Here are the important highlights of the Pennsylvania automobile insurance law, more formally called, the Pennsylvania Motor Vehicle Financial Responsibility Law:
1) When purchasing a new policy after 1990, your insurance company must notify you, in writing, of two very important coverage options which you are to consider. The options are regarding “limited tort” and “full tort” coverage. Those options are defined as follows:
LIMITED TORT RIGHTS
a) The laws of the Commonwealth of Pennsylvania give you the right to choose a form of insurance that limits your right and the right of members of your household to seek financial compensation for injuries caused by other careless drivers. Under this insurance, you and other household members covered under the policy may seek recovery for all unpaid medical and out-of-pocket expenses, but not for pain and suffering or other non-monetary damages, unless the injuries suffered fall within the definition of “serious injury.” At present, the courts across the Commonwealth of Pennsylvania are attempting to determine what constitutes a “serious injury,” however, no firm definition has yet been established. If you are injured in an accident you may think you have a serious injury, however, the other insurance company or court may disagree. Therefore, we recommend that you do not choose the limited tort option. If you are injured and cannot make a claim for pain and suffering your loss will far exceed the premium savings from choosing limited tort.
FULL TORT RIGHTS
b) The laws of the Commonwealth of Pennsylvania also give you the right to choose a form of insurance under which you maintain full and complete rights for you and members of your household to seek financial compensation for injuries caused by other careless drivers. Under this form of insurance, you and other household members covered under this policy may seek recovery for all unpaid medical out-of-pocket expenses, and may also seek financial compensation for suffering or other non-monetary damages as a result of drivers.
2) If you do not sign the form which you will be sent, you will have chosen the full tort coverage as described in (b).
3) The tort option you select will be effective for all future renewal policies, replacement policies, and any other private passenger motor vehicle policies under which you are insured as an individual. The only way you can change to the other is to obtain a form from your insurance carrier.
4) We strongly recommend that you choose full tort rights.
5) Even if you have chosen a limited tort policy, you shall be treated as though you have the full tort rights whenever the person at fault:
a) is convicted of, or accepts accelerated rehabilitative disposition for, driving under the influence of alcohol or a controlled substance in that accident;
b) is operating a motor vehicle registered in another state.
c) intends to injure himself or another person.
d) has not maintained insurance.
MEDICAL AND WAGE LOSS
6) All policies, whether full or limited tort, provide a medical benefit in the amount of $5,000.00. There will be no coverage for wage loss, unless you select and pay for this coverage.
The minimum wage loss coverage you may purchase is $5,000.00. This wage is payable in increments of $1,000 per month and will reimburse you for 80% of actual loss of gross income.
It should be noted that you can purchase more medical or wage loss coverage.
It should be noted that medical benefits provided under your automobile insurance policy are primary to any other type of health coverage such as group contracts. Also, your own automobile insurance policy pays medical bills for your injuries, regardless of the fault of the other driver.
Finally, medical bills are paid at 110% of the prevailing Medicare rate and you cannot be billed for the difference.
7) If you are the victim of an auto accident and have received Worker’s Compensation benefits, those monies are to be reimbursed from any money you may later recover from a negligent driver. Therefore, you can receive monetary benefits from Worker’s Compensation, and then also recover equivalent amounts from the negligent driver.
However, any amount recovered from a wrongdoer must be reimbursed to the Worker’s Compensation carrier.
UNINSURED AND UNDERINSURED
8) On July 1, 1990, uninsured motorist coverage and underinsured motorist coverage is no longer mandatory, but there must be a mandatory offer of such coverages. Unfortunately, purchase of uninsured motorist and underinsured motorist coverage is optional. This means that if you are injured by a negligent driver who does not have insurance, or does not have enough insurance to pay for all of your injuries, you will have no further source of money unless you purchase the all-important uninsured motorist or underinsured motorist coverages. You must specifically reject uninsured or underinsured motorists’ protection by signing a specific waiver form. THIS IS VERY IMPORTANT COVERAGE, AND IN NO EVENT SHOULD YOU SIGN THE WAIVER OR REJECTION FORM. WE RECOMMEND THAT YOU DO NOT GIVE UP THESE COVERAGES. If you have chosen the limited tort coverage option, you are likewise limited in your recovery for uninsured or underinsured motorist benefits.
9) If you select uninsured or underinsured motorist coverages, these coverages cannot be in an amount greater than your bodily injury coverage which protects you in the event that you yourself are negligent. However, you can decide to obtain less uninsured or underinsured motorist coverage than your bodily injury protection. For this you will have to select lower coverage in writing. DO NOT REDUCE THESE COVERAGES.
10) If you receive uninsured or underinsured motorists’ protection, you are entitled to multiply that protection by the number of vehicles you have insured in your household. This is called “stacking”. This is very important, since it obviously would multiply the coverage available to you or your family if there were to be a serious accident. However, you can “waive” or give up this so-called “stacking” and only receive coverage on one vehicle. WE URGE YOU NOT TO DO THIS. DO NOT WAIVE STACKING.
11) Insurance companies must provide discounts for restraint systems, anti-theft devices and driver improvement courses.
12) There are certain limits on when an insurance company can cancel your coverage. You must have two chargeable accidents where your company pays out more than $650.00 in damages. This figure will be adjusted every three years. It is now approximately $950.00.
13) For the first time, interest equal to the prime rate plus 3%, punitive damages, court costs and attorney fees may be awarded against an insurance company which acts in bad faith toward its insureds.
YOU WILL BE RECEIVING INSURANCE POLICIES, WITH MANY COMPLEX WAIVER FORMS, INCLUDING COVERAGE OPTION SELECTION FORMS, AND NOTIFICATION OF DISCOUNTS.
WHILE IT MAY SEEM ATTRACTIVE TO SELECT AN OPTION WHICH GIVES YOU A CHEAPER PREMIUM, OR TO GIVE UP CERTAIN COVERAGES OR BENEFITS IN ORDER TO SAVE SOME MONEY, YOU WILL BE SHOCKED TO LEARN HOW LITTLE INSURANCE COVERAGE YOU WILL ACTUALLY RECEIVE IN THE EVENT OF AN ACCIDENT SHOULD YOU GIVE UP IMPORTANT COVERAGES.
WE URGE EVERYONE TO SELECT THE FULL TORT OPTION, SINCE SELECTION OF THE LIMITED TORT OPTION AFFECTS NOT ONLY YOU, BUT ALSO OTHER PEOPLE IN YOUR HOUSEHOLD WHO MAY BE DEFINED AS INSUREDS OR NAMED INSUREDS.
ALSO, YOU SHOULD BE VERY CAREFUL NOT TO CHOOSE ANY OF THE WAIVERS WHICH MAY BE AVAILABLE, SUCH AS ELIMINATION OF UN- OR UNDER-INSURANCE, STACKING AND THE LIKE.
If you have any questions when you receive your policies, please feel free to call us. We will consult with you, free of charge, to answer your questions.
REMEMBER, DO NOT BE PENNY-WISE AND POUND-FOOLISH, FOR THE DECISION YOU MAKE NOW WILL BIND YOURSELF, YOUR LOVED ONES, AND PERHAPS OTHERS AS WELL, NOT ONLY FOR THIS POLICY BUT ALSO FOR RENEWAL POLICIES.
Leanord A. Sloane is a partner at Eckell, Sparks, Levy, Auerbach, Monte, Rainer & Sloane, and can be reached at (610) 565-3700, or (610) 431-4650.