When people have been hurt in car or truck crashes, it is sometimes difficult to understand how the bills are going to get paid. That is partly because the coverages available are confusing to most people.
The first source of confusion is when the injured person learns that the limits of coverage required of the person who caused an automobile collision can be very minimal, and don’t appear to be enough to cover the injured person’s cost of treatment and lost wages. For instance, car drivers are generally only required to carry $25,000 in liability insurance, although the exact measure of that varies somewhat as will be discussed in another section. In truck collisions, if the collision was caused by the trucker, usually commercial enterprises are required to carry a minimum of $1,000,000 liability coverage.
Assuming that you have been involved in a vehicle collision, who pays the immediate bills for treatment and wage loss? That question occurs first because the injured person is often out of work due to the injury and also has hospitals and doctors immediately clamoring for payment.
In all that follows in this discussion, there is one principle that must be understood. The insurance for the person who caused the injury will rarely if ever pay anything until the injured person is ready and willing to settle all of their claims and sign a release of liability for any further recovery of money from the person who caused the injury or their insurer. (There are exceptions to that, such as when you are passenger and your driver was the negligent party, and there is PIP coverage on the driver’s insurance.) The injured person usually needs insurance that pays right away, especially if there is treatment or wage loss that will continue for several months or longer. The liability coverage of the person who caused the collision will not be available right away to pay for immediate expenses, and probably will not be available at all until all treatment and wage loss has been concluded.
The first place to look is at the PIP coverage of the vehicle in which the injured person was riding. If the injured person was a pedestrian or bicycle rider, you look to the PIP coverage of the vehicle that struck the pedestrian or bicycle rider. PIP is the first place we look because in auto collisions, it is what is known as “primary”. Other insurance is usually secondary, such as health insurance. Secondary insurance will pay, but usually not until the primary coverage is paid out; resort should always be had to primary insurance. People sometimes express concern that making a PIP claim will increase their insurance rates. It will not.
Furthermore, there are statutes adopted by the Legislature and regulations adopted by the Insurance Commissioner that require PIP carriers to make timely payments. This business of timely payments is important so as avoid being turned over to collection if there isn’t other insurance. Health insurers do not always make timely payments and the regulation on that type of insurance is more difficult to enforce.
What is PIP? “PIP” is short for Personal Injury Protection coverage. It is the coverage that initially pays for treatment and wage loss. It is a form of no-fault coverage. It is coverage that pays your initial treatment expense or wage loss if you were hurt while riding in a covered vehicle, or if you were hit by a covered vehicle as a pedestrian or bicyclist. PIP coverage must start paying very soon after the accident.
In Oregon, PIP coverage is mandatory. In Washington, PIP coverage must be offered. An insured car normally has PIP in Washington unless the owner of the car waived PIP coverage in writing when the coverage on a car was obtained. All the time I have people come into my office who have been in an auto accident who think that there is no PIP because somebody from an insurance company told them that. There is PIP coverage under Washington policies unless the insurer can produce a copy of the written waiver. In Washington cases, I always write for a copy of the waiver if someone has told the injury victim that there is no PIP.
In Oregon, PIP is simply always required. However, there are exceptions in both Oregon and Washington to required coverage or required offerings in this regard. One is where the person injured is riding in a vehicle made available through their employer to use on the job. The other is some government vehicles. There are others, such as motorcycles.
When the full PIP benefit has been paid out, or “exhausted”, or there is no PIP on the vehicle in which the injury occurred, where do we look next for money to pay for treatment and wage loss? We look for other PIP coverage. For instance if the person injured was not the policy holder on the car in which the injury occurred, we look to see if that person had their own auto insurance with PIP coverage. Even if there was PIP coverage on the car involved in the collision, if the PIP coverage on the car is exhausted the injured occupants’ own PIP coverage frequently “stacks” on top of the PIP for the car. So if the PIP for the car is exhausted, bills for treatment and wage loss are submitted to the occupants’ own PIP coverage. This sometimes occurs when the PIP benefits are sought for a child under that child’s parents’ PIP coverage although the parents’ car was not involved in the collision.
Once PIP has run its course, the next place we look is for any health or disability insurance that the injured person carries. Other places we look are Medicare and Medicaid benefits. If the injured person was injured on the job, workers compensation benefits are then primary. PIP is then secondary and can be used to fill in for treatment of a type that is not covered by workers compensation benefits. If there are no sources of money to pay a provider, such as a hospital, these facilities sometimes have charity policies that eliminate the need for payment.
I am often asked by a client what to do if a provider is demanding payment and is threatening to turn them into collection and ruin their credit. Although I cannot make guarantees, experience has taught me that I can make a deal with the creditor or the collection agent that if I will agree to pay them directly from my trust account out of the settlement proceeds, they will not report the account to a national credit reporting agency, which would otherwise affect the injured person’s credit rating. In other words, normally arrangements can be made that do not affect the injured person’s credit.
That brings us to the next source of money, the insurance proceeds of the at-fault party. There are two things to remember about this coverage. Again, it will rarely if ever pay until the insurance company can obtain a signed release from the injured person, which ends any further obligation of this insurer to pay. Second, this insurance only pays to the limits of the coverage.
I am occasionally approached by injured persons and asked why they cannot enter into an agreement with the at-fault insurance carrier to pay the injured person an immediate lump sum of money and then continue to pay for the injured person’s treatment and wage loss? They can, but it is very bad idea. First, the injured person frequently does not know the extent of their injuries, and therefore provision is not made to pay them for the full extent of the injury, which is sometimes only determined later, after the early settlement.
Second, the carrier may not pay after the deal has been made and choose to quibble about whether the post-settlement treatment is actually necessary, or whether the injured person can actually work or not. This issue is sometimes resolved on the injured person’s agreement to be examined by an insurance company doctor, who invariably states that no further treatment is necessary and that the injured person can return to work. And third, when a dispute like this arises, because the insurance’s company’s obligation has been capped by the settlement there is really no way to pay an attorney out of the settlement proceeds in order to fight to resolve the dispute in favor of the injured person.
What do we do if the at-fault insurance is not enough, or if there is no at-fault insurance coverage? In automobile cases, we look to the underinsured motorist coverage of the injured person. Again, this can stack just like PIP. First we look at the UIM coverage of the vehicle involved in the collision. And then we look to stack the UIM coverage of the injured occupant. Again, one of the keys here is that the insurance policy of the UIM coverage, or a statute, may require that the UIM carrier is given notice and an opportunity to buy an assignment of the injured person’s claim against the at-fault party before any settlement of the claim against the at-fault party; otherwise the UIM coverage is waived. The waiver might be defeated if the injured party’s failure to offer an assignment does not actually prejudice the UIM coverage, as when the at-fault party is uncollectible except for the proceeds of their insurance coverage. This is complicated stuff. That is why injury victims are well advised to have an early free, no-obligation consultation with an experienced personal injury attorney.
In another section, will talk about the specifics of PIP coverage.
Additional reading: auto insurance minimum coverage for Washington state and auto insurance minimum coverage for Oregon state. You can also read about Claim Adjusters and how they work and review Insurance Companies Claims Processing, and Claims Adjusters Overview, and hiring a personal injury attorney.
Perhaps you have choices that you might not have otherwise considered. Feel free to call for an appointment or a phone conference at no charge.