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Car Insurance in PIP States

Car coverage in PIP states is different in some ways than it is in the states that do not require personal injury protection for its drivers. Personal injury protection (PIP), also called no fault insurance, is a type of coverage that has been around in the U.S. since the early 1970s. One of the intents behind creating this form of auto insurance was to reduce the number of accidents leading to court cases. But this presumed effect has not always been born out in reality, leading states like Colorado to repeal no fault law and others to modify their laws in certain ways. Personal injury protection in car policies focuses on getting covered drivers medical care after an accident regardless of fault, and not making them wait for a liability judgment.

Overview of PIP Auto Coverage

At the present time, twelve U.S. states plus the District of Columbia currently have some form of PIP or no fault auto insurance law. The states utilizing some version of personal injury protection in their mandated forms of auto plans are: Florida, Kentucky, Kansas, Michigan, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania, Utah, and North Dakota [1].

Personal injury protection or no fault law has been around in this country since the early 1970s, but there is no one uniform way of applying the law that is in use everywhere. For this reason, it is important for residents of each personal injury protection state to take a closer look at their home state's auto insurance laws and become better acquainted with them. There are pure no fault states and states that use some modified variation of PIP auto coverage law, and every state has unique requirements for minimum coverage types and amounts. Take a closer look at your own state's requirements by getting on the state insurance department or DMV website which usually has the best and most up to date information for consumers.

No fault or PIP auto coverage law limits the rights of drivers to sue over injuries sustained in auto accidents. That is because each covered driver is required to buy their own personal injury protection policy as part of their auto plan. The costs of the treatment for any injuries they may suffer in an accident come out of this portion of their policy, not from the other driver's plan, no matter who was at fault in the accident. This is the specific provision from which no fault auto law gets its name.

No Fault a Misleading Title

The very term no fault somewhat misleadingly implies that these states are not concerned with finding fault in an accident. This would be in contrast with tort auto policy law which requires fault to be assigned in every accident case. But really, the name only means that accident victims have the right to medical care whether they were at fault or not, and that this care should not be impeded by an accident investigation. That's the reasoning behind having drivers buy their own PIP coverage.

Even so, PIP states still require liability protection including bodily injury. For example, in Utah, a PIP auto insurance state, drivers have to carry personal injury protection, but they also must buy bodily injury liability coverage to cover others' injuries in at fault accident situations [2]. Clearly, the premise of no fault protection is not to deny the importance of fault or liability in auto accidents. The term no fault is merely to try to reduce the number of legal entanglements related to finding fault and determining liability; and to make sure each accident victim injured in a crash does get the treatment they need in spite of any fault scenario.

Problems with PIP Law

The PIP auto coverage system was put into place largely to try to reduce the crowding of court room dockets and the related monetary costs of these cases to both the affected states and to individuals. It does limit the rights of individuals in these states to sue each other for costs related to at fault car accidents, instead putting more pressure on their auto policy providers to handle these costs. Ideally, the system is a good idea because it promotes efficiency while also placing importance on accident victims or participants getting the treatment they need from medical personnel for injuries they suffer in these accidents. This coupled with the expected reduction in court time and accident expenses make no fault or PIP seem like a great option.

But there have been some problems with these systems through the years that have demonstrated PIP insurance programs to have some flaws in their application in real life. The theoretical model for pure PIP auto insurance law predicts a much lower rate of court cases, yet court dockets are loaded with no fault cases. In the state of New York, a no fault state, this problem is demonstrated very clearly. In New York City, for example, one third of all court cases are no fault cases. No fault fraud is so rampant there and there are so many cases flooding the dockets that cases brought in 2009 have been assigned 2011 court dates [3]. Clearly, there is a large gulf between the expected load of no fault court cases and the actual number of cases that end up appearing in court.

Critics of no fault or PIP law contend that one of the main so called highlights of this type of law has turned out to be a sham. Early proponents and theorists of no fault predicted that insurance rates for drivers would not be as greatly affected as those of drivers in tort states when these drivers were involved in at fault accidents. Yet this has not been the case; insurance rates are just as likely to increase in no fault states as they are in tort states following an at fault accident, and those increases are likely to be similar in both cases. What's more, in spite of predicted results to the contrary according to statistical models presented by no fault theorists, there has been no reduction in accident costs for drivers in no fault states versus the costs paid for by drivers in tort states [4]. In other words, accidents are averaging out to cost just as much regardless of the insurance system. And with no fault states having some of the highest insurance rates across the nation, it is little wonder that many politicians and private citizens alike are calling for changes to no fault law in many of these states, notably in the New York and Michigan legislatures in recent months.

Personal injury protection auto coverage has great potential to save auto owners a lot of money on their premiums and keep courts clear of frivolous cases. But the distance between theory and application has to close if this sort of potential is going to be realized. Car insurance in PIP states is interesting to follow and read up on because of the many ups and downs legislators and private citizens have been through in applying PIP law.

[1] http://www.ehow.com/about_4612526_what-states-require-pip-insurance.html Retrieved 2010-02-14.
[2] http://dmv.utah.gov/registerinsurance.html Retrieved 2010-02-14.
[3] http://www.aiadc.org/aiadotnet/docHandler.aspx?DocID=331373 Retrieved 2010-02-14.
[4] http://www.rand.org/pubs/research_briefs/RB9034/index1.html Retrieved 2010-02-14.

 

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