Enter your ZIP code:

PIP and No-Fault Auto Insurance Reform

More and more states are abandoning the PIP/No-Fault form of auto insurance in favor of a tort-based set of laws. PIP/No Fault originated in the 1930s as an alternative to the often slow and expensive process of litigating claims. The intent was to speed up the process by shifting the dispute resolution from the courts to the insurance companies. In theory, this was supposed to reduce insurance rates—and rates did go down initially.

By the mid-70s, almost 20 states had some form of no-fault insurance laws. However, over time, rates again rose until "No-Fault" states had higher rates than tort-based states. Beginning in 1980, states started repealing their no-fault laws, and now only nine states (Florida, Hawaii, Kansas, Massachusetts, Missouri, Minnesota, New York, North Dakota and Utah) have mandatory no-fault laws. Eleven states plus the District of Columbia have hybrid laws (Arkansas, Delaware, Kentucky, Maryland, New Jersey, Oregon, South Carolina, South Dakota, Texas and Virginia), which are a combination of no-fault and tort systems.

The pendulum seems to be swinging back to tort-based auto insurance. What does this mean for you as a policyholder?

The Good News

Tort-based systems, in theory, give you more choices for medical payments and could save you substantial amounts of money. As an example, depending on the insurance company and coverages selected, those with Colorado car insurance (the most recent state to revert to a tort-based system) could see savings of 10 percent to 30 percent, according to several recent Denver Post articles.

The Choices

PIP, or Personal Injury Protection, is still available (in most cases), should you wish (or need) to pay for it. If you choose to drop this coverage, or if you are already under a tort-based system and don't have this coverage, you can still purchase it with most policies to cover medical expenses. However, coverage will be limited, with a general ceiling of $50,000. This additional coverage, if purchased, will pay expenses incurred by you and your immediate family for injuries resulting from an at-fault auto accident.

Since many drivers are uninsured or underinsured, it is essential that you understand the ramifications of this and make an informed decision about the "Uninsured/Underinsured Motorists" coverage option.

What if?

What happens if you are at fault? Your auto policy should pay the other person's claims. Companies normally negotiate this with each other. If you have insufficient coverage, you may have to go to court—thus displaying the tort aspect of the law. Either you or your health insurance company will pay medical expenses for you and your family once those expenses exceed your auto policy coverages.

What if you are injured by another driver who is at fault? Generally, the two auto insurance companies will work together to determine fault and pay benefits accordingly. This resolves the problem in most cases. If not, or if the amounts paid are insufficient, it may be necessary to resort back to the court system to recover damages.

What if the other driver is at-fault and has no (or inadequate) insurance? Your insurance company normally covers your medical expenses. This protection is provided under the uninsured/underinsured motorist coverage. If you do not have this coverage, your health insurance usually pays the bills, or you can sue the other party.

Consider the "Deductible Gap"

Generally, under a tort system, medical payments from your own policy are limited. However, in most cases you can choose "additional medical payments" and "Uninsured/Underinsured Motorists" coverage as part of your auto insurance policy.

After years of rising rates, many people may choose to forgo any additional coverages. Adding these coverages creates financial strain if you have high-deductible health insurance, or no health insurance at all. However, there is a potentially huge gap between the amount paid under a tort-based policy and your health insurance deductible. If you have no insurance, the out-of-pocket costs could be staggering. If you are not at fault in the accident, the tort-based system allows you to go to court to receive compensation for these costs, as well as for pain and suffering. But you must do so within a specified time period, and a lot of out-of-pocket expenses may be involved.

What does this mean for health insurance?

As more costs are shifted to the health insurance system, your insurance costs are likely to rise. This also means more people will be without health insurance.

So, what is next?

This is a good time to look at your health insurance to make sure you will have adequate coverage if you drop your PIP/No-Fault coverage. Don't wait until you're in an unpleasant situation to find out if you need more insurance. Be prepared!

