We share your concern about the cost of car insurance. Any changes in car insurance
rates are subject to review by actuaries on our staff. Sometimes changes in the law that are intended to benefit consumers can also affect the cost of insurance. The 2015 legislature passed Senate Bill 411 which made changes in two required coverages, Personal Injury Protection (PIP) and Uninsured Motorist (UM). Let’s take Personal Injury Protection first.
PIP pays for medical expenses, lost income and other benefits for you and your passengers who get hurt in a car accident. It doesn’t matter who is at fault. Before this bill became law, medical expenses had to be incurred within one year. Now the time period is two years. For example, Jane was hurt in a car accident and had to have physical therapy for fourteen months. Under the prior law, her car insurance company would have paid
for twelve months and Jane would have had to use other resources for the last two. Now all fourteen months may be paid. There is also a dollar limit but that was not changed, so the amount available to be paid could be used up before the time limit runs out.
Uninsured Motorist coverage is a little more confusing for most people. If you’re hurt in a car accident and someone else is responsible but doesn’t have car insurance, then your insurance company steps in and pays what the responsible party’s insurance company would have paid. UM also applies if the responsible party doesn’t have enough insurance to cover all of your damages. When you buy car insurance, you choose the limits for this coverage. Let’s look at a couple of examples.
1. Jane selected the minimum limits for UM coverage when she bought her policy. The maximum payment is $25,000 for each person injured. She was involved in an accident with Joe and it was determined that he was 100% responsible. He does not have car insurance. Her accident was very serious and she had hospital bills, doctor bills, lost income, and months of discomfort. Her claim for all damages could be $60,000. Since there is no insurance available from Joe, Jane’s company would pay $25,000.
2. Now let’s change the facts. Joe does have insurance, but he also chose minimum limits of $25,000 per person for his liability coverage. His company would pay the $25,000. Under the prior law, Jane’s UM limits would not apply because her limits were the same as Joe’s. Now Jane’s limits will apply and she may be paid up to an additional $25,000 by her insurance company.
These changes may result in higher claim payments and insurance companies may adjust
their rates to cover the increased claim payments. The affect of these changes should be relatively modest, so if you are seeing substantial increases, we suggest asking for a detailed explanation. You may also want to consider shopping for the best combination of coverage, rates and service.
If you have questions or are having difficulties with your insurance company or agent, our advocates are available at 1-888-877-4894.