October 25, 2013 - A few months into my personal injury practice, I found myself constantly wading through insurance policies; a veritable labyrinth of legal terms, definitions, and acronyms. Drudging on through these lifeless pages of text proved to be about as exhilarating as reading a dictionary in a foreign language. However, within time I began to understand the nuanced variations between UIM coverage (under-insured motorist) and UM coverage (uninsured motorist), the process of subrogation, and the stark realities of the inaptly named IME ("independent" medical evaluation). In practice, I also began to notice that my car accident clients with Personal Injury Protection (PIP) coverage typically were far better off in both the treatment and settlement phases of their cases. In fact, after working through a few cases with PIP coverage, I quickly got on the phone with my own insurance agent and added a PIP policy to my auto coverage. So, what made me a PIP believer?
PIP coverage is a benefit you can add to your auto policy that helps pay for medical bills, wage loss, loss of services (e.g. household maintenance), and funeral expenses arising from a car accident. In my experience, PIP policies are primarily used to help pay for the client's medical bills. Another interesting trait of PIP coverage is that it covers the insured regardless if the insured was at fault for the accident. As for medical treatment, PIP coverage applies to medical bills incurred within three years of the date of the collision; however, the medical bills must be reasonable in amount, medically necessary, and causally related to the auto accident. Typically, PIP coverage extends to:
(1) the person(s) named on the policy;
(2) minor family members in the household;
(3) passengers in an insured vehicle; and
(4) pedestrians that are struck by an insured vehicle.
Most PIP policies I have come across have limits between $10,000 to $35,000. So, what are the real-life, practical applications that justify jumping on the PIP bandwagon?
First, Washington is a comparative fault state; meaning, insurance adjusters, judges or jurors who evaluate your case can delineate the fault into percentages. For example, someone can be deemed 20% at fault for an accident and the other person can be deemed 80% at fault. In this scenario, the predominantly at-fault party would only have to pay for 80% of the other party's medical bills. Since PIP coverage is "no-fault" insurance, the policy will help pay for your related medical bills, regardless of any breakdown of comparative fault.
Second, unbeknownst to most people (including myself when I started to practice law), when you are involved in a car accident, you are personally responsible/liable for your own treatment related to the accident. In other words, if a client is treating for injuries caused by the at-fault party, the client is financially on the hook for any doctors' visits, chiropractic adjustments or sessions of physical therapy. Failure of the client to timely pay their bills or enter into an amenable payment arrangement often leads to the client being sent to collections (thus damaging their credit). Strangely, the way our system is designed, the at-fault party reimburses the injured party for injuries sustained; which, ideally is at the end of treatment. However, the treatment duration for car accident injuries can subsist for weeks, months or even years! Sure, the at-fault insurance company might try to get the client to settle early, but who wants to sign a settlement agreement before they are aware of the extent of their injuries? This is why PIP coverage is so helpful. PIP coverage helps the client stay on top of their bills so that they are able to pursue the recommended treatment, maintain financial stability, and, ultimately, maximize the value of any settlement with the at-fault insurance carrier.
Lastly, a client is typically better off in the subrogation phase of their case when they have a PIP policy and an attorney. What is subrogation you may ask? Subrogation is the process where, after you have settled a case, your own insurance carrier(s) seeks reimbursement out of your settlement for any benefits they paid related to your car accident. Subrogation usually comes as a surprise to most people, because they believe that the insurance premiums they pay would keep their own insurance company from trying to recoup money from them. Unfortunately, in virtually every insurance contract, there is a subrogation clause that permits your insurance company to recoup all, or at least some, of the benefits paid when you receive a settlement. If you have an attorney, however, there are several favorable cases in Washington that require the subrogating insurance company to bear their fair share of their insured's attorneys' fees and costs when seeking reimbursement. This typically equates to an appreciable reduction in the subrogation amount. For example, if a client had their PIP policy pay $10,000 in medical bills, an attorney can typically negotiate the PIP subrogation down to $6,600 (i.e. an additional $3,400 in the client's pocket). Without an attorney, the client may be forced to pay the full $10,000 back to their insurance carrier.
In the end, I have found that a PIP policy cultivates a smoother environment for the client when they are treating their injuries and settling their auto accident claim. Now, that is not to say I have not had my difficulties with PIP policies (e.g. client's insurance company arguing about what treatment is and is not related to the accident), but my overall experiences have been quite positive. In any event, it is certainly worth a call to your insurance agent to see what a PIP policy would cost to add to your auto policy, before you become the victim of hindsight.
Erik R. Olsen is a Personal Injury and Criminal Defense attorney with Hanis Irvine Prothero, PLLC. For a free consultation regarding personal injury, criminal, or traffic infraction matters, please call 253-520-5000.