For over 30 years, New York State has had a no-fault law that governs all automobile accident cases.  This article is the first of a series that will discuss the law, how it works, and what all drivers – as purchasers of auto insurance policies – must know.  It will also discuss what many insurance companies probably would rather have you not know.

The first thing to remember is that under the no-fault law, your own automobile insurance company is responsible for your medical bills – regardless of who is actually at fault for the happening of the accident.  This includes all medical costs:  hospital, diagnostic testing, physician, chiropractor, physical therapy, medicines, and other expenses that will be discussed in much more detail later in this series.  Not only are you, the driver of the car, covered but all of your passengers get the same coverage.  Therefore, everyone in your vehicle will be entitled to the same no-fault coverage.  There are two common exceptions to this general rule.  Bicyclists and pedestrians can make no-fault claims against the insurance company for the motor vehicle involved in the accident.  Again, this is regardless of who is at fault. 

Medical bills will generally be paid in the order they are received, but they are paid only to the limit of coverage purchased.  Under the law, you must purchase at least $50,000.00 in no-fault coverage.  This is referred to as basic PIP which stands for Personal Injury Protection.  The limit purchased applies to medical and lost wage payments which are discussed next.

The next important thing to understand is that the law only requires that a percentage of your lost wages be paid by the no-fault insurance company.  Many consumers mistakenly assume that all of their lost wages will be covered, but most auto policies specifically say otherwise.  Generally, you can only get up to 80% of your lost wages, which is subject to a $2,000.00 per month limit.  You may certainly purchase greater limits, and it is often extremely affordable to do so.  For just a few more dollars, you can increase your total no-fault limit, out of which both medical and wages are to be paid. 

It is important to thoroughly check your coverage each year when you renew it.  Be sure to ask your insurance agent to explain anything that is unclear to you.  The state mandatory minimum of $50,000.00 of no-fault coverage may sound like plenty, but once you factor in ever-increasing health care costs and lost wages for even a short time, it is easy to see that the policy will quickly be depleted.  Insurance policies are just like any other product you purchase.  The better informed you are before you buy, the better value you receive.