What Is The Difference Between Liability Insurance and No-Fault Insurance?

car crash

A motor vehicle accident is scary and creates various challenges, especially if injuries occur. You might wonder about the type of insurance you need and how you’ll pay your medical bills.

In New York, two types of insurance can compensate people for their accident-related expenses. No-fault and liability insurance are the two primary types New York resident drivers must purchase. Below you can find more information about each coverage and how they might apply to your personal injury case.

Insurance Requirements in New York

If you live in New York, you must buy and maintain auto insurance to prove financial responsibility. Three types of coverage are required to register a motor vehicle and obtain a license plate:

  • No-fault insurance – No-fault insurance is also called personal injury protection (PIP) insurance. State law requires a minimum of $50,000 coverage under a basic policy. It pays for the policyholder and a covered individual’s accident-related expenses.
  • Liability insurance – Liability insurance covers injuries and property damage the policyholder causes someone else.
  • Uninsured motorist (UM) insurance – UM insurance compensates the policyholder for various losses if the at-fault driver doesn’t have liability coverage.

How Personal Injury Protection Works

Personal injury protection is a type of no-fault insurance coverage that pays for costs from a car crash incurred by:

  • You or someone else driving your vehicle
  • Passengers riding in your car
  • Pedestrians harmed by your vehicle

PIP is supposed to restore a person to health and productivity as soon as possible after getting hurt in a car accident. Below are the losses PIP pays for up to a $50,000 limit.

Medical Bills

PIP covers all necessary and reasonable accident-related medical treatment and services, such as:

  • Medical
  • Ambulance
  • Hospital
  • X-rays
  • Dental
  • Prosthetic devices
  • Surgical
  • Prescriptions

Lost Wages

PIP also covers up to 80 percent of lost earnings, up to $2000 per month, from a job you would have performed if you hadn’t sustained an injury. This benefit is available for up to three years after the accident.

You might not be entitled to compensation for lost wages if you receive monetary payments under a statute or contract with your employer or benefits your employer pays for your injury from using or operating a motor vehicle. PIP coverage doesn’t apply if the benefits or monetary payments you receive don’t result in decreased income.

Household Assistance

You can receive up to $25 a day for necessary and reasonable costs due to your inability to complete basic tasks. For example, PIP can pay for transportation to doctor’s appointments if you can’t drive or help with household chores like laundry. Coverage is limited to one year after the crash.

You are automatically ineligible for no-fault benefits if you:

  • Drove while intoxicated or impaired by a drug contributing to the collision. The only exception is for emergency medical-related services performed in a hospital or by an ambulance worker outside a hospital. If you are convicted of driving while intoxicated or impaired, the PIP insurer can recover the total amount of payments made for the emergency services;
  • Intentionally caused your injury;
  • Sustained an injury while committing a felony offense;
  • Rode a motorcycle or all-terrain vehicle (ATV) as a passenger or operator and struck a pedestrian;
  • Own an uninsured vehicle; or
  • Sustained injuries while you were in a car you knew was stolen.

Requirements for Auto Insurance with Liability Coverage

Liability coverage is another type of required auto insurance for New York residents with vehicles. Every motorist who resides in New York must purchase a liability policy with minimum limits of:

  • $25,000 for one person in one accident for bodily injury that doesn’t lead to death or $50,000 for an injury resulting in death
  • $50,000 for two or more people in an accident for bodily injury that doesn’t result in death or $100,000 for bodily injury leading to death
  • $10,000 for damage to someone else’s vehicle or property

Filing a Liability Claim After a Car Accident

State law requires accident victims to file a claim with their PIP insurance carrier before going after the at-fault driver. However, you can pursue compensation in a third-party claim or lawsuit if you meet the serious injury threshold. That means the car crash causes at least one of these issues:

  • A bone fracture;
  • A significant limitation of the use of a body system or function;
  • Significant disfigurement;
  • Substantially total disability for 90 days;
  • Loss of a fetus
  • Death; or
  • Permanent limitation of use of a body member or organ.

You are not limited to the no-fault law if your injury qualifies as a serious injury. After exhausting your PIP coverage, you can file a claim with the at-fault driver’s liability insurer. Liability insurance covers more than lost wages, medical expenses, and household services. It also compensates for intangible losses, such as pain and suffering.

Whether you file a third-party claim or lawsuit, the money you receive might cover your:

  • Loss of enjoyment of life
  • Ambulance services, physical therapy, imaging tests, and other medical bills
  • Emotional distress
  • Scarring or permanent loss of limb
  • Lost wages
  • Lost earning capacity
  • Pain and suffering
  • Property damage

Punitive damages might also be recoverable in a lawsuit. This financial award punishes the defendant for their misconduct and is meant to deter similar behavior in the future. You must provide clear and convincing evidence that the defendant was reckless, malicious, wanton, or willful, or their actions show a high degree of moral culpability for the court to award these benefits to you.

Injured in a Motor Vehicle Accident? Contact Finz & Finz, P.C. Today

At Finz & Finz, P.C., we have a team of nationally recognized personal injury lawyers in New York. We’ve represented injured clients in their personal injury cases for over 35 years. You can expect quality legal services and one-on-one attention when you hire us.

If you sustained injuries in a vehicular crash due to someone else’s negligence, call us at (855) TOP-FIRM for a free consultation today. Let us help you fight for the justice and compensation you deserve.

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Finz & Finz, P.C. is a New York and Long Island personal injury law firm based out of Mineola, NY. It was founded in 1984 and is highly rated, with many honors and awards of excellence.