Is Insurance In a No-Fault State More Expensive?

Last Updated on December 11, 2025

America’s auto insurance laws fall into two broad categories: traditional “at-fault” (tort) systems and “no-fault” systems. Because of the way claims are handled, many people wonder whether car insurance in a no-fault state is more expensive than in a traditional liability state.

Below, we explain how no-fault car insurance works, which states use it, and what current data suggests about prices in no-fault vs. at-fault states.

Key Takeaways

• In no-fault states, each driver’s own insurance (usually through PIP coverage) pays their medical bills after a crash, regardless of who caused the accident.
• There are currently 12 no-fault states, and drivers in these states tend to pay about 10–15% more for car insurance on average than drivers in at-fault states.
• No-fault states are overrepresented among the most expensive states for auto insurance, but some no-fault states still have relatively moderate premiums.
• Premiums depend on many factors—like medical costs, fraud, weather, and traffic density—so the best way to save money is still to compare quotes regularly and take advantage of all available discounts.

What Is No-Fault Car Insurance?

Twelve states in the U.S. use no-fault car insurance systems. In a no-fault system, each driver typically turns to their own insurance policy for certain losses—especially medical bills—no matter who caused the crash.

In a traditional at-fault state, the driver who caused the accident (or their insurer) is responsible for paying the other party’s damages. In a no-fault state, your own policy usually handles your medical costs and related expenses first, even if another driver clearly caused the collision.

To make that work, no-fault states almost always require extra first-party medical coverage such as personal injury protection (PIP) or, in some states, medical payments coverage (MedPay). These coverages help pay your medical bills after an accident, along with related costs like lost wages and funeral expenses, up to your policy limits.

How Does No-Fault Insurance Work?

In most at-fault (tort) states, the insurance claim is handled based on who caused the crash. If one driver is 100% at fault, that driver’s liability coverage typically pays for the other driver’s injuries and property damage (up to policy limits).

In a no-fault state, first-party benefits come into play. After a crash:

• Your PIP or MedPay covers your medical bills and certain related expenses, regardless of who caused the accident.
• The other driver’s PIP or MedPay covers their injuries, even if you were at fault.
• Property damage (damage to the cars, fences, buildings, etc.) is usually still handled on an at-fault basis through property damage liability and/or collision coverage.

No-fault states also often limit when you can sue another driver. Many use a “threshold” system: you can only bring a liability lawsuit for pain and suffering if your injuries are serious enough or your medical bills exceed a certain dollar amount. These rules are meant to cut down on small lawsuits and help claims settle faster.

However, if your injuries meet the threshold, you can usually still sue the at-fault driver for damages not fully covered by your no-fault benefits, such as extensive medical bills, serious long-term injuries, or pain and suffering. If you’re unsure about your rights after a severe crash, it may be worth talking to an attorney about whether to hire a lawyer.

Which States Use No-Fault Insurance Systems?

As of 2025, twelve states (plus Puerto Rico) use a no-fault auto insurance system that requires drivers to carry some level of PIP coverage:

• Florida
• Hawaii
• Kansas
• Kentucky*
• Massachusetts
• Michigan
• Minnesota
• New Jersey*
• New York
• North Dakota
• Pennsylvania*
• Utah

Puerto Rico also uses a no-fault system for certain auto injuries.

*Kentucky, New Jersey, and Pennsylvania are “choice” no-fault states. Drivers there can pick between a limited-tort (no-fault style) option and a full-tort option when buying a policy. Your choice affects both your premium and your right to sue after a crash.

Several other states tried no-fault in the past but later repealed it or scaled it back, including Colorado, Nevada, Georgia, and Connecticut. Today, most states still use traditional at-fault systems with optional PIP or MedPay coverage.

Is No-Fault Car Insurance More Expensive?

There’s no single number that applies to every driver, but recent data suggests that, on average, drivers in no-fault states do pay more for auto insurance than drivers in at-fault states.

Several long-running studies and consumer analyses have found that:

• No-fault states tend to have higher average claim costs, mainly driven by medical and PIP expenses.
• Historically, multiple studies found no-fault premiums to be roughly 15% to 25% higher than in similar at-fault states.
• More recent quote data suggests that drivers in no-fault states pay about 13% more on average than drivers in at-fault states for comparable coverage, with significant variation from state to state.

That doesn’t mean no-fault laws are the only reason premiums are higher; they’re just one piece of the puzzle. To really understand costs, it helps to look at how no-fault states show up in nationwide price rankings.

