damages the insured individual incurs if the insured individuals is 49% or less at fault. However, no-fault insurance means that instead of having to sue the other driver for damages (who may or may not have insurance or enough insurance) one makes claim to their own insurance to have damages covered.

Is NY a No-Fault State?

Currently, there are only 12 states that offer no-fault benefits, and New York is one of them. No-fault benefits attach to any accident a New York driver or a New York-registered vehicle may have, whether within or outside of New York.

It also attached to any out-of-state vehicle driven in New York state. Every vehicle operated in New York state must be insured, and the insurance company must provide no-fault benefits in case that vehicle or driver is involved in an accident, meaning that a vehicle registered and insured anywhere else in the United States or Canada that is involved in a collision in New York state must provide no-fault insurance.

New York’s No-Fault Law

70A NY Jur Insurance §§ 1881-1961, the Comprehensive Automobile Reparations Act, was enacted in 1973 to remove a lot of the common law tort claims arising from automobile accidents out of the court system and to speed up receipt of compensation for economic loss. Otherwise, those injured in car accidents would have to sue the other party for compensation. In 2015, there were nearly 300,000 car crashes involving almost 525,000 vehicles.[1] No-fault insurance therefore keeps hundreds of thousands of cases out of the court system that would otherwise clog it and slow it down. Taking a court case to verdict at trial can take up to a few years now; without no-fault insurance, it would take even longer.

Why sue in the first place?

First, if someone’s insurance only covers the damage they do to other vehicles or people not in someone vehicle, then the only way someone will get money to cover damage to someone vehicle, medical expenses, and lost wages, or other incidental damage is to sue the other party. If they have insurance, it may offer to pay, and what it offers may even cover all the damages. However, if it refuses to pay, or if it won’t pay enough, or if the other driver doesn’t have insurance at all, then the only option is to sue.

However, not everyone is able to take on a lawsuit. They may not be able to afford a lawyer, and they may not be able to represent themselves. They may not have the time or energy to go through a lawsuit. There may no suitable lawyers where they live or even suitable courts, if they live in a rural area of New York State.

No-fault insurance fixes that problem.

What is covered under “no-fault benefits”?

Basic no-fault insurance (personal injury insurance) will cover up to $50,000 per qualified person per accident. The categories include:

  • Medical expenses/medicine: emergency treatment, hospitalization, medication, therapy, surgery, medical devices, and other medical care.
  • Personal care: This may include in-home care or other expenses incurred due to the injury.
  • Damage to vehicle and property: No-fault insurance covers damage to other vehicles and property.
  • Lost wages: Injury can lead to miss work, and insurance will cover salary lost.

It’s important to note that with basic, minimum insurance, all of these expenses are only covered up to $50,000 total. Thus, if someone’s medical expenses are $50,000 or more and they only have basic no-fault insurance, the company won’t pay for lost wages or personal care. Additionally, basic minimum insurance only pays for 80% of lost salary up to $2000 a month.

What about the other party?

No-fault insurance means that the policyholder waives their right to sue the other party for damage up to the amount no-fault insurance covers. The reason for this is to keep those who are in car accidents for recovering twice – one from their own insurance company, and against from the other party’s insurance company – for the same damage. Thus, if someone’s minimum no-fault insurance is exhausted, they will have to sue to get any more compensation for injuries or loss, but not before.

Minimum coverage:

Every insured motorist in New York must purchase a policy at or above the minimum, and every insurance company licensed to do business in New York must not sell any policy below the minimum. Minimum coverage includes:

  • minimum liability coverage: this is the coverage that attaches to a driver, covering any damages or harm done to people or property by the driver driving their own or someone else’s car,
  • uninsured motorist coverage: coverage for the driver or anyone else in the driver’s home or riding as a passenger in the driver’s car if they crash with an uninsured vehicle,
  • no-fault coverage: also known as personal injury protection.

