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The minimum automobile insurance coverage that Pennsylvania requires car owners to obtain hasn't been raised for decades. – Legal Intelligencer

Amaris Elliott-Engel

2011-12-20 10:00:00 AM

The minimum automobile insurance coverage that Pennsylvania requires car owners to obtain hasn't been raised for decades.

Plaintiffs lawyers in the state would like to see that change. The Pennsylvania Association for Justice is pushing for a bill introduced last month in the state Senate that would double the minimum coverage required to obtain lawful automobile insurance in Pennsylvania.

Those backing the bill said it will better protect drivers and compensate those injured in car accidents. Opponents counter that it will lead to higher insurance rates, and consequently, more uninsured drivers on the roads.

Under a bill primarily sponsored by state Sen. Don White, R-Indiana, an insurance broker by trade and the chairman of the Senate Banking and Insurance Committee, motorists would be required to carry insurance minimums of $30,000 coverage for an injury to any one person in any one accident, $60,000 coverage for injuries to any two or more people in any one accident and $10,000 coverage for property damage in any one accident.

White did not respond to a request for comment.

But opponents to the bill, which include the Insurance Federation of America, argue that raising insurance limits in the middle of a tough economic climate would make policies more expensive to obtain and people on tight budgets would just drop insurance entirely, even though the Motor Vehicle Financial Responsibility Law requires it. The result would mean more uninsured claims, they argue.

"It's the wrong measure at the wrong time because it's a bill that makes insurance more expensive for people least able to afford it," said Sam Marshall, the president and chief executive officer of Insurance Federation of Pennsylvania.

Louis E. Bricklin, a defense attorney who is the managing attorney of the Philadelphia firm Bennett Bricklin & Saltzburg, said, "I'm not an underwriter but my instincts tell me, if you raise the limits you'll have more uninsured motorists out there and you'll have more uninsured motorists claims but less underinsured motorist claims."

Because car insurance is cheaper in real dollars in 2011 there has been a decrease in the number of uninsured motorists in Philadelphia, but increasing the minimums could raise the number of uninsured motorists and thus the number of uninsured motorist claims, Bricklin said.

Claims are worth more on first-party claims against an insured's uninsured/underinsured motorist carrier than on third-party claims in which the named defendant is not an insurance company but the tortfeasor, Bricklin said.

If there are more uninsured motorist claims, then the costs of insurance payouts could increase in the state, Bricklin said.

Arbitration panels, at least before the state Supreme Court said that arbitration was not mandated for uninsured and underinsured motorist claims, would render larger awards when the defendant was an insurance company in a UM/UIM claim than when it was a tortfeasor in a liability claim, Bricklin said.

Mark E. Phenicie, legislative counsel for PAJ, said witnesses testified at a recent hearing on the bill that when Maryland raised its auto insurance rates, Baltimore, which, like Philadelphia, has a large population of people living in poverty, did not see a spike in the number of uninsured motorists and saw a decrease in underinsured motorists.

PAJ, when it obtained quotes for addresses in Philadelphia for coverage with $15,000/$30,000/$5,000 coverage in comparison to $30,000/$60,000/$10,000 coverage found that the difference in the cost in the premiums was just a matter of a few dollars, Phenicie said.

"The argument is specious from the Insurance Federation" that the number of uninsured motorists will increase, Phenicie said. "They just don't want to raise anything."

There's also the possibility that underinsured motorist coverage rates would be reduced if the policy minimums were set higher, Phenicie said.

Laura Feldman, president of the Philadelphia Trial Lawyers Association and with Feldman & Pinto, said under current limits all the payouts from insurance goes to pay back Medicare or insurance companies for plaintiffs' medical bills.

"Really the number should be much, much higher" than White's proposal, Feldman said. "This would be a start in the right direction and it's not going to cost the consumer any more than a de minimis increase in their plans."

Scott Cooper, a plaintiffs attorney with Schmidt Kramer in Harrisburg specializing in motor vehicle accident and insurance cases, said that with the state's insurance rates so low "there's a lot of people, especially in Philadelphia … getting undercompensated" because of the costs to treat people's injuries from motor vehicle accidents.

Cooper said he has seen an increase of insureds in the central part of Pennsylvania get automobile coverage online or over the phone, rather than through agents, and people have been purchasing the minimum amount of coverage to try to get the lowest premiums.

What people don't realize is that their insurance premiums are tied into other factors like multiple vehicle discounts and the deductibles they opt for, not just the minimums required by law, Cooper said. But higher insurance minimums, if required by law, could protect their assets more.

"You really don't want to be 15/30," Cooper said. "The last thing you want is your personal assets exposed and I don't think people really understand that."

The professional groups for insurance agents, chiropractors, physical therapists and orthopedists are also in favor of raising the automobile insurance limits, Phenicie said.

Health care providers would be helped with reimbursements and subrogation claims if overall insurance coverage was higher, Cooper said.

Raising insurance limits would help compensate people who are injured as a result, said Ronald A. Kovler, a plaintiffs attorney with the Philadelphia law firm Kovler & Rush and who is chairman of the PAJ's auto section.

Because Pennsylvania has one of the lowest automobile insurance minimums in the country, even doubling the rates would keep Pennsylvania in the mainstream in this area of policy, Kovler said.

It's not "like we're requesting to be outliers here," Kovler said. "We're requesting to be in line with other states."

Daniel E. Cummins, a defense attorney with the Scranton law firm Foley Cognetti Comerford Cimini & Cummins, said that increasing the insurance limits could have an impact on the number of cases that go to trial in which plaintiffs allege they have soft-tissue injuries without accompanying allegations of broken bones or herniations because of low-speed, low-impact accidents. Cummins writes a column for the Law Weekly.

In a soft-tissue case, UIM carriers, under a $30,000 liability limit credit, "might be more willing to litigate the case in the appropriate circumstance," Cummins said.

With higher liability coverage on a marginal case, the UIM carrier would not run the risk of being exposed "to a bad-faith claim for not settling the case prior to trial," Cummins said.

But increasing the limits, overall, would not have that great of an impact on automobile insurance litigation, Cummins said.

Amaris Elliott-Engel can be contacted at 215-557-2354 or Follow her on Twitter @AmarisTLI. •

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