No-Fault Insurance Explained – Texas Insurance Resources

No-Fault Insurance Explained - Texas Insurance Resources

Summary: No-fault insurance isn’t used in Texas but is a system some states use to help make the claims process smoother for drivers. Some no-fault states require PIP coverage and although the Lone Star State uses an at-fault system, PIP insurance is available. Estimated Read Time: 2 mins

Depending on the state you’re in, there are different insurance systems that help govern the roads and make sense of things in the aftermath of an accident. No-fault insurance doesn’t apply in Texas as the state uses an at-fault approach, however, there are several states in which no-fault coverage is used.

What Is No Fault Insurance?

No-fault insurance aims to streamline auto insurance processes by handling minor claims internally, reducing court involvement. Under the no-fault system, each insurer compensates its policyholders for minor injuries, regardless of fault in the accident.

In strict terms, no-fault refers to states where insurers provide first-party benefits and limit the right to sue. However, in severe injury cases, drivers in no-fault states may still pursue legal action, subject to specific thresholds based on verbal descriptions or monetary values.

In choice no-fault states, drivers choose between no-fault and tort liability policies. No-fault insurance in New Jersey and Pennsylvania has verbal thresholds, while Kentucky has a monetary threshold.

For drivers in traditional tort liability states, there are no lawsuit restrictions, allowing faulted drivers to be sued for pain, suffering, and expenses.

Add-on states combine no-fault benefits with traditional liability systems, allowing lawsuits without restrictions. First-party coverage in add-on states may be optional and benefits could be lower compared to true no-fault states.

No-fault insurance came to be in response to public dissatisfaction with the traditional auto liability insurance system in the 1960s.

By the 1970s, legislation in many states allowed accident victims to recover financial losses from their own insurance companies, aiming to streamline the process and reduce delays.

Currently, 24 states, along with the District of Columbia and Puerto Rico, have laws enabling policyholders to obtain compensation from their insurers.

No-Fault States May Require PIP Insurance

Personal injury protection (PIP) is mandatory in true no-fault states, covering medical expenses, lost wages, and funeral costs. However, coverage varies across states, with differences in limits for medical expenses, lost income, and essential services.

However, at-fault states may still have carriers offering PIP coverage. This doesn’t mean that it’s mandatory to enroll but the option may be available as an additional way to protect yourself from the rising costs of medical expenses.

Is Texas a No-Fault Insurance State?

In Texas, the at-fault insurance system holds drivers responsible for covering damages in car accidents they cause. This traditional fault-based approach means the responsible driver must compensate for the incurred damages.

Those not at fault have multiple avenues for seeking compensation, including through their own insurance, the at-fault driver’s insurance, or by suing the at-fault driver directly. This system ensures that the driver who caused the accident is legally accountable for the resulting damages.

No-Fault States in the U.S.

There are states where no-fault insurance may take shape in different forms, but Texas is not one of them. Nevertheless, if you’re in one of the following states, you won’t use an at-fault system:

● Florida

● Hawaii

● Kansas

● Kentucky

● Massachusetts

● Michigan

● Minnesota

● New Jersey

● New York

● North Dakota

● Pennsylvania

● Utah


1. Background on: No-fault auto insurance, III. Accessed February 2024.

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