February 7, 2017
By Douglas Wayne
No one likes to pay for automobile insurance; it’s one of the few purchases we all make that all of us hope to never use. As car insurance can be so expensive, it is very tempting to try to save a few dollars up front by choosing what is known as “limited tort” instead of “full tort” insurance. On the surface, this option looks attractive. It is tempting when insurance companies tell you that you can save up to a quick 15% on your yearly premium just by checking the “limited tort” box on the application or insurance renewal form and then signing it. You might think, “I’m a good driver, I haven’t had any accidents, why not save 15% on something I probably won’t use anyway?” But, as with many deals that look too good to be true, in the long run choosing limited tort over full tort insurance can cost you a whole lot more than 15% of your yearly car insurance premium.
Let’s pull back the curtain a bit. If you are injured in an auto accident, your damages fall into two general categories. One category is called economic damages. Economic damages refers to compensation for objectively verifiable monetary losses like lost wages, medical bills, damage to your automobile or other personal property, and similar out-of-pocket expenses. The other category of damages are called non-economic. Non-economic losses are not objectively verifiable; these can be damages such as pain and suffering, emotional shock or loss of enjoyment of life. While non-economic damages cannot be objectively measured, they can often be the largest element of a personal injury claim. Few of us would think that time spent in a hospital or going to medical and physical therapy appointments is enjoyable. We do not want to be fearful every time we are in a car, recalling the time a careless driver was texting, missed a stop sign, and rammed our vehicle. None of us want to miss out on participating in family events or doing the activities we love because of injuries sustained while another driver was being inattentive. These non-economic damages can be considerable, and insurance companies dislike paying them because they mean the insurance companies make less profit.
The limited tort option was created over insurance company concerns that there were too many lawsuits in Pennsylvania where the injured parties sought and received compensation for non-economic damages. In other words, limited tort insurance was created largely to protect insurance company profits. To avoid paying out too many premium dollars to alleviate pain and suffering, insurance companies encourage Pennsylvania drivers to choose limited tort. With full tort insurance, you can always sue for your full damages. However, with limited tort insurance, your ability to recover your full damages is limited to when you can prove that you have sustained what is called a “serious injury.”
It is the requirement to prove a “serious injury” before an accident victim is entitled to any pain and suffering damages that saves insurance companies so much money. “Serious injury” is defined as “death, significant deformity, or impairment of bodily function.” In practice, this means that if you are not dead, disfigured or crippled, your insurance carrier is likely to deny your claim for pain and suffering. Insurance carriers have denied that broken bones or even herniated spinal discs amount to “serious injuries.” Maybe you can prove in court that your particular injury was “serious” within the limitations of the law, but it is likely you will not be able to carry this heavy burden of proof. At minimum, your insurance company will likely use your status as a limited tort policy holder to significantly reduce any settlement offer to you. The cost of proving that you sustained a “serious injury” will quickly exceed the few dollars you saved in insurance premiums. Further, in light of the extra burden of proving a “serious injury,” many lawyers will decline to represent limited tort policy holders except in exceptional circumstances. Finally, be aware that the choice of limited tort insurance by the owner of a vehicle in a household can bind resident relatives, such as spouses and children, to the limited tort choice. Accordingly, selecting limited tort insurance can limit not only your right of recovery, but those of your family.
Like all insurance, cheaper is better until you have to use it. But the 15% you might have saved on your premiums with limited tort will likely be but a tiny fraction of your losses should you be unfortunate enough to be in a bad car accident that was caused by the fault of another driver. The emotional pain and physical suffering of being an auto accident victim is difficult enough without your formerly friendly insurance company telling you that your injuries aren’t “serious” enough to justify full compensation, but that you can sue them if you disagree. The 15% you saved will be small solace when lawyer after lawyer tells you that they probably could have helped you obtain a better recovery, but that your status as a limited tort insured means that it is not economically feasible to take your case.
Don’t be fooled by the small upfront savings of limited tort insurance. Know that the substantial rights you are giving up by selecting limited tort insurance are exactly the ones you are most likely to need should you be injured in an auto accident. Don’t be victimized twice; once by a negligent driver of another vehicle, and again by an insurance company that has charged you 85% of the premium that could have purchased adequate, full tort insurance but instead sold you inadequate insurance called limited tort. Ask yourself, “would my insurance company be offering me a 15% upfront discount on my auto premiums if I select limited tort, if the insurance company ultimately did not save much more money in the long run by not providing me with full tort insurance?” Please consider the fact that insurance is a for-profit business; insurance companies would not offer limited tort insurance if it was not ultimately more profitable to them to do so.
You are encouraged to think of full tort as “adequate” insurance and limited tort as “inadequate” insurance. Don’t wait until after an auto accident to learn the hard way the valuable rights you have given up by opting for limited tort over full tort insurance. If you have limited tort insurance, you are urged to call your insurance company today and ask to be sent the paperwork necessary to switch to full tort. Fill that paperwork out, sign and date it, and please keep a copy. Or, when your insurance policy renewal comes around, switch to full tort. You and your family will be glad you did should an auto accident occur.
The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.