No-Fault Car Insurance... What It Is, And How It Works

What is No-Fault and what does it cover?

By Mark T. Freeley, Esq. (Open Post)March 20, 2012 at 5:02pm

New York State requires every motor vehicle policy of insurance to provide for No-Fault coverage, also known as Personal Injury Protection (PIP). This is the part of your policy that provides for the payment of medical expenses and loss of wages when you are injured in a car accident. It covers the driver, all passengers as well as any pedestrian or bicyclist that is struck by your car.

The minimum mandatory amount of PIP on every policy written in New York is $50,000.00, this amount has not increased since 1975. This means that the most that your insurance company will pay out for medical bills and loss of wages will be $50,000.00. This is really not a lot of coverage if you need to be hospitalized for a period of time. The maximum lost wage reimbursement under the mandatory PIP benefits is 80% of your gross earnings up to $2,000.00 per month. However, any disability payments that are payable to you from New York State, will be deducted from this amount. So again, this is really not much coverage either, especially if you are unable to work for a lengthy period.

In addition to the above mandatory minimum PIP benefits, you can purchase increased No-Fault benefits known as Additional Personal Injury Protection (APIP), as well as Optional Basic Economic Loss protection (OBEL), both of which will provide you with higher limits of No-Fault coverage.

APIP can typically be purchased in increments of $50,000.00, and usually up to $100,000.00, on top of your mandatory PIP. These benefits work the same way as your mandatory PIP does, and can be used for medical bills and wage loss reimbursement. You can also increase your wage loss reimbursement to $3,000.00 or $4,000.00 per month when you purchase APIP.

OBEL coverage can only be purchased in the amount of $25,000.00, and can be used for loss of wage reimbursement, physical or occupational therapy and rehabilitation after the mandatory PIP has been exhausted.

The most amount of total No-Fault coverage that my insurance carrier offers is $175,000.00, which includes the mandatory $50,000.00, the APIP $100,000.00 (with the $4,000.00/month wage loss) and the OBEL $25,000.00, and this is the coverage that I currently have.

It is a good idea to take out your car insurance policy and review it to make sure that you understand and are comfortable with your current coverage. If you have any questions, feel free to send me an e-mail and I will be happy to guide you through the choices.

Keep it safe out there.