Deciding on an auto insurance plan, particularly after the rush of purchasing a new car, can be a deflating experience. There are many confusing choices to sort through the most significant of which is the option to select either full-tort or limited-tort coverage. While it’s certainly tempting to purchase the least costly option, savings at the front end can end up costing substantially more if you’re ever in an accident and hoping to recover more than your out-of-pocket medical costs.
The Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) is the statute that defines both full-tort and limited-tort coverage. Under the MVFRL, limited-tort coverage limits the rights of an insured to recover damages in a lawsuit. Unless a limited tort claimant suffers a “serious injury”, his or her recovery is quite limited and certainly not fully compensable for all of the consequences of an accident. “Serious injury” is as ambiguous as it sounds, and defined by the act as “death, serious impairment of bodily function, or permanent serious disfigurement.” 75 Pa.C.S. § 1702. While death and permanent serious disfigurement are relatively self-explanatory, whether the insured has suffered a “serious impairment of bodily function” is more often than not a question for the jury which is asked to evaluate the injuries suffered in terms of “the extent of the impairment, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors.” Washington v. Baxter, 719 A.2d 733, 740 (Pa. 1988), Cadena v. Latch, 78 A.3d 636, 640 (Pa. Super. 2013). Unless the jury decides that the injuries sustained, using these criteria, are “a serious injury”, a limited tort claimant can only recover his or her unreimbursed out of pocket costs (referred to as “economic loss” in the statute). He or she will receive no compensation for pain and suffering, loss of life’s pleasures, or the “non-economic loss” which so often has the most significant impact on an accident victim.
In certain limited circumstances, an insured with limited-tort coverage can recover for non-economic damages without first proving he or she suffered a serious impairment, but only if:
1. The other driver is convicted of driving under the influence;
2. The other driver is driving a vehicle registered outside of the Commonwealth;
3. The other driver intended to injure himself or another person;
4. The other driver failed to maintain automobile insurance him or herself;
5. The plaintiff was injured while an occupant of a vehicle which meets certain criteria such as for example, one owned by a corporation or another business entity. 75 Pa. C.S. § 1705.
Comparatively, an insured selecting full-tort coverage retains an “unrestricted” right to sue for all medical and out-of-pocket expenses, pain and suffering, and other non-economic damages without first crossing the serious impairment threshold. Id. In other words, by selecting the limited-tort option the insured limits the damages he or she can claim while a full-tort insured, for a higher premium at the outset, retains the right to receive full compensation for all injuries suffered in an accident. As an example, consider two claimants with identical injuries resulting from a car accident. One has limited-tort coverage while the other has full-tort coverage. The claimant with limited-tort coverage is restricted in the damages he or she can recover (unless the injury is a serious injury) while the full tort claimant has no such restriction. The difference in the compensation awarded could easily exceed any premium savings realized from the limited tort election.
The purchasing decision is, of course, a personal one driven by many factors including price. The ultimate take away is that when making this decision, the consumer should be mindful of the long term consequences of his or her choice and recognize that, in the event he or she is injured in an accident, any savings in the premium could come at substantial cost.