“No-fault” is one of the worst-named ideas in American insurance law. It does not mean fault stops mattering, it does not mean nobody is blamed, and it does not mean you cannot be sued. It means something much narrower: your own insurer pays your own economic losses first, whoever caused the crash, and in exchange your right to sue the other driver is restricted rather than removed.
Of the ten states covered here, three run that system — Florida, New York and Michigan. Pennsylvania runs something different again. The other six are ordinary tort states where the at-fault driver’s liability insurer pays.
The two halves of a no-fault system
Every no-fault state has to answer two questions, and they are independent of each other.
How much does your own insurer pay? That is the personal injury protection limit.
When are you allowed to step outside the system and sue? That is the tort threshold.
New York answers the first with $50,000 of “basic economic loss” per person — medical and related expenses, lost earnings up to $2,000 a month for three years, and other reasonable expenses up to $25 a day for one year. It answers the second with the “serious injury” threshold in Insurance Law § 5102(d): you may sue for pain and suffering only if the injury clears it. See New York’s fault page.
Florida answers the first with $10,000 in medical and disability benefits plus $5,000 in death benefits — and with a limit inside the limit, since medical benefits are capped at $2,500 if a qualified provider determines there was no emergency medical condition. It answers the second with a four-part test in § 627.737(2): significant and permanent loss of an important bodily function, permanent injury, significant and permanent scarring or disfigurement, or death. Under § 627.737(1) an insured driver is exempt from tort liability for bodily injury to the extent PIP benefits are payable. See Florida’s fault page.
Those two states have fixed answers. Michigan does not.
Michigan lets the driver set the ceiling
Since 2 July 2020, PIP medical is still mandatory in Michigan, but the insured picks the limit from six options:
- Unlimited.
- $500,000 per person per accident.
- $250,000.
- $250,000 with PIP-medical exclusions for household members who hold qualified health coverage.
- $50,000 — available only if the named insured is enrolled in Medicaid and every spouse and resident relative has qualified health coverage, Medicaid, or PIP under another auto policy.
- Opt out of PIP medical entirely — available only if the named insured has Medicare Parts A and B and every spouse and resident relative has qualified health coverage or PIP under another auto policy.
If no valid selection is made, the policy defaults to unlimited. Wage loss, replacement services, and survivor’s and funeral benefits stay on the policy even under a full opt-out.
Options 5 and 6 are gated, not offered. “Qualified health coverage” means a plan that does not exclude or limit auto accident injuries and whose annual individual deductible sits at or below a figure the Department of Insurance and Financial Services indexes each July 1 — $6,579 for 1 July 2026 through 30 June 2027. A health plan that fails either test does not qualify, and the election that depended on it is not available.
The practical result is that there is no single statutory PIP number in Michigan. $250,000 is the lowest limit a driver with ordinary health coverage may select, $50,000 is reachable only by a Medicaid enrollee, and a Medicare Parts A and B enrollee may carry no PIP medical at all. See Michigan’s minimums.
Why that election changes who pays
This is the part that is easy to miss, and it is the reason the Michigan choice is not a private matter between a driver and their own policy.
When every Michigan policy carried unlimited PIP, an injured person’s allowable expenses and work loss were covered by their own insurer, full stop. Now that each driver elects a ceiling, an at-fault driver can be sued for the injured person’s allowable expenses and work loss above that cap — or without limit where the injured person opted out of PIP medical entirely. That exposure did not exist before 2020, and it is the practical reason the default bodily injury limits were raised to 250/500 at the same time.
So one driver’s decision to buy a $50,000 PIP limit creates liability exposure for whoever hits them. The two halves of the reform were designed together.
What survives in Michigan besides PIP
Michigan abolishes tort liability except for the exceptions in MCL 500.3135(3). Two are worth knowing.
The mini-tort is the one most drivers meet: for crashes after 1 July 2020, a driver 50% or more at fault can be sued for up to $3,000 of vehicle damage insurance did not cover — usually the other driver’s collision deductible. The cap was $1,000 for earlier crashes. These claims go to small claims or district court.
Property Protection Insurance is mandatory and unique to Michigan. It pays up to $1,000,000, without regard to fault, for damage your car does to buildings, fences and properly parked vehicles inside Michigan. It does not pay for damage to another moving car.
Two Michigan-specific bars also cut the other way: a person injured while driving their own uninsured vehicle recovers nothing in tort, and mini-tort damages are not awarded for a vehicle that was being operated without the required security.
Pennsylvania: choice, not no-fault
Pennsylvania’s system is recorded here as Choice, and it works differently from all three no-fault states.
Pennsylvania requires first-party coverage — it calls it “medical benefits” rather than PIP — with a minimum limit of $5,000, and it is mandatory regardless of anything else. Higher limits, and separate extraordinary medical benefits above $100,000, are available.
What the policyholder elects is the tort option. Limited tort keeps your right to recover out-of-pocket medical and other expenses but gives up damages for pain and suffering except where the injury meets an exception in the law. Full tort keeps that right unrestricted. If you do not specially elect limited tort, you are deemed to have chosen full tort.
That election, made once when the policy is bought, usually decides more about a Pennsylvania claim than any other single term on it. See Pennsylvania’s fault page.
Where fault comes back
In all four of these states, fault returns the moment a claim leaves the first-party system. The comparative negligence rule then governs everything claimed from the other driver — which is a separate question, handled on the fault rules page.