Covers you and the car you are driving in the event of an accident. In an accident in a state that requires No-Fault insurance, your insurance company will pay for the damage to the car you are driving and the passengers in your car. The driver of the other car will be covered by her own insurance. Your insurance company will not pay her. If you happen to hit someone else's property, like a parked car, or you drive through someone's living room, your insurance company will pay those damages as well. Generally, No-Fault means that, in most cases, no one can file a lawsuit over the accident. In some states you can sue for your deductible if you did not cause the accident. In other words, with No-Fault Insurance you decide how much responsibility you will take for your own car and passengers. Also, the insurance companies are no longer responsible for the costs related to both sides of an accident -- the damage to your car and the car you hit.