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Automobile Insurance Laws In Pennsylvania: A Summary of What You Need to Know

All owners of motor vehicles in the Commonwealth of Pennsylvania are required by law to purchase and maintain automobile insurance. The laws relating to automobile insurance coverage are compiled in 75 Pa.C.S.A. ▀▀1701 et seq., commonly known as the Act 6 Amendments to the Pennsylvania Motor Vehicle Financial Responsibility Law, "MVFRL. As an owner, driver or passenger, it is important to understand how automobile insurance affects an individual involved in an automobile accident. The type of coverage an individual selects will depend upon the individual's needs. The following are the most common types of coverage offered:

Liability Coverage

This coverage is mandatory. That means if you are required to purchase auto insurance, you must buy liability coverage. This type of insurance protects you from claims made against you. If an accident is your fault and you have caused damage or injury to others, your liability insurance is available to compensate the injured party.

The question you should ask yourself is: How much coverage do I really need? The minimum amount the law requires you to purchase is $15,000.00 per individual and $30,000.00 per incident. It is typically written as "15/30". Higher limits are available and should be purchased if you have assets to protect. If a claim for injuries is made against you and the value of the claim is greater than the limits of your policy, as it might if the injured party is seriously injured, the injured party can either accept your policy limits and release you from further claims, or can pursue the claim against you personally for damages in excess of your policy. Therefore, you should buy sufficient liability coverage to protect your assets (home, savings, investments, income, etc.).

In addition to liability coverage which applies to bodily injury (BI) claims, you can also purchase liability coverage which applies to property damage claims. This coverage applies to damage you caused to the other person's vehicle. As the cost of automobiles increases, you should consider buying enough coverage to pay for repair or replacement of a damaged vehicle.

Please be aware that if you cause an accident injuring someone, and your insurance company pays money on your behalf to settle the claim against you, your insurance carrier can raise your premium rates and probably will attach a surcharge to your premiums. Certain rules apply to how and when rates can be raised and surcharges applied. You should contact either your attorney or your insurance agent to have this explained to you.

First Party "PIP" Coverage

First Party Benefits (previously referred to as Personal Injury Protection, or PIP) is mandatory coverage. This is a basic no-fault type of medical insurance for your own medical bills. The minimum coverage required by law is $5,000.00. Regardless of who is at fault for the accident, your medical bills (if you need treatment) will be paid through your PIP coverage. You are entitled to this protection, and using it will not affect your rates or premiums in any way. If you exhaust your PIP limit of coverage, then any additional excess medical bills can be submitted to your health insurance. If you have health insurance, then the $5,000.00 minimum PIP limit should be more than adequate coverage. In most cases, even without separate health insurance, the minimum PIP limit is sufficient.

Collision Coverage

This coverage is optional, and pays you for any damage done to your vehicle. It typically is purchased with a deductible. This means that you pay up to the amount of your deductible limit and then your insurance will cover the remainder. A higher deductible will give you a lower premium. If the accident was not your fault, your insurance company should demand your deductible back from the responsible party and then return the deductible to you. Things to consider in deciding whether to buy collision coverage and how high a deductible you can afford are the age of your automobile, its current "blue book" value, and its replacement value. If your car is totaled in an accident, remember the insurance company will only offer you blue book value and not what it would cost for you to purchase a new car.

Comprehensive Coverage

This coverage is optional, and provides protection if your vehicle is stolen or damaged in a variety of ways other than in an accident with another vehicle. It also operates with a deductible contribution from you. The same considerations outlined above for collision coverage apply to decisions about buying comprehensive coverage. Uninsured Motorist Coverage This coverage, called "UM", is optional, although very important. It protects you in case you are injured by a driver and/or vehicle that is uninsured. With the high number of uninsured drivers on the road, do not overlook this coverage. It is not a good place to look to save money on your premiums.

"UM" coverage may be purchased in amounts equal to or smaller than your liability coverage. You should consider purchasing at least $100,000.00/$300,000.00 limits. If you are injured by an uninsured driver, this is the only benefit available to you. The additional coverage offers you much protection. Ask your insurance agent to give you a price quote so you can make an informed decision about whether or not you can afford the highest limits. Do yourself a favor, do not waive this coverage.

Under-insured Motorist Coverage

This coverage, "UIM", is similar to the coverage for "UM", described above. It also is optional. However, this coverage only applies if you are injured, it wasn't your fault, and the other party didn't carry enough insurance to adequately compensate you for your injuries. Typically this coverage comes into play when the responsible party had a minimum policy of 15/30 and your injuries are sufficiently serious to exceed that amount. This is very good, smart coverage to purchase in the same amount as "UM" coverage.

Tort Thresholds - Should you sign away your rights?

Concerned about the high rates of automobile insurance, Pennsylvania followed several other states and enacted laws attempting to keep automobile insurance rates affordable. Whether or not the laws actually accomplished their purpose is debatable. However, individuals who buy automobile insurance are now classified as either "full tort" or "limited tort".

"Tort" is a legal term meaning a private or civil wrong or injury, other than breach of contract, for which the law provides a remedy in the form of an action for damages. Thus, were you to select 'full" tort coverage, you are preserving your familyÝs full legal rights in case of an accident or injury. If you select 'limited" tort coverage, you may save some money, but you are signing away your and your familyÝs rights in case of an accident or injury - rights you may later deeply regret forfeiting.

An individual who chooses "full" tort pays a higher premium (anywhere from 12% - 20% more) for coverage than if the "limited" tort option had been selected. If you have full tort, you can bring a claim (and ultimately a law suit) for any injury you suffer as a result of an automobile accident. An individual who chose the limited tort option can only recover very limited sums for injuries sustained in an automobile accident, but cannot collect at all unless the injuries are considered to be 'serious". The law defines "serious" injury very narrowly.

Serious injury is defined as a personal injury resulting in death, serious impairment of a bodily function or permanent serious disfigurement. Although the law has defined "serious injury", you can see from the definition that it is not altogether clear. Case after case has been litigated trying to further define just what the law means by serious impairment of a bodily function.

The recent trend of the courts has been to view most "soft tissue" injuries (neck and back sprains and strains) as insufficient to satisfy the serious impairment requirement. In many cases even broken bones and head injuries have been considered not to meet the law's definition of "serious", although they were certainly serious to the injured party. More and more, courts are finding against individuals who have selected the limited tort option. Some judges are looking at the injury and asking whether or not it resolved. Injuries that have healed and no longer cause pain are not considered serious. One plaintiff had a fractured elbow and missed three months of work. The injury healed and the court found against the limited tort plaintiff.

Although it is not impossible to win a claim if you select the "limited tort" option, it has become increasingly difficult. This means that the insurers are able to collect premium dollars on policies to which, they have greatly reduced their risk of loss. In fact, the insurers risk of paying on claims has been reduced at a much higher rate than the small rate reduction passed on to the consumer who selects the limited tort option. Unfortunately, the only way for an individual to protect him/herself is to pay the higher rates for full tort coverage.

This informational piece was prepared by Silverman & Fodera. If you would like more information on this topic, call us at (800) 220-LAW1, or use the "Do I Have A Case?" link on this web site.