In an effort to combat rising automobile insurance rates, in 1974 the New York Legislature passed sweeping changes to the Insurance Law designed to provide a basic level of economic coverage for New York drivers hurt in motor vehicle accidents while at the same time significantly curtailing the number of motor vehicle cases litigated in the State courts.

Known as the No-Fault law, the statutes create a dual system for compensating persons involved in motor vehicle accidents. Regardless of fault, every automobile insurance policy in New York provides for the payment of first-party benefits of up to $50,000 for “basic economic loss” for covered persons injured in car accidents, but bars the filing of lawsuits against the at-fault party to recover non-economic loss (i.e. pain and suffering) except for those who have suffered “serious injury” as defined by the statute.

II. Who is covered under the No-Fault Law?

1. “Covered Persons”

A. includes any pedestrian injured through the use of operation of a motor vehicle, any owner, occupant or operator of a motor vehicle, any other person entitled to first party benefits, including the named insured under the insurance policy and members of the named insured’s household.

B. Bicyclists are covered persons.

C. With an express provision in the policy, insurance companies are permitted to exclude coverage for:

1. Persons who intentionally injure themselves;
2. Persons operating under the influence of alcohol or drugs;
3. Persons who are committing a felony;
4. Persons who are knowingly passengers in a stolen car;
5. Persons who are injured while fleeing the police or while racing.

D. Motorcyclists and their passengers are excluded from no-fault coverage, as are non-pedestrians injured by motorcycles.

E. Pedestrian victims of motorcycles are covered by no-fault.

III. First Party Benefits:

1. Basic economic loss (also called PIP or Personal Injury Protection):

A. Minimum limit: $50,000;

B. It is available regardless of fault;

C. Covers:

1. Accident related medical expenses;
2. Lost wages up to $2,000;
3. Other reasonable and necessary expenses.

2. APIP:

A. Although $50,000 is mandatory on all motor vehicle policies in New York, car owners can buy additional protection above the mandatory $50,000.

B. A carrier who pays APIP benefits is subrogated under certain situations to the recovery the insured obtains from the at-fault party.

3. Procedure to obtain first party benefits:

A. An injured party must give the carrier notice of the accident within 30 days by filling out a no-fault application.

1. Obtain the standard form that can be obtained by calling, e-mailing or writing the carrier to report the accident.
2. Failure to timely file this form will permit the insurance carrier to disclaim coverage for first party benefits.

B. Medical Bills:

1. Insured must give his/her health care providers the insurance information for the no-fault carrier, which normally includes:

a. The name of the company;

b. The claim number; and,

c. The name of the adjuster responsible for the claim.

2. THE MEDICAL PROVIDER MUST BILL THE NO-FAULT CARRIER WITHIN 45 DAYS OF THE DATE OF SERVICE AND FAILURE TO DO SO WILL RESULT IN THE CARRIER BEING ALLOWED TO DISCLAIM COVERAGE.

3. Once the no-fault carrier has been timely billed, the carrier must pay the bill within 30 days or must provide a written disclaimer stating the reasons why the carrier refuses to cover the bill.

a. The automobile insurance carriers pay bills according to an agreed upon fee schedule that pays medical providers substantially less than their normal fee.

b. The injured party is not responsible for paying the difference between the medical provider’s normal fee and the no-fault fee schedule.

4. Upon receiving a written denial, the injured party has the right to dispute the decision.

a. Can file a lawsuit or arbitration.

5. There is no time limit for how long the carrier is obligated to pay accident related medical expenses.

a. However, within one year after the accident the need for future accident-related treatment must be “ascertainable.”

b. If not, such expenses can still be covered but the injured party bears the burden of showing that the expenses were ascertainable and necessitated by the accident.

6. APIP is triggered, if it exists, after the $50,000 in mandatory PIP is exhausted.

a. If there is no PIP, the bills go to the next level of coverage, which is whatever the person’s primary coverage is. It could be private health insurance, Medicare, Medicaid, or self pay if the person has no coverage.

C. Lost Wages.

1. Limit is up to $2,000 a month for not more than three years after a motor vehicle accident.

a. The actual amount is calculated as 80% of the injured party’s average weekly wage. If that number is more than $2,000 for one month, the injured party will be paid $2,000.

b. New York State Disability benefits and Social Security Disability benefits are an offset to what the No-Fault carrier is required to pay for accident-related lost wages.

c. The carrier will require an injured party to file for both New York State Disability and Social Security disability even where it appears obvious that the injury party will not qualify for the benefit.

