Washington State Insurance Practice Exam

What does no-fault insurance provide for policyholders?

1. Coverage only if the accident was not their fault

2. Payment for their own losses irrespective of fault

3. Coverage for damages to the other party

4. Insurance against theft and vandalism

The correct answer is: Payment for their own losses irrespective of fault

No-fault insurance is designed to provide coverage for policyholders' own losses regardless of who is at fault in an accident. This means that, in the event of an accident, each driver's insurance pays for their own medical expenses and other losses, leading to quicker compensation without the need for lengthy legal battles over liability. The system encourages prompt payment of claims, thus reducing the burden on the judicial system and enabling individuals to receive necessary medical treatment or recover losses without waiting for fault determination. In contrast, other options mentioned involve coverage aspects that are not aligned with the principles of no-fault insurance. Coverage dependent on fault, or for damages specifically to other parties or different types of insurance for theft and vandalism, does not capture the core idea behind no-fault insurance, which is centered around individual responsibility for one's own losses irrespective of the circumstances of the accident.