When discussing no-fault, MedPay or Personal Injury Protection claims, they seem straightforward to handle. These benefits are offered as first party coverages regardless of who is at fault for an accident. However, several factors can affect the outcome of a claim when dealing with no-fault accident claims both from a first and third party perspective.
Factor #1 - Identifying PIP or MedPay
First and foremost, you must identify if there is PIP coverage afforded on the claim. You can find this by reviewing the policy or the state’s individual requirements. Some states require mandatory PIP coverage.
Example: Joe lives in Kentucky and is rear-ended by another vehicle and sustains injuries requiring medical attention. Kentucky requires Joe to carry $10,000 in PIP coverage. Joe’s insurance will pay his medical bills until his limits are exhausted regardless of who is at fault for the accident.
Factor #2 - Who or What Does the Coverage Follow?
In some instances, PIP coverage follows the vehicle. Other times it follows the person. In other circumstances, it will even follow the household.
Example: Mike doesn’t own a car but lives with his brother, Roman, in Florida. Roman owns a car and carries insurance for his vehicle. One day, Mike is a passenger in Sam’s vehicle. Sam’s vehicle is hit by another driver who then flees the scene of the accident, and Sam does not have insurance on his vehicle. Mike sustains minor injuries and seeks treatment at the ER. In this situation, Roman’s PIP coverage would cover Mike’s bills.
Factor #3 - Does Workers’ Compensation Apply?
If an injured party is working at the time of the accident, this may affect their no-fault benefits.
Example: Sarah works as a sales representative for ABC Supplies in Florida. She is covered under ABC’s commercial auto policy. On her way to a customer, Sarah is involved in an auto accident and is injured requiring medical treatment. ABC’s policy has $10,000 in mandatory PIP coverage. Sarah may have her bills covered under ABC’s workers' compensation coverage. Any costs not paid by the workers’ compensation carrier, including lost wages, can be paid under the PIP coverage up to its limits.
Factor #4 - Is Underinsured/Uninsured Motorist Coverage a Factor?
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In some situations, where UM/UIM coverage is in place, the carrier may use no-fault payments as an offset for the UM/UIM settlement.
Example: Robert is involved in an auto accident in Florida but is not at fault for the accident. The tortfeasor’s policy has bodily injury limits of $10,000. Robert incurs $25,000 in medical bills. Robert’s carrier would handle his PIP claim and pay the first $10,000 in benefits. The tortfeasor’s policy would offer their limits of $10,000. In this case, Robert’s underinsured motorist coverage he elected would come into play. When negotiating the settlement of the underinsured motorist claim, Robert’s carrier can use PIP benefits paid as an offset towards the final settlement.
Factor #5 - Can the Adverse Party Subrogate for PIP or MedPay Benefits?
When evaluating a liability bodily injury claim, it is important to remember whether the adverse carrier can subrogate for no-fault benefits paid out. In many instances, the adverse carrier may not subrogate. However, there are exceptions.
Example: Laura is driving in Manhattan and is hit by a tractor trailer which runs a red light in an intersection. Laura files a no-fault claim with her carrier for injuries she sustained. Ordinarily, Laura’s carrier may not subrogate against the tortfeasor. However, there is an exception in New York. If the tortfeasor’s vehicle is in excess of 6,500 pounds, her carrier can seek subrogation against them.
Conclusion
There are many facets to no-fault claims, and it is important to examine and review individual states’ laws as they apply to each situation. Taking the factors outlined in this article into consideration will result in the proper handling of these types of claims.
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