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In general, auto insurance in the United States operates as either a tort or no-fault system, depending on the state. Tort insurance, also known as at-fault insurance, allows you to sue the at-fault driver in an accident. Some states may give drivers the option to choose which system they participate in. Drivers in these states must decide between full and limited tort insurance when purchasing a policy.
Full tort allows drivers to sue for pain and suffering after any accident, while limited tort only allows you to do so in certain situations. Here's how it works and what you need to know to decide which type of coverage is right for you.
What Is Tort Insurance?
In states with tort systems, also known as at-fault states, at-fault drivers are responsible (usually through their car insurance companies) for covering damages after an accident. Drivers in these states rely on liability coverage to pay for injury-related expenses and property damage they may cause to others. The tort system also allows drivers to sue for non-monetary damages, such as pain and suffering, regardless of the severity of the accident.
Thirty-eight states in the U.S. currently have tort systems for auto insurance.
Full Tort vs. Limited Tort
Three states—Kentucky, New Jersey and Pennsylvania—give drivers the option of participating in the no-fault system or purchasing tort insurance. Drivers who opt to participate in the tort system may choose between limited and full tort.
Limited tort policies cost less but restrict your ability to recover damages from an at-fault driver after an accident. With limited tort insurance, the at-fault driver's insurance company is responsible for covering your medical bills, lost wages and certain other expenses—up to the policy limit. However, you won't be able to sue for non-monetary damages, such as pain and suffering, unless your injuries are considered "serious." The definition of a serious injury varies by state but generally includes dismemberment, disfigurement, death and other severe outcomes.
Full tort policies cost more but don't limit the type of damages you can recover. Drivers with full tort insurance may sue for non-monetary damages, such as pain and suffering, no matter what type of injuries they sustain.
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Learn more >> Steps to Take After a Car Accident
How to Choose Between Full and Limited Tort Insurance
If you live in Kentucky, New Jersey or Pennsylvania, and decide to opt into your state's tort insurance system, you'll need to choose between full and limited tort coverage. Here are a few factors to consider before making your decision.
- Cost: Limited tort costs less than full tort insurance. However, it also provides less coverage. It's important to find a balance between the amount of coverage you choose and your budget.
- Leverage: If you opt for limited tort insurance, you lose negotiating power with the at-fault driver's insurance company. By selecting limited tort, you agree that you'll only recoup monetary losses such as medical bills and lost wages, so you can't negotiate a settlement for damages related to pain and suffering.
- Impact: The effect of a car accident can go beyond the medical bills and lost wages, leaving scars you can't see on the outside. Consider whether you would want the opportunity to recover damages for pain and suffering if an accident left you unable to do the things you used to love or struggling with anxiety and depression in its aftermath.
Learn more >> How Long Does an Accident Stay on Your Insurance?
Tort Insurance vs. No-Fault Insurance
When it comes to tort and no-fault insurance, the system your state uses determines how claims are filed after an accident. Here's a brief overview of each.
Tort Insurance
In states with tort systems, the at-fault driver is financially responsible (usually through their insurance company) for injuries and property damage that result from a crash. If you're hurt or your car needs repairs after an accident, the at-fault driver's liability coverage kicks in to pay for your medical bills, damage to your vehicle and other accident-related expenses. Additionally, in tort states, people have the right to sue for damages, including pain and suffering, after an accident.
No-Fault Insurance
States that don't operate using a tort system are known as no-fault states. The no-fault system was created to minimize lawsuits, reduce insurance costs and expedite claims payments. In no-fault states, drivers file injury claims under their personal injury protection (PIP) or medical payments (MedPay) coverage to get reimbursed for medical expenses and other injury-related costs, regardless of who caused the accident. Covered expenses vary by state and may include lost wages, payment for services the injured person can't complete and more.
The no-fault system doesn't allow drivers to sue for injury-related expenses or pain and suffering unless their injuries meet certain requirements set by the state. The right to sue is typically limited to situations where medical bills exceed a certain threshold or injuries are considered serious as defined by the state.
The no-fault system doesn't apply to property damage; it only applies to injuries. If your car is damaged in an accident, the at-fault driver's property damage liability coverage typically pays for repairs.
Currently, 12 states operate using a no-fault car insurance system:
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
The Bottom Line
Full tort insurance will cost you more upfront, but it preserves your right to sue for non-monetary damages if you're in an accident and someone else is at fault. If you opt for limited tort coverage, you'll save some money on your policy. However, you give up your right to sue for pain and suffering—with few exceptions.
Before choosing the coverage that's best for you, it's important to weigh the pros and cons of each type of policy, including what makes the most sense for your budget and whether it's worth giving up your right to sue for pain and suffering in exchange for a lower premium.