In a no-fault insurance system, who typically covers the losses?

In a no-fault insurance system, each policyholder's own insurance typically covers their losses, regardless of who is at fault for an accident. This model is designed to simplify the claims process and reduce the time and costs associated with determining fault. Under this system, when an individual is involved in an accident, they submit claims to their own insurer for medical expenses and other related costs instead of pursuing the at-fault party's insurance.

This approach serves to reduce litigation and encourages more efficient handling of claims, as parties do not need to prove fault to receive compensation for their losses. It allows for faster processing of claims and ensures that individuals can receive necessary benefits without the complexities of fault determination delaying their access to care and support.

Other options do not align with the principles of a no-fault system. For example, relying on the at-fault party’s insurance often leads to a drawn-out claims process and potential disputes. Similarly, government coverage in this context is not typical, as no-fault insurance relies on personal insurance policies. The idea of the insurance company with the lower premium covering losses does not reflect how no-fault systems operate, as it is the individual's own insurance that provides coverage regardless of premium levels.