New York No-Fault Insurance: What It Pays and What It Restricts

New York no-fault: what it pays, and what it takes away

Authority: Insurance Law art. 51, §§ 5102, 5103, 5104; 11 NYCRR 65-1.1 (Regulation 68).

New York is a no-fault state, which means something narrower than most people expect. No-fault does not mean nobody is at fault, and it does not mean you cannot sue. It means your own insurer pays a defined set of economic losses quickly and without litigating blame, and in exchange the law restricts when you may sue another driver for pain and suffering.

The coverage is called first-party benefits, or personal injury protection. It is available to a "covered person" — the owner, operator or occupant of a vehicle carrying the required financial security, and also a pedestrian struck by a motor vehicle in New York.

What no-fault pays is capped as "basic economic loss": $50,000 per person in the aggregate. Within that figure it covers necessary medical, hospital, surgical, nursing, dental, ambulance, prescription and prosthetic expenses, with no outer time limit so long as further expense was ascertainable within a year of the accident; lost earnings up to $2,000 per month for no more than three years; and other reasonable and necessary expenses up to $25 per day for up to a year. Losses on account of death are excluded. An additional $25,000 of optional basic economic loss coverage can be purchased.

Two details routinely surprise claimants. First, first-party benefits are reduced by 20% of lost earnings, so the practical wage replacement is 80% of earnings up to the monthly cap. Second, no-fault benefits are not a credit against pain and suffering — they are a separate, earlier, smaller pot.

The 30-day notice is the deadline that ends cases

Written notice of the accident must reach the no-fault insurer within 30 days. Under 11 NYCRR 65-1.1 the notice of accident and the proof of claim are independent conditions precedent to the insurer’s liability, and the Court of Appeals has held that a timely proof of claim does not cure a late notice of accident. Thirty days is short, it runs from the accident, and missing it can forfeit benefits outright.

Provider and wage-loss proofs have their own clocks

A medical provider’s proof of claim is due as soon as reasonably practicable and in no event later than 45 days after services are rendered. Written proof of claim for work loss is due no later than 90 days after the loss is incurred.

Suing an uninsured defendant triggers your insurer’s lien

Where a covered person recovers from a non-covered person, the no-fault insurer holds a lien to the extent of benefits paid or payable, and the covered person cannot settle without the insurer’s written consent or court approval unless the settlement exceeds $50,000. If no action is brought within two years the insurer may sue in its own right for what it paid.