In 1984 Pennsylvania enacted the Motor Vehicle Financial Responsibility Act (the "MVFRL") which required that every vehicle in the Commonwealth Of Pennsylvania be covered by an insurance policy. The MVFRL was amended in 1990. This article is designed to provide general information as to the MVFRL. All legal concerns should be discussed directly with an attorney as every legal issue has different facts that must be directly applied to ever-changing Pennsylvania statutes and case law.
Motor vehicle insurance coverage may generally divided between "mandatory coverage" and "optional coverage" and then between "liability coverage" and "first party benefits" coverage. As the name suggests, "mandatory coverage" is required by law while "optional coverage" is purchased only if desired by the consumer. "Liability coverage" is purchased to pay other people for personal injuries or property damage caused by a motor vehicle. "First party benefits" are purchased to provide payment to the person buying the insurance policy. That is, "liability coverage" usually benefit other people while "first party benefits" benefit the policy holder.
Under the MVFRA, "mandatory coverage" must include $5,000.00 of First Party Medical Benefits, $15,000.00 of Liability Bodily Injury Coverage per person ($30,000.00 total per collision) and $5,000.00 Liability Property Damage. "Optional coverage" then include lost wages, funeral benefits, underinsured motorist, uninsured motorist, towing, comprehensive and collision.
Mandatory Coverages:
Liability Bodily Injury Coverage: As mentioned above, this coverage is purchased to compensate others for personal injuries and lost wages as a result of a motor vehicle collision. The mandatory minimum coverage amount is $15,000.00 per person ($30,000.00 per collision) and additional coverage may be purchased usually up to $1,000,000.00. The most common coverage amounts are $15,000.00, $25,000.00, $50,000.00 and $100,000.00.
Liability Property Damage Coverage: Similar to liability persona injury coverage, this provides compensation to others who suffer financial harm due to motor vehicles causing property damages.
First Party Medical Benefits: This coverage is purchased to pay for medical expenses arising from injuries received in a motor vehicle collision. Under the MVFRA, your insurance company pays for your health care expenses regardless of who is at fault in causing the collision. Other forms of health care insurance are paid only after the medical benefits in a motor vehicle policy are exhausted. Insurance companies must offer at least $100,000.00 in coverage (the minimum which must be purchased by law is $5,000.00). Extra-ordinary medical coverage is also available up to $1,100,000.00. There are no "co-pays" or "gatekeepers/primary care providers" under the MVFRA and an injured person may seek care from any licensed health car provider. Policies usually provide coverage amounts of $5,000.00, $15,000.00, $25,000.00, $50,000.00 or $100,000.00.
OPTIONAL COVERAGES:
Lost Wage Coverage: This coverage is designed to compensate an injured person for lost wages resulting from injuries received in a motor vehicle collision. Your insurance company pays this benefit regardless of who caused the collision. Benefits are only available after five work days are lost. Also, by statute only 80% of the wages lost are paid. It is also possible to have the wages paid for a replacement worker if a person is "self-employed". Coverage is usually limited by a monthly maximum (usually $1,000.00 to $2,500.00) and total benefits are usually available in amounts between $2,500.00 and $50,000.00.
Underinsured/Uninsured Motorist Coverage: This coverage is purchased to protect an insured from financial losses in collisions caused by an underinsured driver or an uninsured driver. This claim is made against your insurance company for personal injuries, property damages and lost wages when the driver causing the collision does not have insurance (uninsured motorist) or does not have enough insurance to compensate you for your injuries and damages (underinsured motorist).
Comprehensive Coverage: This coverage is purchased to protect an insured from "acts of god" (such as stones thrown into or birds flying into windshields) and vandalism/theft of possessions. Usually there are deductibles involved of $100.00, $250.00 or $500.00.
Collision Coverage: This coverage is purchased to protect the person buying insurance from financial loss associated with being involved with a collision which is the insider's fault - such as a one vehicle collision where due to icy conditions a vehicle slides off the road and into a telephone pole. Again your insurance company pays for the damages over a deductible of either $100.00, $250.00 or $500.00.
Accidental Death: This coverage simply has your insurance company pay your family in the event that you are killed in a motor vehicle collision. Similar to a term life insurance policy.
The option also exists between "stacked" and "non-stacked" coverage. This option is used to increase limits (if the policy is "stacked") or limit benefits ("non-stacked") based upon the number of vehicles owned by the insured. First Party Benefits are not subject to stacking. This option usually is applicable in cases involving underinsured or uninsured motorists.
Finally, one of the primary options that a person has when purchasing a motor vehicle insurance policy is whether to limit their rights to claim compensation for injuries caused by a collision. This is commonly known as the "Full Tort" or "Limited Tort" option.
If the "Full Tort" option is selected, the persons covered under the insurance policy keep their full right to seek compensation for both non-economic damages (including pain, suffering and inconvenience) and economic damages (any actual monetary losses such as for wages and health care expenses).
If the "Limited Tort" option is selected, persons covered under the insurance policy give up their right to obtain compensation for non-economic damages (pain, suffering and inconvenience) unless a serious injury occurred or one of several specific exceptions applied. By law, persons selecting the Limited Tort option received a discount on their insurance premiums. However, as a practical matter and in most instances, the discount per vehicle often was less than $50.00 to $75.00 per year.
For Limited Tort option purposes, a "serious injury" was defined as injuries that caused death, a "serious impairment of bodily function" or a "permanent serious disfigurement". If a "serious injury" existed, a person who was covered under a Limited Tort option was permitted to claim non-economic damages. However, beyond injuries which were catastrophic or caused death, the Courts and insurance companies rarely considered an injury to be "serious" enough to warrant allowing the injured person to claim "Full Tort" compensation.
Several exceptions based upon the actions of the defendant or type of vehicle occupied by the person injured also exist which may permit a "Limited Tort" person to claim "Full Tort" compensation. These include situations where the injured person was a passenger in a commercial vehicle, when the other vehicle is registered out-of-state, when the driver of the other vehicle was drunk or when the driver of the other vehicle was uninsured.