Car Insurance

If you live in the District of Columbia, or the states of Kentucky, New Jersey, or Pennsylvania, you live in one of the very few areas of the country where drivers actually have a choice of what kind of car insurance they may purchase. In these states and Washington, D.C., you may choose either a “Tort” policy or a “No-Fault” policy for your vehicle. If you have been injured in a car accident, which type of policy the parties have will determine how your bodily injury claim may be handled. (See articles on Bodily Injury and Bodily Injury in a No-Fault State.)

A “Tort” policy follows the same bodily injury insurance claims procedures as in “Fault” states. Regarding a car accident, a tort is a wrongful act that renders the negligent driver liable to the injured party for damages. A tort policy, therefore, is one that provides the insured with coverage if someone is injured and files a car accident claim against the insured’s policy. Unlike no-fault where everyone is covered under their own policy, with a tort or fault-based system, the negligent party’s insurance pays the damages of those who are injured and not responsible for the accident. In general, there are few limitations on suing the responsible party.

If you choose a “No-Fault” policy in one of the Choice States, there is coverage under the policy called Personal Injury Protection, or PIP, just like the “no-fault” only states. (See Bodily Injury in a No-Fault State) If you are injured and someone else is at fault, your medical and some other expenses will be covered by your own PIP coverage up to your policy limits. Just like with the no-fault only states, there are some differences in coverage depending on the state. In Kentucky, for example, basic PIP coverage is $10,000 combined for medical expenses, loss of income or services, and funeral expenses. You forfeit your right to sue the other driver for the cost of your medical treatment, and non-economic damages (e.g. pain and suffering), unless: the injury involves a broken bone, permanent disfigurement, medical expenses over $1,000, permanent injury or death. The law also allows Kentucky auto insurance companies to sell you back the right to sue (even though you carry PIP) for an increase in your premium.

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If you have been injured in an automobile accident, in about a quarter of states, it does not matter who was at fault in order for you to recover money under an insurance policy. Regardless of who was at fault, in a no-fault state, your own insurance policy will protect you and provide you with immediate medical treatment. That’s the good news. The not-so-good news is that in no-fault states you are limited in your ability to sue the negligent driver for damages.
There are currently nine states that are considered “No-Fault” and three additional states which are “Choice” states, where you are given a choice of purchasing a no-fault policy or a “tort policy”. The tort policy is the same type of fault policy as in the majority of states. If you have a tort policy in a choice state, the claims procedures are the same as if you are in a fault state and you retain your right to sue the neligent party with few limitations. In general, tort policies have higher premiums.

The No-Fault states are: Hawaii, Florida, Kansas, Massachusetts, Michigan, Minnesota, North Dakota, New York and Utah. The Choice states are Kentucky, New Jersey, Pennsylvania, plus the District of Columbia.

Under a pure no-fault system, your own auto insurance policy would pay for any economic damages including medical bills and lost wages up to your policy limits. You would be prohibited from suing a negligent driver for general damages such as pain and suffering, loss of companionship, etc. Currently, there are no pure no-fault states. All of the no-fault states have somewhat of a modified system where your insurer pays for your economic damages up to the policy limits, but you may be allowed to sue for non-economic or general damages (i.e., pain and suffering, loss of services, etc.) if those damages exceed a certain level. In some states that level is $250,000; in others it is higher, and in still others, you or your family may sue only if the injuries are “serious” or resulted in death, regardless of the dollar amount.

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