1. The failure to apply can delay, reduce or eliminate the no-fault carrier’s obligation to pay lost wages.

D. Other reasonable and necessary expenses.

1. Include household help, baby-sitting services and the like.

2. Limited to $25.00 per day and for only one year.

E. Death benefit.

1. In the event of a motor vehicle related death, the no-fault carrier will pay a $2,000 benefit for funeral expenses.

F. Dealing with No-Fault Disputes.

1. The dispute begins with the carrier providing a written denial of claim form stating the reasons why the claim is being denied.

2. Aggrieved parties, who can include the injured person or their medical providers operating under an assignment of rights, have two options:

a. Binding arbitration or

b. Filing a breach of contract suit.

3. Arbitration process:

a. Initiated by the aggrieved party completing and filing of a no-fault arbitration request form along with a $40.00 filing fee to the American Arbitration Association.

b. An injured party who prevails in a no-fault arbitration is entitled to the repayment of the $40.00 arbitration filing fee and to a reasonable attorneys’ fee if represented by counsel.

G. Workers Compensation Coverage.

1. A person injured in a motor vehicle accident while acting in the scope of his or her employment has the option of filing a workers compensation claim instead of filing for no-fault benefits.

a. The carrier cannot assert a lien on the first $50,000 in benefits paid in such circumstances, because they are considered in lieu of ‘first party benefits’ under No-Fault.

b. Workers compensation provides better benefits for a longer period.

H. Property Damage:

1. When you notify your insurance carrier of an auto accident, report the damage to your car;

2. The insurance carrier will and adjuster to the property damage claim;

a. often, the PD claim will have a different claim number.

3. Let your carrier know where the car was towed or where it is so that they can send an adjuster to evaluate the damage.

4. Always obtain photographs of the damage to your vehicle and, if possible, of all of the other vehicles in the accident.

5. Whatever the damage to your vehicle, the amount you will receive in compensation from your insurance company will be reduced by your deductible and limited by the applicable limits.

a. If a person has a nice car, the limits should reflect that.

b. If the accident was not the insured’s fault, often the insured can get the deductible back from the at-fault driver.

IV. Bodily Injury Coverage:

A. Bodily Injury coverage provides indemnification and a defense to insured’s who face claims in an MVA where the other party asserts a “serious injury” and that the insured was the at-fault party.

1. Allow for recovery of economic loss “in excess of basic economic loss” and for “non-economic loss”, which is pain and suffering damages.

a. in excess of basic economic loss means wages in exceeding $2000 per month and any economic loss in excess of $50,000.

2. The minimum limits in NY are $25,000/50,000.

a. Absurdly low-nobody should have minimum limits:

-cannot protect personal assets and personal property.

-examples on inadequate coverage.

b. This means there is $50,000 available for each accident and no one person can get more than $25,000.

3. Single Limit Policies:

a. The stated limit applies to every claim except PIP with no individual per person limits.

B. Bodily injury limits apply when there is a claim that the insured was at fault in causing the MVA.

C. Two pre-conditions to a BI lawsuit:

1. Evidence that the insured was negligent;

2. Evidence that the injured party meets the “serious injury” tort threshold as defined in the statute.

D. What is a “serious injury”?

1. Insurance Law 5102(d) defines a ‘serious injury” as one that results in:

a. death;

b. dismemberment;

c. significant disfigurement;

d. a fracture;

e. loss of a fetus;

f. permanent loss of use of a body organ, member, function or system;

g. permanent consequential limitation of use of a body organ or member;

h. significant limitation of use of a body function or system; or

i. a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person’s usual and customary daily activities for not less than ninety days during the one hundred and eighty days immediately following the occurrence of the injury or impairment.

2. “Serious Injury” is a threshold, not a measure of recoverable damages. A. The following hypothetical is useful to illustrate this point:

Two passengers in the same car involved in a motor vehicle accident with another vehicle that is clearly liable for the accident. Both sustain soft tissue injuries that result in substantial subjective pain, but that lack any objective findings of the injury. Both are prevented fromperforming substantially all of their activities of daily living for 80 days after the accident, but then return to all activities, albeit with pain. The physicians believe that each is living day to day with pain due to soft tissue injury. In addition to the soft tissue injury, one of the two sustains a simple accident-related fracture of the pinky on his non-dominant hand. The passenger with the pinky fracture can sue the at fault driver to recover for his non-economic loss for the fracture and for all of his accident-related injuries because his pinky fracture meets the serious injury threshold. The other passenger cannot bring a lawsuit against the at fault driver, but is limited to first party benefits for basic economic loss, because none of his injuries meet the threshold.

3. Thompson v. Abbasi, 15 AD3d 95 (1st Dept. 2005), the Appellate Division, First Department, stated the following about the “serious injury threshold”:

In the context of this appeal, we engage in the perennial debate over the issue of whether a plaintiff’s evidence of personal injury meets the statutory threshold set by Insurance Law Section 5102(d), ‘an elusive standard that all too frequently escapes facile and final resolution.’

