What is bodily injury coverage?

Bodily injury coverage definition

Bodily injury coverage helps you pay for an injured person’s medical expenses and lost wages if you’re at fault in a car accident.

For the purpose of analyzing their effect on insurance consumers and insurers, the different approaches for compensating bodily injury as a result of an auto accident may be classified as follows:
1. no-fault with verbal threshold.
2. no-fault with verbal and days of disability thresholds.
3. no-fault with monetary, days of disability and verbal thresholds.
4. no-fault with monetary and verbal thresholds.
5. add-on no-fault.
6. fault (traditional tort liability).

As the name implies, the costliest possible system is “add-on,” since insurers are selling and insurance consumers are paying for what amounts to two discount auto insurance policies to pay for the same damages and making it possible for injured people to recover twice for the same thing.

Low monetary thresholds (for example, $200 or $400) have the same practical effect as add-on in many cases, since it will be a relatively easy matter for most injured people to run up sufficient medical expenses to reach the threshold and sue. The lower the monetary threshold, the greater the number of lawsuits and the more insurance buyers must pay for a double system of first-party and third- party compensation (including all the non-compensation costs of the third-party system, such as fees for lawyers and other litigation costs).

Discount Auto Insurance and Bodily Injury Coverage

For example, in the past, Pennsylvania’s law mandated that injured persons receive first-party unlimited medical and rehabilitation benefits, but also allowed lawsuits when medical expenses reached $750. As a result, many accident victims collected under both fault and no-fault for the same injury. Compare discount auto insurance rates now!

Insurance companies, faced with the rising costs of both unlimited benefits and lawsuits, had to raise premiums. Premiums for first-party coverage and third-party liability coverage rose about 20 percent annually from 1975 when the restricted lawsuit measure took effect. Responding to the constituent demand to do something about these rising auto insurance premiums, some members of the state legislature attempted to enact a less-easily- met threshold. But they encountered stiff opposition from trial lawyers and others who feared giving up the right to sue. It was thus politically impossible to improve the no-fault system. Finally, in 1984, the state removed all restrictions on lawsuits to become an add-on state.

New Jersey has had a similar experience. Its no-fault law provided for unlimited medical benefits, but it allowed lawsuits when a victim’s medical bills reached a $200 threshold. Victims continued to sue, the tort liability system continued to operate almost unchanged, and, predictably, insurance rates shot up. Premiums in Newark were double those in Detroit (a no-fault state with a verbal threshold) for similar coverage. While many factors contribute to the higher rates, it is clear that a public policy of forcing consumers to pay for and insurers to provide double coverage for the same injuries drives up insurance premiums. Ge discount auto insurance quotes!


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