In most states, insurance companies pay out according to the each party's degree of fault. Determining who was at fault not only can take a long time, but may involve long and drawn out processes with expensive lawsuits. No-fault auto insurance, also known as Personal Injury Protection (PIP), was created to reduce the number of lawsuits stemming from car accidents as well as for quicker compensation of damages. Currently, there are about a dozen or so states in the United States that have adopted their own modified versions of the no-fault system.
Under this no-fault system, when an accident occurs, the insurance company will cover up to the policy limit. In order to receive compensation, you must give up on some of your rights and not sue the other driver for damages. This is not to say that lawsuits are not allowed. It's just that the damages must be more serious for lawsuits to be brought up. If the damages or costs incurred are more than what the insurance company covers, you may sue the other driver; however, the details and amounts vary from state to state.
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