Of the liability coverage, the minimum amounts allowed to be sold in New York are:

  • $25,000/$50,000 for injury,
  • $50,000/$100,000 for death, and
  • $10,000 for property damage.

Injury and death cover someone and their loved ones, but property damages covers what happened to vehicles or property belonging to the other driver or other people involved in the accident.

Drivers who wish to insure themselves above the minimum may do so, especially if they have expensive vehicles and/or live in an expensive part of the state.  

Additional coverage above the minimum:

APIP Coverage

Additional personal injury protection, or APIP, covers personal injury and loss above the minimum. For example, it will cover more lost wages, medical expenses, and personal expenses. APIP covers what PIP does not, such that additional coverage kicks in once PIP is exhausted. For example, if PIP pays $50,000 of $75,000 total medical expenses, APIP will cover the additional $25,000.

OBEL Coverage

Optional basic economic loss, or OBEL, pays for basic economic losses above the minimum $50,000. This would cover expenses incurred because of the accident, such as lost wages or a new vehicle. Like APIP, a victim can sue the other driver for economic damages above the minimum of $50,000 or above whatever OBEL coverage applies if the damages are above the minimum.

Subrogation:

An insurance company has the right to seek reimbursement of any additional coverage by suing the one who caused someone harm in place of the insured. This is known as subrogation, or the insurance company’s right to sek compensation for paying the insured’s losses. This is a right the insured signs over to the insurance company when they take on a policy. The insurance company will take the insured’s claim and then go after the party who harmed the insured in order to get back what the insurance company paid in benefits. Thus, if the insured sues the other party themselves and settle or win a verdict, the insured will most likely owe their insurance company back what the insurance company paid in benefits through the APIP since the settlement or verdict means that the insurance company lost the right of subrogation.

A personal injury attorney will know about and be able to advise someone on before someone sue the driver of another car.

Obtaining compensation for lost wages, medical bills, damage to car, and pain and suffering:

A victim of a car accident can sue the driver of another vehicle so long as the pain and suffering meets a threshold – meaning that the pain and suffering is from a bodily injury and that it was severe enough.

A severe injury disables someone permanently or temporarily, or causes a major life change. For example, paralysis is a permanent injury, and miscarriage after an accident is a major, unwanted life change. Usually, the ramifications of the injury have to be permanent in some way in order to meet the threshold. For example, a broken knee is serious, but if the injured makes a 100% full recovery, it may not meet the threshold, whereas someone stuck using a cane for the rest of their lives is permanently effected.

Who is sued depends on who is hurt. The driver of a vehicle must sue their own insurance company. Passengers, pedestrians, and bicyclists must sue the insurance company of the driver’s whose vehicle caused them the harm.

When Do No-Fault Benefits Apply?

There are some conditions that have to be met in order for no-fault insurance. No-fault insurance applies when:

  • The vehicle that caused the harm was registered in New York State at the time of the accident;
  • The vehicle is insured by a New York insurance company or company licensed to do business in New York;
  • The vehicle is a car, truck, bus, or taxi;
  • The accident happened in New York State; AND
  • The injured party was either:
    • the driver or passenger of the insured motor vehicle,
    • a pedestrian, OR
    • a bicyclist.

There are a few more exceptions. No-fault benefits don’t cover motorcycles, mopeds, and most scooters, nor do they cover drivers who were injured because they were driving while intoxicated. Intoxication includes both alcohol AND drugs, and legal and illegal drugs.

No-Fault Accident Application

In order to qualify for no-fault benefits, the insured must file an NF-2 with the insurance company. This is a No-Fault Application form. This has to be sent within 30 days of the accident if there was no original notice in writing (ex. if the driver only called their insurance company to tell them they were in an accident). This is a form from the Department of Financial Services, and it’s the same for all claims. You can download it here[2].

No-Fault Insurance Claims

Anyone making a claim for benefits has 30 days from the time of the accident. Failure to do so may mean loss of ALL benefits.

