Auto insurance is big business these days. It not only has a lot of benefits, it is also the law to have insurance coverage in most states.
In most insurance claims, the parties involved usually have to take the case to court in order to determine who was at fault. And then only the insurance company from the side of the person who was at fault ends up paying for both parties. This is actually a very good idea, given that only the person at fault is penalized. Even though he does not pay the money directly, his premium will obviously go up and thus he will end up being penalized for his actions.
But the flipside of this is that almost always the case will end up being taken to court. No driver will say that he or she was at fault when they can easily fight it out in court. And in the meantime, both the parties have to bear all the expenditure pertaining to their losses. In addition to this, both the parties also have to pay for lawyers and other court fees. Thus in the end, even the party which was legally right ends up spending a substantial amount of money. In addition to all this, there is also the factor of mental agony which both the parties go through during litigation.
Hence no fault insurance was formulated. This clause states that the insurance companies of each party will pay for the damages incurred by their customer. And there is no litigation involved to find out who was at fault. This is a very good idea given that the money is immediately available for both parties to cover for the damages sustained. They also do not need to spend on costly court cases or lawyers. And they do not have to go through the tension of going to court and fighting it out. All the legal hassle is avoided.
But again, the other side of the story is that both parties will end up paying more premiums to their insurance companies. And even if you are an extremely good driver, you might end up paying as much as a bad one if you are really unlucky. It all boils down to being at the wrong place at the wrong time!
The good thing is that though almost all states have enacted the no fault clause, not one has pure-fault, which means that both the parties are prohibited from suing under any case. All states allow for litigation in cases where the offending party was extremely negligent or even deliberate in committing the offense.