List of Articles
No. Subject Author Views
85 Rental Car Insurance: Do You Really Need It? youcomparequotes 17567
84 Auto Insurance: The Secret Weapon for Saving at the Pump youcomparequotes 17887
83 Getting the Cheapest Car Insurance in Your State youcomparequotes 16830
82 Play It Safe for Cheap Truck Insurance Rates youcomparequotes 17206
81 How to Get Discount Auto Insurance youcomparequotes 17647
80 Insurance for Van Lovers youcomparequotes 17310
79 Car Insurance That Fits Your Needs youcomparequotes 17047
78 Online Car Insurance Quotes in 5 Easy Steps youcomparequotes 17232
77 Getting Insured with an Online Auto Insurance Quote youcomparequotes 18076
76 Home and Auto Insurance: Sure-Fire Protection in Unsure Times youcomparequotes 17053
75 How to Keep Teen Car Insurance Quotes at Bay youcomparequotes 19273
74 Choosing Cheap Online Car Insurance That Fits Your Life youcomparequotes 17632
73 Auto Insurance from InsureMe youcomparequotes 17551
72 Car Insurance Comparisons Save You Time & Hassle youcomparequotes 17905
71 Car Insurance Companies & InsureMe Save You Money youcomparequotes 18300
70 Buying and Insuring a New Car youcomparequotes 16681
69 Compare Auto Insurance Rates youcomparequotes 17024
68 Safety Measures Lower Auto Insurance Quotes youcomparequotes 16526
67 Getting Car Insurance Quotes, from Beginning to End youcomparequotes 16625
66 The Car Insurance Quote & Ratings Factors youcomparequotes 17104
65 What's Behind Your Auto Insurance Quotes? youcomparequotes 17233
64 How Cheap Car Insurance Can Save You Money youcomparequotes 16476
63 How to Reduce Car Insurance Prices youcomparequotes 17082
62 Getting Insured with Free Car Insurance Quotes youcomparequotes 17310
61 Auto Owners Insurance & Costly Driving Mistakes youcomparequotes 16568
60 Auto Insurance Cost & Your Ride youcomparequotes 17106
59 How No Fault Auto Insurance Works--or Doesn't youcomparequotes 16895
58 How to Get the Cheapest Car Insurance youcomparequotes 16799
57 Selecting a Car Insurance Company youcomparequotes 17506
56 Finding New Car Insurance Following Cancellation or Nonrenewal youcomparequotes 17113
55 Get the Best Car Insurance Rates Around youcomparequotes 17354
54 Factors That Affect Your Car Insurance Quotes youcomparequotes 16365
53 Child Safety Belts Keep Kids Safe youcomparequotes 17056
52 Speeding and Car Insurance Rates youcomparequotes 16754
51 Not At Fault Car Insurance & Accidents youcomparequotes 16896
50 State Auto Insurance Becoming Available youcomparequotes 17173
49 Auto Insurance Gap Narrowed by Insurance youcomparequotes 17628
48 Car Insurance & Roommates or Family Members youcomparequotes 17210
» PIP and No-Fault Auto Insurance Reform youcomparequotes 16905
46 PIP and No-Fault Auto Insurance Reform youcomparequotes 16809
45 SUVs: Minor Collision, Major Damage youcomparequotes 17353
44 Severe Weather Driving Tips youcomparequotes 17077
43 Avoiding Aggressive Drivers youcomparequotes 17969
42 Safety Tips & Car Insurance for Teens youcomparequotes 17056
41 Insurance for Cars: It's Your Choice youcomparequotes 17014
40 Car Insurance Quotes Save You Money youcomparequotes 17075
39 Finding & Comparing Auto Insurance Specialists youcomparequotes 17929
38 Safety Features Save Lives & Money youcomparequotes 16816
37 Curbing Auto Insurance Prices youcomparequotes 16373
36 Teen Auto Insurance youcomparequotes 16648
35 Car Insurance: Your Questions Answered youcomparequotes 16576
34 How to Buy Car Insurance youcomparequotes 17342
33 Vehicle Insurance: Covering Any Kind of Car youcomparequotes 16619
32 Truck Insurance for Your Pride & Joy youcomparequotes 16407
31 How Insuring a Used Car Can Save You Money youcomparequotes 17234
30 All-in-One Policies Insure Car & Home Together youcomparequotes 17109
29 Credit Scores & Car Insurance youcomparequotes 17742
28 Classic Car Insurance Protects Your Relic Ride youcomparequotes 16265
27 Reducing SUV Insurance Rates youcomparequotes 16795
26 Good Driver Car Insurance Rewards Safe Driving youcomparequotes 17312
25 How to File an Auto Insurance Claim youcomparequotes 16949
24 Avoiding Deer Collisions While Driving youcomparequotes 17420
23 Cheap Auto Insurance through Safe Driving youcomparequotes 16741
22 Auto Insurance Basics That Save youcomparequotes 17173
21 It's Official - Men Are Terrible Drivers youcomparequotes 18662
20 Car Insurance Quote Saves Money and Stretches Income youcomparequotes 17424
19 Auto Insurance Quote Heavily Dependent on Driver Behavior youcomparequotes 16947
18 Car Insurance Quotes Separate Fact from Fiction youcomparequotes 17198
17 How What You Drive Affects Your Auto Insurance Quotes youcomparequotes 16954
16 Cheaper Car Insurance in 8 Easy Steps youcomparequotes 17322
15 Save Hundreds on Your Car Insurance Without Switching to Geico youcomparequotes 16773
14 Your Options in Motorcycle Insurance youcomparequotes 16784
13 The Advantages of RV Insurance youcomparequotes 17160
12 Enjoying the Classics: How to Insure Your Old Relic youcomparequotes 34668
11 Insuring Your Teen Driver youcomparequotes 16934
10 The SR22 & Car Insurance youcomparequotes 16430
9 Auto Insurance & Generic Parts youcomparequotes 17136
8 A Trip Gone Wrong: Summer Breakdown on the Road youcomparequotes 18260
7 Drowsy Drivers, Wake Up! youcomparequotes 16419
6 Cheap Car Insurance Protection You Deserve youcomparequotes 17795
5 Top 8 Safety Picks for Car Insurance Discounts youcomparequotes 17225
4 Drivers: 7 Important Facts about Texting That Could Save Your Life youcomparequotes 21293
3 Buckles: Use Them for Safety, Not for Show youcomparequotes 16743
2 Auto Insurance Quotes youcomparequotes 17203
1 Why You Should Give Thanks -- And Stay Home This Year youcomparequotes 17340
XE Login