Most and Least Expensive States for Car Insurance

The Insurance Information Institute (III), using National Association of Insurance Commissioners (NAIC) data, regularly ranks states by average auto insurance expenditure. According to the latest full state-by-state data (2022), the ten most expensive states for auto insurance were:

1. Florida (no-fault)
2. Louisiana
3. New York (no-fault)
4. District of Columbia (add-on no-fault option)
5. Rhode Island
6. New Jersey (choice no-fault)
7. Georgia
8. Michigan (no-fault)
9. Nevada
10. Delaware

The ten least expensive states for auto insurance in that same dataset were:

1. North Dakota (no-fault)
2. Maine
3. Idaho
4. Iowa
5. Vermont
6. Wisconsin
7. Indiana
8. South Dakota
9. Ohio
10. North Carolina

Are No-Fault States More Expensive Overall?

Looking at the lists above and national averages, we can make a few observations:

• No-fault states are overrepresented among the most expensive. Only about 24% of U.S. states (12 out of 50) are no-fault states, yet 4 out of the 10 most expensive jurisdictions for auto insurance (Florida, New York, New Jersey, and Michigan) are no-fault states.
• Some of the priciest markets are no-fault. Florida, New York, and Michigan have long had some of the highest premiums in the country, driven in part by generous PIP benefits, dense traffic, and fraud issues.
• Only one of the ten cheapest states is a no-fault state. On the “least expensive” list, North Dakota is the only no-fault state; the rest are at-fault states with relatively light traffic and lower claim costs.
• Not all no-fault states are ultra-expensive. States like Utah, Minnesota, North Dakota, and Kansas typically land in the middle or lower half of national cost rankings, despite being no-fault.
• Other factors still matter a lot. Urban density, local medical and repair costs, extreme weather, theft rates, and state regulations all play big roles in how high premiums are in any state—no-fault is only one factor.

Putting it all together, research and real-world pricing suggest that no-fault insurance states tend to have average premiums roughly 10–15% higher than comparable at-fault states. But the gap isn’t uniform, and many drivers in no-fault states can still find competitive rates by shopping around.

Why Can No-Fault Insurance Cost More?

Critics of no-fault insurance systems often point to several cost drivers that can push premiums higher in these states:

1. Higher Medical and PIP Costs
No-fault systems guarantee first-party medical benefits through PIP. In some states (like Michigan historically), PIP limits were extremely high or even unlimited, which dramatically increased claim costs and, in turn, premiums.

2. Fraud and Abuse
Because no-fault systems pay many claims without litigating fault, some experts argue they create more opportunities for insurance fraud—for example, staged accidents, exaggerated medical treatments, or inflated billing. In certain states, anti-fraud crackdowns have become a major focus of regulators and insurers.

3. Higher Filing and Administration Costs
No-fault claims can be complex. Insurers must coordinate PIP, health insurance, and liability coverage, which can increase the cost of administering each claim, especially in states with generous benefits or loose utilization controls.

4. Weaker Deterrent for High-Risk Drivers
In no-fault systems, reckless drivers may feel less immediate financial pain from causing crashes, since each driver’s PIP covers their own injuries. While at-fault drivers can still see rate hikes and lawsuits in serious cases, critics argue no-fault dulls the deterrent effect compared to pure tort systems.

5. Uninsured Drivers in High-Cost Markets
Very high premiums can create a vicious cycle. In places like Detroit, Michigan, average premiums have historically been extremely high. When many drivers can’t afford coverage and go uninsured, costs get shifted to insured drivers through higher premiums, uninsured motorist coverage payouts, and assessments.

Supporters of no-fault, on the other hand, argue that these systems can reduce litigation, speed up injury payments, and give drivers more predictable coverage for medical bills—even if premiums are somewhat higher.

Pros and Cons of Living in a No-Fault State

Whether no-fault is “worth it” depends on how you value predictable medical coverage versus lower premiums and broader rights to sue. In very general terms:

• Potential advantages of no-fault states: Faster medical payouts, less pressure to sue over minor injuries, guaranteed PIP benefits, fewer small liability disputes.
• Potential downsides: Higher average premiums, stricter limits on lawsuits, more complexity in coordinating PIP and health insurance, and possible fraud concerns in some markets.

Regardless of which system your state uses, the basics of saving money are the same: keep a clean driving record, compare quotes from multiple companies, adjust your deductibles carefully, and take advantage of discounts when possible.

FAQs on No-Fault States and Car Insurance Costs

Final Word: Car Insurance Premiums Depend on Many Factors

No-fault laws do appear to push average premiums higher—roughly in the low double digits compared to at-fault states. But they’re only one factor among many that affect what you pay for coverage.

Weather patterns, crash and theft rates, medical and repair costs, legal environment, and even how many uninsured drivers are on the road all influence prices in your area. That’s why two no-fault states can have very different average premiums, and some at-fault states can still be extremely expensive.

Whether you live in a no-fault or at-fault state, you can still lower your costs by shopping around. Compare quotes online, ask how your state’s system affects your premiums, and make sure you’re getting every discount you qualify for. Your ZIP code may be fixed—but your insurance company isn’t.