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WHAT IS “NO-FAULT” INSURANCE?

If you are injured in a car accident who pays your medical bills?

If you thought your medical insurance carrier had the primary responsibility to pay your medical bills as a result of injuries sustained in an automobile accident, you are incorrect. In New York State each automobile insurance policy must provide coverage known as Personal Injury Protection (“PIP”) and typically referred to a “No-Fault” insurance. Medical bills, some or all of the injured party’s lost wages and other expenses are paid from this portion of the policy, whether or not the injured party caused the accident.

The New York State Insurance Law, requires that all automobile insurance policies issued in this state contain a Personal Injury Protection (“PIP”) or “No-Fault” endorsement with a minimum of $50,000.00 in coverage. Generally speaking, this coverage extends to the driver and passengers in a covered vehicle, as well as to a pedestrian struck by the covered vehicle. The coverage “kicks in” regardless of fault in connection with an accident; in other words, under most circumstances, a covered individual will be afforded certain enumerated benefits regardless of that individual’s fault in connection with the happening of the accident.

Assuming an application for benefits is filed in a timely manner, (most typically within 30 days of the accident), no-fault benefits are provided. This insurance covers “basic economic loss”. These benefits can be summarized as follows:

  a. All necessary doctor and hospital bills and other health service provider and related
expenses;

  b. 80% of lost earnings up to $2,000 per month for a period of three years following the
accident;

  c. Up to $25 per day reimbursement for reasonable and necessary expenses incurred by the injured person (e.g. housekeeping, transportation for medical services), for a period of up to one year; and

  d. $2,000 death benefit to the estate of a deceased, in addition to coverage for economic
loss.

Drivers have the option of purchasing additional no-fault coverage above the $50,000.00 basic PIP minimum. These additional optional coverage options are called additional personal injury protection (“APIP”) and optional basic economic loss (“OBEL”). More often than not, the cost to purchase these additional coverage options is minimal. It is highly recommended that all those purchasing automobile insurance purchase the most APIP that is available to them.

1. APIP coverage is typically offered in increments of $50,000.00. APIP can extend the basic economic loss benefits of PIP up to the amount of the additional coverage purchased. There are different varieties of APIP coverage available. APIP protection may be purchased for lost wages, medical expenses or additional expenses. In connection with lost wages, for example, APIP coverage allows you to increase the PIP $2,000.00 reimbursement limit to cover your monthly salary. In other words, if you earn $2,500.00 per month, APIP will increase your lost wage earnings benefit to cover your lost salary. If you are injured in a motor vehicle accident and are unable to work, APIP will cover 80% of $2,500, but the underlying no-fault policy will pay the first $2,000. The amount beyond the basic PIP limits would be paid under APIP. Without APIP, the lost wage coverage under basic PIP would be limited to $2,000 per month.

Under New York State law, any APIP benefits which are actually paid to you (i.e. those basic economic loss benefits paid in excess of the $50,000 basic PIP coverage) may need to be repaid to the insurance carrier if you have a successful personal injury claim against the person who caused the accident.

OBEL coverage is a policy option that provides $25,000 additional coverage, beyond the $50,000 PIP coverage. Under OBEL, when the policy is written, the policy holder determines where the payments go. For example, the policy holder can opt for additional basic economic loss (wages, health expenses). A second option would be to have the benefits go to lost wages exclusively. A third option would be to have the coverage to go to any rehabilitation that is necessary including psychiatric, occupational and physical rehabilitation. A final option allows the policy holder the choice of selecting both the second and third options combined. In any event, this coverage comes into play after the initial $50,000 of basic economic loss coverage is exhausted.

Most people are unaware that they have PIP coverage, let alone that they can buy additional coverage. $50,000.00 sounds like a lot of money but it can be depleted very quickly in the event of an injury that requires hospitalization and/or surgical intervention. The addional APIP and OBEL benefits are a good value for the consumer and their purchase should be discussed with your insurance company or insurance agent.

If you still have medical expenses after your No-Fault benefits expire or are terminated, your health insurance carrier should step in and pay those costs pursuant to the terms of your health insurance contract. However, your health insurance carrier may, under some circumstances, have a lien against any funds you recover from a personal injury law suit that you commence relating to the accident that caused your injury. More importantly, when you utilize PIP and APIP instead of your health insurance you do not have to worry about co-pays and deductibles when seeking medical care.

