Most states do not follow the a fault policy for auto insurance, however the state of California is one of the few that does. This is due to the financial responsibility law that was passed in the Golden State along with a few other states. This requires that motorists carry personal injury protection along with their regular car insurance policies.
The meaning of a no fault law is that no matter who is at fault in an accident, you will be reimbursed for the damages that were sustained. This law will apply in all cases when the cause of the accident cannot be determined. And also when the person who was at fault is unable or unwilling to reimburse you for the damages and the case is under litigation.
In addition to this requirement, you have the basic requirements of the state. The state of California requires a person to have bodily liability limits of 15000$ per person per accident and a coverage of 30000$ per accident for all the people involved in the accident. In addition to this it is required that you have a coverage of 5000$ for property damage incurred in an accident. Once you have purchased the proper policy, it is required that you contact the states department of motor vehicles and let them know. And in addition to this, the insurance company is supposed to inform the DMV about this. And when this is done, the DMV will suspend the vehicles registration until the insurance is reinstated and sufficient proof is furnished.
The no fault clause is something that is very beneficial to the insurance holders. There are several cases where the person who was not at fault is not able to access reimbursement due to various factors. One common reason is that when the case goes to the court, the parties involved will need immediate money to pay their bills and will not have access to funds for the same. In such cases it helps to have no fault insurance which will immediately pay you and later if and when the case is sorted out, the money can be paid back to the company.
Another situation is when there is a hit and run case. In such situations it is not possible to access funds from the other party’s insurance company. In such cases, your insurance company has to fund your damages. This is when you file for reimbursement under the no fault clause.
This sort of clause will also be useful in situations when the other party is underinsured or uninsured. If the other party does not even have sufficient assets to cover for the damages even after litigation, then your only option is to claim for reimbursement under the no fault clause.
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