Basic Principles

In Pennsylvania, the Motor Vehicle Financial Responsibility Law governs the basic principles of automobile insurance. While the law requires that you maintain certain minimum insurance, your policy may afford you more than that minimum.

Your "liability" coverage is insurance you purchase to pay for injuries you may cause other people by your own negligent driving. Someone you may accidentally injure, or whose car or property you might accidentally damage, can sue you. If successful, they would be entitled to receive money from you, which you would obtain from your liability coverage. This coverage may be referred to on your policy or insurance statements as "third party coverage." You and the insurance company are the first and second parties; those who may sometime sue you are often referred to as "third parties."

Your liability coverage probably includes a promise from the insurance company to pay for the services of a lawyer of the company's choice to defend you if you are sued. It also includes a specific limit on the amount of money the insurance company must pay if such a lawsuit is decided against you or settled by the insurance company. Once the insurance company has paid up to its liability limit, you are on your own to pay the balance, if any, owed to the person who sued you. You should know the liability limits of your policy and be sure that the coverage you have purchased is appropriate.

Your policy also provides you with certain coverage for your own injuries. Your "first party medical benefits," sometimes called "personal injury protection" or "PIP" coverage, pay your medical bills, wage losses, or death benefits if you are injured in an automobile accident. You collect these benefits no matter who was at fault in the accident. Your first party or PIP coverage may be fairly minimal, consisting of only $5,000 in medical coverage. It may be substantial, including combined coverage for medical expenses, wage losses, and death benefits for up to $177,500. You should review your existing first party coverage and adjust it if necessary for your current needs.

Your "underinsured motorist" coverage is insurance you purchase from your own insurance company to pay for your losses if you are injured by someone whose liability coverage is not sufficient to pay for all the injuries you have suffered. Your "uninsured motorist" coverage is insurance you purchase to pay your own losses if you are injured by an uninsured or hit-and-run driver.

While it is mandatory that you maintain minimal liability coverage of $15,000 for each person you may injure, up to $30,000 for any one accident, your purchase of underinsured and uninsured motorist coverage is optional. You may have none at all. Since many people purchase minimal liability coverage, and an alarming number of drivers drive without any insurance at all, it is wise to purchase underinsured and uninsured motorist coverage. Review your insurance policy to make sure that you understand your coverage and that you are adequately insured.

Rights to Sue

If you have elected the "full tort option" under your automobile insurance policy, you are entitled to file a lawsuit against negligent drivers who have caused you injuries in an automobile accident. A tort is a legal wrong -- something more than ordinary rudeness but less serious than a crime. Negligent driving is a tort.

Pennsylvania adopted a "No-Fault" Automobile Insurance Act in 1974. The Act sought to eliminate many automobile-related suits by requiring that the injured person's insurance company pay his or her initial medical bills and wage losses. In l990, the legislature amended the Pennsylvania No-Fault Act, requiring that insurance companies give policyholders the option to choose the right to sue or to limit their right to sue. These l990 amendments are currently in force. Whether you remember or not, you have chosen a "full tort" or a "limited tort" option on your insurance policy.

If you chose the "full tort option," you retain the right to sue negligent drivers. You may sue for any uncovered medical expenses or wage losses. You may also recover for your pain and suffering, for other economic losses, and for the permanent or continuing limitations on your activities and income that may result from your injuries.

If you chose the "limited tort option," you can sue only for the actual economic losses you have sustained that are not covered by your automobile or other insurance. However, if you have sustained a personal injury resulting in death, serious impairment of a body function, or permanent serious disfigurement, you may sue for your pain, suffering, and other losses. Also, if you elect the limited tort option, you may still recover for pain, suffering, and other losses if the negligent driver was drunk, was driving an out-of-state vehicle, injured you intentionally, or was uninsured. You can also sue if you were an occupant of a vehicle not a private passenger car or if you are suing a business responsible for a motor vehicle defect that caused your injury.

If you do not have your own policy of automobile insurance, you are bound by the tort option selected by your spouse or any insured relative with whom you live. When you select a tort option for yourself, you bind your children and your spouse or relatives in your household, unless they have their own automobile insurance policies.

By choosing the limited tort option, you reduce your annual premium. Be sure you know what you are actually saving before you limit your rights to sue -- compare those premium savings carefully to the rights you are relinquishing.