Additionally, other documentation has different time limits:

Medical: All medical bills must be submitted within 45 days of treatment in order to claim medical benefits. They may receive health services benefits within a year of the accident and afterward if, during that year, it’s clear that the insured will continue to need healthcare.

Lost wages and other expenses: Claims for lost wages must be submitted within 90 days.

Again, failing to submit anything within the deadlines can mean loss of benefits. However, if there is a compelling reason why this couldn’t be done, the insured can send, an explanation in writing explaining why it couldn’t be done. For example, if a driver was in coma for two months, they wouldn’thave been able to have made a claim during the first 30 days after the accident.

Treatment After a No-Fault Accident

Anyone involved in a car accident should get medical treatment immediately, even if they don’t think they’ve been hurt too badly. Some injuries, such as whiplash, concussions, and even traumatic brain injuries, may not seem as bad at first, especially when the adrenaline is pumping and one is in shock of seeing one’s car wrecked. However, these injuries can become progressively worse without medical attention.

The fire department and paramedics will show up to major accidents, especially if anyone has called 9/11. If this is the case, those involved in the accident should allow emergency service personnel to take care of them. However, if there are no emergency services personnel at the scene, everyone involved should go to the emergency room or to a medical center immediately to make sure that there are no injuries, or that any injuries are treated.

Second, getting immediate treatment is the best chance of getting an accurate assessment of injuries and medical costs. Anyone submitting medical claims to their insurance company will have to send medical records verifying what injuries occurred, what treatment is recommended, and how much they cost.

In the case of no-fault collisions, medical professionals must use a fee schedule to determine the costs of medical care. They may not charge outside of that schedule. This schedule applies to in-state and out-of-state medical professionals. These schedule fees are what insurance companies will pay for services, regardless of what the medical service provider would normally charge.

What if the insurance company wants more information?

Sometimes, an insurance company may seek more information if it believes that a claim could be fraudulent. This isn’t personal; rather, the insurance company wants to make sure that it’s paying appropriately for actual injuries or losses. Therefore, it may seek additional information to make sure that the claimed medical expenses are appropriate or that the accident happened as the claimant said that it did. The insurance company may seek an independent medical exam (IME) or an examination under oath (EOU).

Independent Medical Exam (IME)

When an insured person makes a claim for medical expenses due to injury, the insurance company may want the individual to go through an independent medical exam. An independent medical exam is done by a doctor or medical professional that has never worked with the patient before and has no doctor-patient relationship with them.

The examination looks for injuries, and the diagnosis and prognosis are shared with the insurance company. The right to keep this medical information confidential is waived in signing the insurance policy. The independent medical exam helps to ensure that the claimed damages and loss are accurate, and that neither the claimant (or their doctor) is seeking compensation fraudulently.

Examination Under Oath (EOU)

The insurance company may also want to verify that the insured is making a true claim for damages. The insurance company may require the insured to undergo an examination under oath. It’s similar to a deposition, in that the insurer gives an oath to tell the truth and there’s a court reporter transcribing the examination. An insurance company representative questions the insured. This allows the insurance company to gather all the facts it needs to decide whether or not to honor a claim. Also, if the insured is making a false claim, they’re doing so under oath, and it can be used against them in a lawsuit.

However, an insurance company may also require this in the event that records are lost or are unclear, especially in the case of a claim made during a disaster.

Denial of No-Fault Benefits

An insurer may decide to not grant benefits. This could happen because of an error, a mistake, or a late form. There could be a question about how an injury occurred, and if its related to the accident, or the insurance company may claim that the benefits have run out. For whatever reason a claim is denied, the insured has the right to continue to seek compensation. The best way to do this is to contact a personal injury lawyer for help. A personal injury lawyer has the knowledge and experience working with insurance companies and no-fault claims to specifically help obtain no-fault benefits. A lawyer can represent someone in a dispute and bring a lawsuit against the insurance company.