No-fault Coverage

No-fault insurance coverage essentially provides a less expansive insurance coverage than that of the traditional system, limiting the right of parties to bring traditional fault-based legal actions and the availability of certain types of damages that cannot be directly measured in economic terms, such as damages for what the law terms "pain and suffering," which often make up the bulk of the damages awarded in a traditional court action. In return, the no-fault system attempts to indemnify persons who have suffered personal injury or property damage in an auto accident more quickly and efficiently than can be accomplished by traditional methods, and also to reduce costs for all the participants in the insurance system. No-fault insurance laws often contain exceptions to their limitations on coverage and allow the bringing of traditional court actions in cases where serious injuries are involved.

Automobile Insurance Policies: Refusals to Insure

An automobile insurance company has the right to choose whom it will insure. If an applicant for automobile insurance is deemed to be a bad risk, the insurance company can refuse to issue an insurance policy. Ordinarily, the insurance company does not have to give the applicant a reason for refusing to insure him or her. However, insurance companies must act in good faith in their dealings with insureds and applicants. Although an insurance company can refuse to insure someone, they cannot refuse to insure a person for an improper reason. The same applies to the cancellation of an insurance policy.

Setoffs and Underinsured Motorist Insurance Policies

An automobile insurance policy may contain a set-off clause, which provides that an insured cannot recover bodily injury benefits under both the liability coverage part and the underinsured motorist coverage part of the policy. When an insured fully recovers his or her losses under the liability provision of an automobile insurance policy, the insured could not then seek to recover under the underinsured motorist provision of the same policy.

Business Use Exclusion in Motorist Insurance

Some motorist insurance policies exclude coverage for injuries and damages if they occur while a vehicle is being used for a business purpose. For example, if a driver is using his or her personal van to make deliveries for the driver's home-based business and causes a collision with another vehicle, the driver's insurance company would refuse to pay for the damage caused to the other vehicle and for any injuries to those riding in it. In effect, the exclusion causes a vehicle to drive in and out of insurance coverage depending on its driver's particular mission.

Conflict of Laws Issues in Motor Vehicle Insurance Disputes

Motor vehicles, by the nature of their mobility, freely move among the states. Accidents can occur in an insured's home state or another state. The laws of the states can differ on how they interpret the terms of an insurance policy. Which law should be applied is the subject of rules for conflict-of-laws or choice-of-laws decisions.