Personal Injury Protection

Just wanted to go over an insurance coverage that I think is worthless. In several of the 50 states of the United states there is a compulsory insurance called "personal injury protection" or "no fault." This coverage is, for those of you who don't live in a "no fault" state, this coverage is comparable to your own medical payments. The US prides itself in its tort laws. Many people think that the reason that insurance is costly is due to those tort laws. Legislators, in order to combat those tort laws decided that they needed to have insurance pay for the injuries of the company's own insured, thus deferring the cost of lawsuits to the companies just paying for their own.

Here's an example of a regular tort law state:

Joe hits Shmoe's car and causes Shmoe bodily injury. Shmoe makes a claim against Joe's insurance. If Schmoe doesn't like how much he gets on the claim, he sues Joe and gets more money. If Joe is also injured, he calls his company and makes a claim on his own medical payments, if he has that coverage.

Here's an example of a "no fault" state:

Joe hits Shmoe's car and causes Shmoe bodily injury. In this case, both people have No fault insurance. Shmoe makes a claim on his own insurance through personal injury protection. If that's not enough, he can sue Joe. If Joe is injured he makes a claim on his own insurance.

So you're wondering what is the difference. Well the only difference is that in no fault states, both parties can claim for work loss and for other economic losses that may have occurred on their own policies. Whereas tort states limit the payments to be for medical expenses. So, we're back to where I started - which is that it costs the insurance companies about the same, or even more in a no fault state because of the higher potential of both parties making larger claims. Perhaps that's part of the reason auto insurance in Florida, Pennsylvania, and Michigan are much higher than anywhere else in the United States. Legislators can be morons sometimes.