If you are injured in a motor vehicle accident and are employed, you should also determine whether you are covered by a separate disability policy through your employer. If this is the case you should contact the disability carrier and complete an application for those benefits, which would supplement your No-Fault disability benefits. Without a separate disability policy, you

2. can no longer collect lost wages once your No-Fault benefits expire or are terminated, though you can claim them as damages in any personal injury law suit you may file as a result of the automobile accident.

Finally, if you are injured while driving your vehicle during the course of your employment (i.e. “while on the clock”), New York State Law provides that you look to your company’s Workers Compensation carrier for benefits, not to your no-fault insurance carrier.

Estates, Powers, and Trust Law (EPTL) §5-1.4

While you were married, you prepared a Will naming your spouse as your beneficiary. Now your divorce has been finalized. You should probably do a new Will. But what happens if you don’t? Estates, Powers, and Trust Law (EPTL) §5-1.4 provides the answer:

Under the statute, a divorce or annulment revokes any revocable “disposition or appointment of property made by a divorced individual to, or for the benefit of, the former spouse.” This includes a disposition or appointment to that former spouse made in your Will, by beneficiary designation, or by revocable trust. The statute acts to revoke “in trust for” and “pay on death” designations on bank and brokerage account. This means that upon a divorce, the statute writes your spouse out of your Will, out of your revocable trust and removes his or her name from any “in trust for” or “pay on death” bank accounts.

The divorce or annulment also automatically revokes any revocable provision conferring a power of appointment on the former spouse. If your former spouse was appointed or nominated by you to serve in a revocable fiduciary or representative capacity, such as nomination of the former spouse as an executor, trustee, guardian, agent, or attorney-in-fact, that appointment or nomination is also nullified by the end of your marriage. However, after your divorce, your financial institutions and financial advisers should be given notice of your intent to revoke any such powers you granted your former spouse, since they will not held legally responsible if they act against your wishes unless the proper notice is given.

Finally, if you own property with your former spouse, the divorce or annulment acts to sever joint tenancies between former spouses (including joint bank accounts). This means that it automatically transforms them into tenancies in common, meaning post-divorce you will each own one-half (1/2) of the asset.

Does this protection mean you should do nothing with respect to estate planning after you are divorced? The answer is no. After you are divorced, you should consult an estate planning attorney such as Joseph A. Marra so you can revise the disposition of your assets as you see fit,
to better serve the new circumstances of your life.

The Revocatory Effect of Divorce on a Testamentary Disposition or Appointment

The Revocatory Effect of Divorce on a Testamentary Disposition or Appointment
When you get divorced it is extremely important to review your estate planning documents. If you don’t, you could wind up leaving all your assets to your former in-laws. A divorce decree automatically removes the former spouse from the Will as both a distributee and as an executor. But the divorce does not automatically remove the former spouse’s family from the Will.

TUnder New York law, except as provided by the express terms of a will, a divorce or annulment of marriage revokes any testamentary distributions or appointments to former spouses. The former spouse is treated as having predeceased the divorced individual as of the time of the revocation (See EPTL 5-1.4(a), (b)). New York law further provides that the provisions of EPTL 5-1.4 only apply to former spouses, not to members of the former spouse’s family.

In re Estate of Lewis, (114 A.D.3d 203, 4th Dept. 2014), the decedent executed a Will while she was still married to her ex-husband. Pursuant to her Will, her ex-husband was named as the executor and sole beneficiary of her estate. In addition, in the event that her ex-husband predeceased her, her ex-husband’s father was named as the successor executor and successor sole beneficiary of the estate. The decedent and ex-husband were divorced and when the decedent passed away, her ex-husband’s father petitioned the Surrogate’s court to be appointed as the executor and take under the will as the sole beneficiary. The decedent’s parents filed objections to probate, but they were dismissed by the Surrogate.

The Appellate Division of the Supreme Court of the State of New York, Fourth Department, held that the testamentary disposition and appointment as executor made to the exhusband in the decedent’s Will were revoked by virtue of the divorce. Once the decedent and exhusband were divorced, the ex-husband was treated as having predeceased the decedent.

However, since EPTL 5-1.4 only applies to the former spouse, not to the members of the former spouse’s family, the ex-husband’s revocation did not apply or extend to the disposition and appointment made to her ex-husband’s father.

As you can see, it is extremely important to keep your estate plans updated, especially after a divorce. Consulting with an experienced estate planning attorney to review and analyze your specific situation is crucial to making sure that your true wishes will be reflected in your estate plan.