In states with a "no-fault" auto insurance system - also called "personal injury protection" or "PIP" - the insurance company ("insurer") automatically pays for certain losses or damages suffered by the victim of a car accident. The payments are made regardless of who was at fault for the accident, and cover things like:
- Medical expenses
- Lost income or wages, and
- Burial and funeral expenses
How do you claim no-fault benefits? The process for filing claims is usually stated in the no-fault law and in the insurance policy itself. The claims process has several steps, and involves both the insurer and the victim, or the person who is claiming benefits ("insured" or "claimant"), such as the victim's survivors.
Filing a Claim
In the first 30 days following an accident, the injured person should get and file a claim notice with the no-fault insurer. Filing this notice is required. Whenever possible, this should be done on the form designed by the insurance commissioner of the state where accident happened or on the form provided by the no-fault insurer.
Most no-fault laws require the claim notice to state that:
- An accident happened
- The date of the accident and,
- Reasonable proof of the damages being claimed
The claim notice requirements vary from state to state, so its important that you examine your state's no-fault law before filing the notice to make sure that no required information is missing.
A notice with minor omissions or technical errors will not stop a court from forcing an insurer to pay benefits that are otherwise due.
However, there usually is a statute of limitations for filing claims, that is, a specified period of time in which a claim must be filed. Generally, the failure to file a claim within that time period means the loss of PIP benefits.
After the initial claim notice has been filed with the insurer, as the injured party, you should file claims for specific benefits based on your losses. These claims will be for benefits such as medical expenses or wage losses, and you may be required to provide information that was not included in the initial claim notice. The insurer or the state's insurance commissioner usually provide standardized forms for these types of claims.
The Insurer's Reaction
After the insurer receives the initial notice of a claim for PIP benefits, it will create a claim file and send the claimant the forms needed for further processing of the claim, as well as a claim number, which gives the claimant the necessary information to give to providers, like doctors and hospitals.
Also, at this stage of the claims process, many no fault laws:
- Allow the insurer to demand that the insured submit to one or more medical examinations to determine the claimant's medical condition
- Require medical service providers and employers to submit sworn or attested statements about services performed or details of the claimant's employment
- Require the claimant to take an examination under oath ("EUO"), where the insured answers questions about the accident and the damages claimed
If the insurer is able to determine immediately that there is or isn't coverage, it should make arrangements for the payment of benefits or notify the claimant in writing that the claim has been denied.
What if There is More Than One Insurer?
Often, a car accident could trigger several no-fault insurance policies, such as situations where both a passenger and driver have no-fault insurance. The injured party or parties should give notice to all of the insurers. In many states, it is possible to recover PIP benefits from more than one policy.
As for the insurance companies, they will likely determine among themselves - sometimes through lawsuits - which of them is the primary insurer, that is, the first one that has to pay the claimant, and which, if any, is an excess insurer, that is, responsible for paying the claimant after the primary insurer has paid all the damages that it is required to pay.
Most no-fault laws provide that payment of benefits must be made by the insurer within 30 days from the date the expense came about and reasonable proof was given to the insurance company. Some laws let insurers accumulate the expenses for a period of time, or until a specific sum has been reached; that way the insurer doesn't have to issue multiple checks or payments.
An insurer can't avoid its obligation to make prompt payments by enforcing an insurance policy provision requiring a no-fault policy holder to submit to an examination under oath (EUO) or a medical examination.
Payments or benefits are "overdue" when they have not been paid even though the insurer has been given reasonable proof of the loss. In most states, the insurer has to pay interest on overdue payments, and in some states, a claimant can recover attorneys' fees if legal action is needed to obtain benefit payments.
In most states, when an insurer pays benefits to its own insured, the insurer becomes "subrogated" to the insured, that is, the insurer, and only the insurer, can enforce the insured's right to seek benefits from another insurance company or the person who caused the insured's injury or death.
For example,if a driver hits and injures the insured as he or she was walking on a sidewalk, and the insured receives PIP benefits from his or her insurer, only the insurer will be able to sue the driver or the driver's insurance company to recover the amounts paid to the insured.
In addition, most states allow insurers to "set-off," or reduce, the amount of no-fault benefits by the amount received by the injured insured from other sources. The most common set-off is for workers' compensation benefits paid to the victim, and some states allow set-offs for Social Security disability payments and Social Security retirement benefits
Lump-sum settlements between the insurer and the insured, that is, paying the insured a certain sum all at once to cover all claims, both past and future, is allowed in some states. State laws vary greatly in this area, so you need to read your state's no-fault law carefully to see what claims can be settled.
Finally, no-fault benefits normally are paid to the injured insured, but some states allow insurers to make payments directly to service providers, like doctors and hospitals. In the case of deceased insureds, payments usually are made to the insured's survivors or dependents.
Having Trouble with a Claim?
There are various ways for an insured to recover PIP benefits when an insurer is unwilling to pay them voluntarily. And, in addition to the PIP benefits, some state laws allow an insured to recover other sums of money when benefits are not paid.
Arbitration, which is an informal method of resolving disputes, is one way to resolve a dispute over the payment of PIP benefits. A third party, called the "arbitrator," decides whether the insured should be paid on the claim based on the information provided by both parties. The arbitrator's decision is usually "binding," that is, the parties have to live with the arbitrators decision.
The no-fault law or the insurance policy itself will state if arbitration is required or if the parties can choose to go to arbitration instead of filing a lawsuit.
A lawsuit is often the final step in a dispute for no-fault insurance benefits. A lawsuit or legal action can be filed to enforce the insurance contract ("policy"), to get damages for breaching or breaking the terms of the insurance policy. Most of the states' no-fault laws specifically allow a claimant to file a lawsuit if benefits are denied.
If a claimant wins a lawsuit for the payment of benefits, most state no-fault laws allow the court to provide for the payment of interest and attorney's fees. Some states allow punitive damages - the award of money that is meant to "punish" the insurer for its wrongful conduct - while other states do not. You should check the no-fault laws in your area to see if punitive damages are available.
Generally, attorney's fees may only be awarded if the lawsuit involves a denial of coverage, rather than a dispute over the value of a claim or the amount that should be paid on the claim. Also, some states allow attorneys and their clients to agree that attorneys fees will be determined by the court based on the law that sets attorneys fees for "prevailing parties," that is, the winning parties in lawsuits.
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