WHAT IS “NO-FAULT” INSURANCE?

AUTO –ACCIDENTS -WHAT IS “NO-FAULT” INSURANCE?

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

Believe it or not, your medical insurance carrier does not have the primary responsibility to pay your medical bills for injuries sustained in an automobile accident – The applicable automobile insurance carrier does.

New York is a no fault state, meaning insurance coverage for medical expenses and lost wages is provided regardless of who was at fault in the accident.

But remember, if your injuries or above a certain threshold you can still sue the person who cause your injuries for money damages above what the applicable automobile insurance carrier provides.

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. These are considered first party benefits, meaning they are paid directly to the policyholder or covered individuals regardless of fault. 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.

So if were in a car accident driving your own vehicle and you are injured as a result of another person’s negligence, the no-fault portion of your automobile insurance policy will cover your medical bills to the extent that you have coverage. If your coverage runs out other insurance will kick in.

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 insurance 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; 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; no-fault insurance covers medical treatment related to accident injuries, including hospital visits, surgery, and therapy.

b. 80% of lost earnings up to $2,000 per month for a period of up to 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 and medical appointments), 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. Death benefits are provided to surviving family members, including funeral expenses and other financial support.

No-fault insurance cover includes payments for economic losses such as lost wages, necessary expenses, and burial costs.

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.

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. These options expand the no fault insurance cover for additional economic losses beyond the basic limits.

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 additional 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.

No-fault insurance generally does not cover pain and suffering. Non economic damages, such as pain and suffering, are only recoverable if the injury meets the serious injury threshold as New York law defines.

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 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. Workers compensation benefits interact with no-fault insurance for work-related vehicle accidents, and the appropriate coverage depends on the circumstances of the accident.

If you are injured in a car accident don’t delay: make sure you get immediate medical attention then contact us to find out how we can help you protect your legal rights.

or marralaw@marralaw.com

Insurance Company Responsibilities

When you’re dealing with a car accident in New York, understanding how insurance companies fit into the no-fault system can make all the difference in getting the support you need. Your insurance company plays a crucial role here, and their responsibilities are what ensure you receive proper coverage after an accident.

Here’s what you need to know: when an accident happens, your own insurance company—not the other driver’s—is required to provide no-fault benefits to you and all eligible parties, regardless of who caused the crash.

Once you file your no-fault claim, your insurance company has to act quickly and fairly. They’re on the hook for covering a wide range of your medical treatment, including hospital stays, surgeries, diagnostic tests, physical therapy, and prescription drugs you need for your injuries.

If you can’t work because of your accident injuries, your insurance company is also required to reimburse a portion of your lost wages, up to what your policy allows. In the tragic cases where a fatality occurs, funeral expenses may also be covered under your no-fault benefits.

To make sure your claims process goes smoothly, your insurance company has to give you clear instructions about what documentation you’ll need—things like your medical records, written proof of lost wages, and receipts for accident-related expenses.

They’re also expected to communicate directly with your medical providers to make sure you get timely and appropriate medical care. Throughout this whole process, your insurance company must stick to strict timelines set by New York law, ensuring that your claims get processed efficiently and that you receive the medical attention and financial support you need without unnecessary delays.

In situations where your injury meets what New York law calls the serious injury threshold—things like significant disfigurement, a significant limitation of a body function, or other catastrophic injuries—your insurance company may get involved in additional legal proceedings.

If you decide to pursue a personal injury lawsuit against the at-fault driver, your insurance company may be responsible for additional compensation beyond your basic no-fault benefits.

Your insurance company is also required to comply with all state regulations governing no-fault insurance, including maintaining accurate records, providing you with written proof of coverage, and following proper procedures for claim denials or disputes. If your no-fault claim gets denied, your insurance company must give you a clear explanation and offer you a fair appeals process, which may include arbitration or mediation.

Ultimately, your insurance company’s role is to provide you with timely and fair compensation, helping to cover your medical bills, lost wages, and other accident-related expenses. By fulfilling these responsibilities, insurance companies help reduce the financial burden on you when you’re injured in motor vehicle accidents and support your recovery under the no-fault system.

If you have questions about your no-fault insurance claim or you’re running into issues with your insurance company, consulting with a personal injury lawyer can make all the difference in securing the maximum compensation you deserve.