Pointers on Points

The Pennsylvania Motor Vehicle Code establishes a point system that it describes as related to "driver education and control." Pennsylvania drivers, no doubt, see the point system as more related to license suspension and insurance premium increases. Each conviction of a Motor Vehicle Code moving violation carries an automatic assignment of a certain number of points, as well as the possibility of the imposition of other sanctions. For example, a conviction for failure to stop for a school bus with flashing red lights carries the assignment of 5 points. Speeding carries the assignment of anywhere from 2 to 5 points, depending on how many miles per hour over the speed limit the guilty driver drove.

An initial accumulation of 6 points obliges a driver to attend an approved driver improvement school or to pass a special examination. The second time a driver reaches the 6-point mark, he or she may suffer license suspension for up to 15 days; the third accumulation of 6 points justifies a 30-day suspension. The Pennsylvania Department of Transportation must suspend a driver's license any time 11 points are accumulated, and the suspension can be for up to 15 days for each point.

Points accumulated by a driver are automatically removed by the Department of Transportation at the rate of 3 points for each 12 consecutive months in which the driver receives no new points. When a driver's record is cleared of all points and remains at 0 points for 12 consecutive months, any accumulation of points thereafter is regarded as an initial accumulation.

Most insurance companies charge an increased premium when an insured driver accumulates points. Often, the premium increase is directly tied to the number of points accumulated. Additionally, insurance companies can and do "remove" points from their insured's record more slowly than does the Department of Transportation.

Premium Increases

Policyholders are often reluctant to submit claims to their own insurance companies after automobile accidents for fear that the filing of a claim will result in a higher annual premium. The Pennsylvania motor vehicle insurance law and the guidelines of the Insurance Department prohibit insurers from such premium increases, unless it is determined that the insured claimant was at fault in the accident.

If you clearly were not at fault in causing the accident leading to your injuries, you should not hesitate to file your claims. If you are at fault in an accident, review your policy to see what notice you owe your insurance company.


Insurance companies that sell automobile insurance in Pennsylvania are required to offer all customers the option to add "underinsured" and "uninsured" motorist coverage to their policies. Remember this is just an option. You must buy it to protect yourself.

"Underinsured" motorist coverage is insurance that you purchase from your insurance company to pay for your losses if you are injured by someone who does not have enough liability insurance to pay for all of the injuries you may suffer. "Uninsured" motorist coverage is insurance that you purchase to pay for your own losses if you are injured by an uninsured or a hit-and-run driver.

Even if you do not have an insurance policy yourself, you may be entitled to uninsured and underinsured coverage from another policy covering someone in your household in the event you are in a car accident. The Pennsylvania Motor Vehicle Financial Responsibility Law defines an "insured" as "a spouse or relative" of a named insured, if the spouse or other relative is "residing in the household of the named insured." Any minor residing in the household in the custody of a household member is also entitled to coverage. Everyone entitled to claim coverage as a household member can also claim uninsured and underinsured benefits if the named insured opted to purchase them.

Pennsylvania courts have clarified the facts and circumstances that make a person a "resident relative" in automobile insurance policies. A person's residence is "a factual place of abode." A residence does not have to be permanent and can simply mean that someone is physically living in the household. For example, a father living in his own home in Pittsburgh was found to be a member of his son's "household" and was entitled to coverage under the son's automobile policy, despite the fact that the son was on military duty in Korea. The father did not own a car and had no automobile insurance coverage. The son owned an insured car, which he garaged at the father's house. Focusing on the facts that the son was only temporarily in the military, that he continued to use the home as his legal address, and that he listed the home as his residence with the insurance company, the court found that the father was a member of the son's household.

In another case, a teenage child who lived in her mother's home and stayed in her father's home "only twice during the entire school year" was not a resident of her father's home for the purpose of determining whether she could collect coverage under his insurance policy. Noting that children who spend significant time in both parents' households can be residents of both households, the court found that the child simply did not maintain a sufficiently significant physical presence in her father's house to merit her having status as an insured.

While Pennsylvania law absolutely requires that all drivers maintain minimal liability coverage, the purchase of underinsured and uninsured motorist coverage is optional. Since many people only purchase minimal liability coverage, and an alarming number of drivers drive without any insurance at all, it is wise to purchase underinsured and uninsured motorist coverage. You should consider reviewing your insurance policy with your agent or your attorney to make sure you that understand your coverage and to check whether you are adequately insured.


If you are injured in an accident, photograph or videotape your injuries as soon as possible. Take pictures of the property damage. A graphic picture can be very helpful when talking to an insurance adjuster or a jury.


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