All You Need to Know About Indiana No-Fault Insurance

Residents of The Hoosier State aren’t required to have no-fault insurance, as Indiana isn’t a no-fault state. Only about 13 states in the U.S. have no-fault laws that mandate varying degrees of no-fault coverage, also known as personal injury protection (PIP), which acts as a first-party medical benefit (FPMB).

While Hoosiers can have a fully adequate policy in the eyes of the law without an FPMB, many opt for one due to its protection. Let’s take a look at what no-fault insurance is, how it works, and how you can build the best Indiana automobile insurance plan for your needs.

No, Indiana isn’t a no-fault state. Instead, Indiana is a tort state, otherwise called an at-fault state. This means that residents aren’t required to carry an FPMB like PIP. An FPMB is a type of coverage one can have on their insurance policy to cover their own medical expenses in the event of an accident, regardless of who’s at fault. 

In Indiana, at least one driver must be deemed at fault in an accident. Then, when a driver is deemed at fault, the victim of the accident will use the at-fault driver’s liability coverage to cover their medical expenses or vehicle repairs once the policyholder pays their deductible.

Indiana’s compulsory motor vehicle insurance law requires all drivers to carry at least $25,000 of bodily injury liability per person, $50,000 of bodily injury liability per accident, and $25,000 of property damage liability per accident, otherwise expressed at 25/50/25 liability coverage. Insurers must offer new policyholders the same 25/50/25 limit of uninsured motorist coverage, but policyholders can reject this coverage by signing a waiver. 

Those who lease or finance vehicles may be required by their lender or leaser to have comprehensive and collision coverages on their policies. 

In Indiana, no-fault insurance isn’t required, but some types of first-party medical benefits may be used in the event of an accident. Suppose you’re injured in an accident you cause. In this situation, you may use an FPMB to help cover your medical expenses since you’re ineligible to use the other party’s liability coverage.

No-fault laws are typically enacted to make it easier and quicker for injured victims of car accidents to receive funds for their medical expenses. In no-fault states, drivers always default to filing a claim with their own PIP or other FPMBs when injured and don’t have to deal with another person’s insurer. 

When the need to place fault is removed, the process of receiving benefits is much quicker. Many drivers in no-fault states that make a claim with their insurance begin receiving benefits almost immediately after they file a claim once they reach their deductible.

In Indiana, and other tort states, when an at-fault driver can’t pay for the expenses they owe the victim because they have insufficient coverage or no coverage at all, the injured party may sue the at-fault party for the unpaid expenses. This clogs up the legal system and the timeline of receiving assistance from insurance.

Indiana doesn’t require no-fault insurance for a couple of reasons. States often enact no-fault laws due to a high population density or a high number of uninsured drivers, but usually both. While Indiana has a high population of uninsured drivers, with about 15% of the driving population lacking adequate coverage, the state has a relatively low population and an even lower population density.

Looking at states with no-fault laws, like New York, Michigan, and Pennsylvania, you’ll notice that many of these states have densely populated cities. When states have densely populated cities, there’s an increased number of drivers on the road. With more drivers on the road, there’s a higher statistical likelihood of car accidents.

With an increased risk of accidents, more people file claims with insurance companies or sue other drivers, causing the insurance and court systems to become overwhelmed. Insurers view drivers in highly populated states or densely populated cities as a higher risk because they’re more likely to get into an accident and file a claim.

No-fault states mitigate the overwhelm of the legal and insurance systems by enacting no-fault laws, so every driver must file a claim with their own insurer, and serious hindrances are placed on who can sue whom in a car accident.

While Indiana is an at-fault state, meaning drivers can sue each other freely (within reason), the insurance and legal systems don’t experience a comparable level of overwhelm to states with high populations. Since Indiana can handle the amount of claims and lawsuits its residents file, the state doesn’t need a no-fault law.

Since Indiana isn’t a no-fault accident state, the driver that causes the accident is at fault. There are obviously exceptions to this rule, especially when an accident is caused by multiple drivers or if every party in the accident is at-fault.

For example, if at a four-way stop, two drivers fail to stop and wait their turn to proceed and crash into each other, each driver is 50% at fault. Drivers who share the fault equally will both be able to receive compensation from each other’s liability coverage if there are any injuries or vehicular damage.

In most cases, unless the accident is obviously split 50/50 or 100/0, drivers will appeal their case in court, and a jury will decide who’s more at fault in an accident. Then, the at-fault driver’s liability coverage will assist the victim with any expenses incurred in the accident.

In another scenario, say a driver is speeding when another driver turns right at a red light, and they collide. In this case, a jury will determine who’s more at fault in the accident. That person will foot the majority of the blame and won’t be eligible to receive any compensation from the other driver’s liability coverage.

Since Indiana isn’t a no-fault state, no-fault insurance isn’t required, and very few options exist. However, you can add a few coverages to your policy that will directly cover your expenses, regardless of who’s at fault in an accident.

For example, collision coverage is a type of coverage that aids policyholders with the expenses associated with repairs to a vehicle after an accident. If you lease your car, you may be required to have this coverage on your policy. It’s a good idea to have this coverage even if it isn’t required because it offers excellent coverage for unforeseen circumstances on the road.

PIP is the most common form of no-fault insurance, but insurers don’t offer personal injury protection in Indiana. PIP offers extensive coverage for medical expenses associated with an accident like:

PIP is considered an FPMB because it helps the policyholder cover these expenses. While PIP isn’t available in Indiana, another FPMB called medical payments coverage (MedPay) is.

Medpay is the only FPMB available in Indiana. While MedPay is known for offering less expansive coverage than PIP, it’s a good idea to have some type of FPMB on your car insurance policy, especially if you have subpar health insurance. 

Drivers in Indiana can have between $1,000 and $10,000 worth of MedPay on their policies. It can be used to pay for the bills from Doctor’s visits or hospital stays associated with an accident, among other things. It can extend to anyone in your vehicle injured in your accident, whether that’s your passengers or someone driving your car with your permission. 

If all this talk about FPMBs and no-fault insurance in Indiana has you reconsidering the coverage on your policy, it may be a good idea to check out what the top insurers in your state offer. The best way to get a policy tailored to your needs with the cheapest rates in Indiana is to get and compare quotes online.

Here at Clovered, we have a free quoting tool you can use to get quotes from the state’s top insurers in minutes. If you prefer to speak to an agent about your quote or have any questions about no-fault coverage in The Hoosier State, please don’t hesitate to reach out to us at 833-255-4117 or [email protected].