Way back in 1990 the state of Pennsylvania enacted the Act 6 auto insurance reform. Part of the new legislation was an immediate. mandatory 10% rollback of auto insurance rates by every insurance company operating in the state. It was mayhem for insurers and policyholders alike when many auto insurance companies simply stopped writing new policies. Many were unsure what the future ramifications of this new act 6 would bring.
To you and I the act 6 legislation appeared to be many more forms to sign and a slight reduction in the auto insurance rates. The 10% rate rollback was a welcome surprise. When many people discovered that they could save another 13-15% by choosing the “limited tort” option they jumped in line to get signed up. Unfortunately for many, the explanation of this new option was cloudy and uncertain. Remember, this was brand new legislation that had never been tested by the courts or challenged in any way. The true test of these new definitions was yet to come.
As time went on we discovered that many people still wanted the limited tort option even though it was explained to them that they were “limiting” their rights to sue or recover damages. Here’s one way we’ve explained it to clients,remember, this is only for accidents that you are not considered to be the “at fault” driver in. To put it as basically as possible the limited tort option allows you to recover any “out of pocket” expenses if you are injured in an automobile accident. Any bills that are not covered by your insurance’s first party benefits will be picked up by the “at fault” driver’s coverage. Assuming you have not suffered what is determined to be “serious and permanent” injuries, you will not be entitled to any additional payments. Additional payments are normally referred to as “pain and suffering” and can be paid in addition to any other payments you may have received.
Those choosing the “full tort” option are normally paying 10-15% in additional premiums for their Pennsylvania auto insurance. These drivers have guaranteed their right to recover under the laws of Pennsylvania if even the smallest injury occurs. In fact, the laws of act 6 make it mandatory for the insurer of the “at fault” driver to make contact with any injured party and propose an offer to settle the pain and suffering claim. Even if a driver has no intention of making a claim for pain and suffering, under the full tort laws that driver will be offered some financial restitution. Naturally, the increased rates are accounting for the fact these settlements are rarely refused.