What is 'no-fault insurance'?

No-fault insurance is a system designed primarily for auto insurance where each party involved in an accident pays for their own injuries, regardless of who was at fault for the accident. The essence of no-fault insurance is to streamline the claims process, minimizing disputes over liability. This system encourages quicker recovery for those injured in accidents since they do not need to wait for a determination of fault, which can often lead to long and contentious legal battles.

In a no-fault system, individuals can receive benefits such as medical expenses and lost wages without having to prove negligence on the part of another driver. This approach is intended to reduce litigation surrounding auto accidents and allow for more immediate assistance for the injured parties.

The other options do not accurately capture the core principle of no-fault insurance. Coverage that only accounts for damages does not include the aspect of personal injury compensation. Requiring proof of negligence contradicts the fundamental principle of no-fault insurance, which purposely removes the need to establish fault for injury claims. Lastly, a policy that only covers vehicle theft does not relate to the concept of liability for injuries sustained in an accident.