According to HowStuffWorks, a no-fault state typically refers to the type of auto insurance a person must have. More specifically, it mandates that all drivers registered in that state have personal injury protection (PIP) insurance. This type of insurance limits the ability of either party to sue the other.
According to HowStuffWorks, if two people get into an accident in a no-fault state, both parties would make a claim to their own insurance companies regardless of who caused the accident. This is different from states that follow tort law, where damages are prescribed based on who is at fault for the accident.