No Pay, No Play Auto Insurance Laws

Some states have 'No Pay, No Play' laws that prevent uninsured motorists from suing for auto accident damages. In such states, you may need proof of auto insurance coverage before filing an auto accident lawsuit.

The Rationale

Auto insurance works best if every driver participates in it by purchasing liability coverage. The way insurance works is that everyone contributes to a pool of funds, and anyone who needs it (that is, anyone who triggers a liability) gets a share of the money.

The setup doesn't work efficiently if some people don't contribute to the pool, but want to dip their hands in the pot when they need it. If such habits are allowed, then it may only be a matter of time before there are too many of those who benefit from the scheme without contributing to it. That can easily deplete the available resources.

The Application

Different states apply 'No Pay, No Play' auto insurance laws in different ways. Below are some of the possible applications of these laws.  

Non-Economic Damages

In a typical auto accident case, there are two forms of damages. There are economic damages, which represent monetary losses of the victim that can easily be quantified. There are also non-economic damages, which are intangible losses (such as pain and suffering) that are not easy to quantify. Some states only apply 'No Pay, No Play' to non-economic damages but allow you to pursue economic damages.

Total Damages

There are also states that apply these laws to both non-economic and economic damages. In such states, you might not recover any of your auto accident damages if you didn't have auto insurance coverage at the time of the accident.

Damage Threshold

Lastly, there are also states with limits that trigger the 'No Pay, No Play' laws. That is, you are barred from pursuing damages below a set threshold, but you are allowed to pursue damages that exceed that limit. Such an arrangement allows you to pursue auto accident damages if you are involved in a serious accident and have serious injuries (such accidents inevitably trigger costly damages). The rationale is that restricting such damages would infringe on your rights and could even make you destitute.

As is the case with other laws, there are a few exceptions to 'No Pay, No Play' auto insurance laws. For example, some states allow you to pursue auto accident damages against drunk drivers even if you don't have auto insurance coverage. Therefore, if you are injured in an auto accident, consult a lawyer to evaluate your case even if you don't have coverage. It might be that your case is an exception, or you may be able to recover at least some of the damages.

For further help filing insurance claims in these situations, hire an auto accident lawyer.