Washington has, for more than a decade, required those who own a car to insure their car. This insurance paid your medical bills if you were injured in an accident. In addition this mandatory insurance paid money you were obligated to pay by operation of law, e.g. to cover pain and suffering for those involved in the accident when the accident is your fault. The insurance for your medical bills is known as Personal Injury Protection, or PIP. The insurance to cover the pain and suffering inflicted on others is known as liability insurance. (Other insurance is also available for automobiles such as collision insurance, uninsured and underinsured motorists insurance.)
In the past Washington insurers were required to offer a number of options to the standard automobile insurance policy. These options included, for liability insurance, choices concerning the amount of insurance coverage you wanted. The minimum standard policy in Washington has been a $15,000.00 policy. Available options included $30,000.00, $50,000.00, $100,000.00 or more of liability coverage, in exchange for higher premiums. In addition drivers were asked to choose between having the “lawsuit threshold” or “no threshold.” Those who chose the “lawsuit threshold” gave up their right to sue for minor injuries, in exchange for a lower premium. Those who chose no threshold were permitted to sue for all injuries, not just serious injuries. The Automobile Insurance Cost Reduction Act of 1998 makes a number of important changes to this scheme.
Washington enacted the Automobile Insurance Cost Reduction Act of 1998 (the Act) on May 19,1998. This legislation made important changes to the choices available in PIP and liability insurance. These choices are available to consumers as they renew, or purchase for the first time, automobile insurance.
There are now two types of policies, the “standard policy” which closely resembles the standard policy prior to the Act, and a new form of automobile insurance called a “basic policy.” Thus the most important choice an owner must make is between a “basic policy” or “a standard policy.”
A. CHANGES TO PIP INSURANCE CHOICES
The “basic policy” was created by the legislature with the passage of the Act. The basic policy is different than the “standard policy” which had been required. The standard policy is still available, with some modifications, in the Act; and insurance is still required. However, an Owner now has the option of a lower-cost “basic policy.” An owner who chooses a basic policy pays significantly less premiums. Unfortunately, he gets significantly less coverage. Drivers who choose a basic policy have different basic PIP coverage, and different optional PIP coverages, than do those who choose a standard policy.
Although these standard policies did, and do, contain numerous options, all provided, at a minimum, $250,000.00 of coverage for your medical bills.(This is not true if you choose to have your health insurance as your primary coverage for automobile-related injuries.) If you now choose a basic policy this limit is reduced to $15,000.00 except for certain catastrophic injuries. In these catastrophic cases, the limit of coverage will become the old “standard” limit of $250,000.00.
Our firm does not recommend these basic policies because of this low limit of coverage, and because of the lack of liability insurance as discussed below. This is especially dangerous if you have assets and no health insurance.
The Act also changes some aspects of PIP under the “standard policy.” You now have the option of limits of $15,000.00, $50,000.00, $75,000.00 or $250,000.00 for all medical bills for any one person injured in one accident.
Perhaps the most controversial of the Act’s provisions have to do with the so-called “managed care” aspects of PIP under the new statute. Prior to the Act, you chose your doctor, and the doctor chose the treatment. As long as his treatment was “reasonable and necessary” the PIP insurer had to pay the doctor you chose for the treatment your doctor chose. Now the statute provides for rules by the Department of Insurance concerning what kind of treatment is reasonable and necessary for certain kinds of injuries. This means only so much of certain kinds of treatment will be paid for by the PIP insurer. Any other treatment, or excessive treatment, will not be covered. You, or perhaps your health insurance carrier, may be responsible for these bills in some cases.
B. CHANGES TO LIABILITY INSURANCE CHOICES
The basic policy was created by the legislature with the passage of the Act. An owner who chooses a basic policy pays significantly less premiums. Unfortunately, he gets significantly less coverage. The basic policy provides NO COVERAGE for liability for damages you are obligated to pay by operation of law, e.g. to cover pain and suffering for those involved in the accident when the accident is your fault. The basic policy does provide for $5,000.00 in coverage for property damage you may owe for an injury to the property of another when the accident is your fault. In addition, all those who chose a basic policy get the lawsuit threshold. That means all those who chose the basic policy give up their right to sue for injuries that are not serious.
There is an option available with respect to liability insurance when choosing a basic policy. This option, if chosen, will increase your premium. In exchange for this increase in premium, you get up to $10,000.00 in coverage for liability for damages you are obligated to pay by operation of law, e.g. to cover pain and suffering for those involved in the accident when the accident is your fault.
Our firm does not recommend these basic policies. If you choose a basic policy, with no options, you have no liability coverage for the pain and suffering you cause. This means if you get into an automobile accident, and the accident is your fault, you will have to pay any damages awarded to those hurt in the accident yourself, the basic policy does not obligate your insurer to pay these damages. In effect, a basic policy provides no insurance at all. The policy will pay to fix any cars you damage, so there is some insurance, but not for the pain and suffering caused. These pain and suffering awards are most often far in excess of the damage to the vehicles.
Premier Law Group, PLLC, and many other personal injury law firms in Renton, Seattle, Federal Way, and throughout the State of Washington, offer free consultations to those confused by their insurance choices. If you have questions, contact the personal injury lawyers at Premier Law Group for advice.