Consequently, we respectfully and simply urge that the ‘serious injury’ threshold be the subject of High Court interpretation or statutory reform aimed at drawing a brighter line between those cases where plaintiff’s injuries are truly and verifiably ‘serious’ within the meaning and intent of section 5102(d) and those which are neither.

One need only examine the scores of repetitive judicial and legal debates on this issue to conclude reasonably and quickly that the status quo is a diversion of precious court resources which is correctable in the interests of justice, fairness and efficiency.

V. Med-Pay Coverage:

A. “Med-pay” coverage, which will pay for medical expenses for one or more people involved in a motor vehicle accident regardless of fault.

1. For personal policies, the limits are ordinarily $1,000, although a person or entity can buy more.

2. Commercial policies usually have $10,000.

B. This coverage is really a “lawsuit avoidance” coverage because it allows adjusters to cover medical expenses for injured people up to the limit of med-pay coverage without getting into issues of liability and serious injury.

C. Any claim must be made within one year of the accident and it can be used for any person injured in an MVA, including the insured.

1. Can be used to satisfy liens and rights of subrogation.

VI. Workers Compensation:

A. A person involved in a motor vehicle accident while in the scope of his or her employment can resort to the workers compensation system for first party benefits and, in the event of a serious injury, can also bring an action against the at-fault driver.

B. Workers Compensation Law Section 29 authorizes an employee injured of killed on the job to both collect Workers Compensation benefits and pursue an action against the wrongdoer, but with several important strings attached:

1. The Workers Compensation carrier has a lien against proceeds recovered from the injured tortfeasor;

2. The employee must notify within 30 days the Board, his employer and the carrier of his/her pursuit of a third-party action;

3. Any third-party action cannot be settled without the written permission of the workers compensation carrier;

4. If the at-fault party is a co-employee, the injured party is limited to the workers compensation remedy and cannot bring an action against the co-employee or the employer.

a. Example: Two employees of a dental office are transporting some office equipment from one dental office to another. The vehicle is owned by the dental practice. The driver runs a stop sign and is broad-sided by a truck, killing the passenger. The passenger’s family is limited to workers compensation and cannot file an action against the owner of the car (her employer) or the driver (co-employee in the scope of her employment).

VII. Supplemental Uninsured/Underinsured Motorist Coverage:

A. “SUM” coverage, provides coverage to an insured and his or her family members injured in an auto accident where:

1. the at-fault party flees the scene and cannot be located,

2. has no insurance (uninsured claim), or

3. has less liability coverage that the insured’s SUM limits.

B. Whether this coverage is available for a particular accident is determined by:

1) whose fault the accident was;

2) the amount of your SUM coverage; and

3) the amount of liability coverage the at-fault driver(s) has.

a. Example, if someone ran a red light and collided with your car causing you a significant injury, that driver had the minimum coverage allowed under the law (currently $25,000) and you had $100,000 of SUM coverage in your policy, you would be entitled to recover up to $75,000 from your insurance company.

C. In order to recover SUM benefits, the injured party must give his/her carrier written notice of the possibility of a SUM claim within fairly strict time limits, which can be as short as 30 days. The failure to do so can result in the loss of this coverage.

D. In uninsured motorists cases, the insured must provide the carrier with an affidavit within 30 days detailing what was done to locate coverage or, in the event of a hit and run, find the driver.

E. SUM limits cannot exceed your BI liability limits.

F. SUM is not liability coverage, so liens and rights of subrogation do not apply to it.

G. It is cheap and everybody should have it to their full liability limits, including umbrella coverage.

I. For businesses, if the named insured is an entity, there will be no named insured coverage. Firefighter example.

VIII. Liens and Rights of Subrogation:

1. The No-Fault law provides where an insurer is liable for first-party benefits to a “covered person” that arise from the negligence of a “non-covered person”, the carrier has a lien for its first party benefits.

2. No-Fault carriers that pay Additional Personal Injury Protection benefits (APIP) have a right of subrogation for payments in excess of first party benefits.

A. Does not apply to SUM coverage.

IX. How do I advise people buying insurance?

1. Consider purchasing APIP:

A. It is not expensive;

B. Especially important if the person has no or inadequate health insurance.

2. BI liability limits must:

A. Be above the legal minimum

1. $25,000/$50,000 provides no protection to anybody.

B. Take into account personal assets and property of the insured

C. For high net worth individuals, consider a personal and/or corporate umbrella.

1. Make sure underlying limits meet the requirements of the policy-no gaps.

D. Always have SUM coverage in the amount of the BI liability limits

1. This should include attaching to any umbrella.

2. Why should we be spending our money to indemnify the world with high BI limits while risking that the people with whom we might be involved in an MVA will have the minimum statutory limits?