NEW YORK'S NO-FAULT LAW AND PIP INSURANCE BENEFITS

By Alan Plafker, PRESIDENT & CEO
Member Brokerage Service LLC
A Melrose Credit Union Service Organization

What is the New York no-fault law?

The New York Comprehensive Automobile Insurance Reparations Act (also known as the no-fault law) took effect on Feb. 1, 1974. Legislators wanted to ensure that persons injured in an auto accident would receive prompt and sufficient medical treatment and income replacement without the burden of litigation.

Prior to no-fault, only 14 percent of the liability premiums in the state actually reimbursed accident victims for their economic loss, and the average time to collect was 16 months.

The no-fault law provides a generous package of Personal Injury Protection benefits and finances it with the removal of excessive pain and suffering damages, wasted litigation expenses and redundant benefits payable under other social programs (for example, workers’ compensation and Social Security). As a result, covered persons injured in an auto accident give up some of their rights to sue for noneconomic (e.g., pain and suffering) damages in exchange for guaranteed benefits that are paid promptly regardless of fault.

However, if the injury is severe enough to reach a “verbal threshold,” which is a list of nine injury types, an injured person may then pursue noneconomic damages.

What are Personal Injury Protection benefits?

PIP benefits emerge from the legislators’ promise of Basic Economic Loss for eligible injured persons which consist of four types of compensation. The first three shown below are subject to a combined limit of $50,000, while the limit of the fourth is in addition to the $50,000 limit.

1. All eligible medical expenses incurred without time limitation.
   
   
   
2. Income loss payments up to $2,000 per month for no more than three years.
   
   
   
3. Other expenses incurred (e.g., housekeeping or transportation) up to $25 per day for not more than one year.
   
   
   
4. Death benefit of $2,000 payable to the covered person’s estate.

Keep in mind that, while eligible injured persons are guaranteed this Basic Economic Loss, it may not all be payable as PIP benefits. There could be other sources such as workers’ compensation, state disability or Social Security benefits which may contribute with your auto insurance to help compensate you for Basic Economic Loss.

What are Optional Basic Economic Loss benefits?

OBEL adds an additional $25,000 to the $50,000 Basic Economic Loss for a total of $75,000, but with a twist. Instead of this amount being paid to the party who first demands it (e.g., the hospital) you can decide who gets access to it first.

You may want the $25,000 to go toward the payment of income loss or you may want to use it for psychiatric, physical or occupational therapy and rehabilitation.

What are Additional PIP benefits?

Additional PIP coverage broadens the protection in two distinct ways:

• First, it expands the definition of eligible injured person to include passengers who are not residents of New York state when injured outside the state.
  
  
  
• Second, it adds another layer of limits (each of the four categories of Basic Economic Loss) to be paid as Extended Economic Loss. The limit combinations that are available for you to choose from may vary by insurance company since each company is permitted to file its own group of optional limits. While most insurance companies offer additional PIP coverage, they are not compelled to offer it by law.

What are the NYC TLC PIP Requirements?

TLC requires Additional PIP coverage of $150,000 with no deductible in addition to the basic $50,000 required by NYS law. This is a total limit of $200,000 for all TLC licensed vehicles. Some Taxi & Black Car drivers are also subject to coverage under Workers Compensation for the driver but PIP will cover passengers or injured pedestrians.

What other PIP options are typically available?

• If your employer has a Qualified Wage Continuation Plan (meeting specific requirements detailed in the no-fault law) you could be eligible for a premium discount.
  
  
  
• Insurance companies must offer the choice of a family deductible in the amount of $200; they also may offer the choice of a $100 family deductible. You will lower your premium by selecting these deductibles.
  
  
  
• You may name an individual (e.g., a nanny) to be eligible for coverage in the same manner as you would for yourself for a small additional premium.

For what types of vehicles are the recovery of noneconomic damages limited and PIP coverage required?

Every motor vehicle insurance policy (whether personal or commercial) must provide these PIP benefits. PIP coverage is required for motorcycles and all-terrain vehicles, but it applies only to injured pedestrians.

The right to noneconomic damages is restricted for all persons eligible for PIP benefits except when the accident involves an ATV.

The no-fault law does not apply to mobile equipment, farm equipment, snowmobiles, street cars, municipally owned vehicles and other vehicles not requiring registration.

This information is provided as a general summary of the no-fault law and PIP coverage. Please consult the actual law and your insurance policy for specific details that may be applicable to your situation.

Your Professional Insurance Agent.
We want you to know about the insurance you’re buying.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082.

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