No Fault Insurance Law and Legal Definition

No Fault Insurance is an insurance scheme wherein every person injured in an automobile accident is compensated irrespective of who was at fault. In such cases, the injured persons are indemnified, regardless of fault in the incident generating losses. No fault insurance is intended to lower premium costs by avoiding expensive litigation over the causes of accidents. The victim's insurance company is required to pay only the claim amount and the driver-at-fault's insurance companies have to pay out a claim and charge that party a higher insurance premium due to the higher risk.