In a no-fault insurance system, how are damages covered?

In a no-fault insurance system, each party's insurance covers their own damages regardless of fault, which is precisely why this answer is considered correct. The purpose of a no-fault system is to streamline the claims process by minimizing the need for legal battles to determine who is at fault following an accident. Instead of having to prove fault in order to receive compensation for damages, individuals can file claims with their own insurance companies to cover medical expenses, property damage, and other applicable costs.

This approach is designed to reduce the burden on the court system and expedite the claims process, as it enables quicker recovery for injured parties without the delays often associated with fault determination. Other options suggest alternative methods of damage coverage that do not align with the principles of a no-fault system.