Kentucky "No-fault" Insurance - What the consumer needs to know.
Who said a name had to mean something?
“Kentucky No-Fault” is a name that makes “no-sense.” It does not mean that no one is at fault in the accident. What does it mean? For the injury victim in an auto accident it means two things:
The first $10,000.00 in medical expenses, lost wages or other reimbursable expenses is to be paid by your insurance company and not by the insurance company of the at fault party. Somehow, a brilliant lawyer somewhere decided that because the at-fault party’s insurance may not pay damages caused by its insured that this new law should be called “no-fault.” Brilliant! Actually, dumb and confusing!
The second purpose of Kentucky no-fault is to somewhat restrict who can sue for personal injuries. It establishes “THRESHOLD” requirements before you can sue an at-fault party. The Kentucky “THRESHOLD” requirements are as follows:
- Permanent Injury
- Fractured bone
- Loss of body member
- Permanent loss of bodily function
- $1,000.00 in medicals.
The $1,000.00 “THRESHOLD” makes the “THRESHOLD” restriction on the right to sue virtually meaningless, because it is easy to incur $1,000.00 of medical expenses.
Kentucky “no-fault” has 3 names - Don’t be confused.
No-Fault benefits pay for medical expenses, lost wages, death benefit and replacement services. These benefits go by three different names and it is helpful to know that these names mean the same thing. The 3 names are: no-fault benefits, personal injury protection benefits and reparation benefits. The term “reparation benefits” comes from the Kentucky “no-fault” statute (Motor Vehicle Reparations Act of 1974); “personal injury protection benefits” comes from the language found in most insurance policies and “no-fault” benefits comes from a term of art used around the country and is the term used by the Kentucky Insurance department. If you come across any of these names you need to simply understand that they mean the same thing.
Why were no-fault laws created?
The majority of the states have no-fault laws. So, why do most of the states have no-fault laws? Was there an epidemic of stupidity going across the states? Well, no. The reason the no-fault laws were created was to simplify the resolution of auto accident claims. Before “no-fault” , the victim of an auto accident had no way to receive compensation for lost wages and medical expenses before reaching a global settlement with the adverse insurance company. This was a great burden for the victim who could not receive the medical treatment necessary to cure his injuries and could not buy groceries because the injuries prevented them from working. No-fault was designed to allow the victim to be able to pay for medical expenses and receive lost wages while he attempted to resolve his claim for all damages against the at-fault insurance company.
Kentucky No-Fault can be rejected.
By filing a rejection of no-fault form, you can opt out of the no-fault laws and its “THRESHOLD” requirements, which limit your right to sue if injured in an auto accident. An additional benefit of rejecting no-fault would be to reduce your insurance premium because you would not have to purchase the coverage.
Very few people reject no-fault and this is true for many reasons. First, most do not know that they have this option because their insurance agent fails to discuss it with them. Secondly, the no-fault benefits are very useful. Thirdly, the “THRESHOLD” limitations on the right to sue are essentially meaningless, since you only have to have a $1,000.00 in medical expenses to earn the right to sue for personal injuries.
The rejection form prescribed by the Kentucky Department of Insurance is provided below.
What do Kentucky No-Fault benefits pay for?
Kentucky no-fault pays for the following:
- Medical expenses
- Lost wages. ($200/week unless you purchased more than $10,000.00 in no-fault)
- Replacement services
- Survivor’s economic loss
- Survivor’s replacement services
- Funeral expenses
You have the right to instruct your no-fault carrier to pay only lost wages.
Kentucky law allows you to hold open your no-fault for lost wages. This is a very important right if you are off work as a result of your injuries and you do not have any worker’s compensation or other benefits to replace your wages. You may contact the no-fault carrier, preferably by writing, and instruct them to not pay any medical expenses or other bills so that you can reserve your benefits for lost wages.
It is imperative that you do this soon after your accident because your medical expenses will quickly exhaust your no-fault benefits. Your medical providers will be sending their bills to your no-fault carrier soon after the accident to be paid and you will find your benefits quickly exhausted if you do not protect your no-fault benefits. You can use your health insurance to pay your medical expenses and then submit any deductible or co-insurance amounts to the no-fault carrier.
The Assigned Claims Plan exists for those unusual circumstances where no-fault benefits may not be available under the terms of your insurance policy or the circumstances of your accident.
The Kentucky legislature created the assigned claims plan to cover unusual circumstances where you may find yourself without no-fault coverage. Here are some examples:
- Your insurance company goes bankrupt.
- Your insurance company rejects your claim for a reason not allowed under the Kentucky no-fault laws.
- No-fault is not available to you and it should have been. This one covers a myriad of circumstances such as if you were a passenger in a vehicle that was uninsured and you do not own an automobile.
- Or, if you were injured as a pedestrian and the car that hit you did not have insurance.
You should consult with an attorney or the Kentucky department of insurance if you believe you may have a claim under the assigned claims plan. Below is the application form used by the Kentucky Department of Insurance.
[Insert assigned claims form]
THIS ARTICLE IS INTENDED TO DISCUSS GENERAL LEGAL PRINCIPLES. IT IS NOT INTENDED TO BE A SUBSTITUTE FOR SPECIFIC LEGAL ADVICE FROM AN EXPERIENCED ATTORNEY AS TO YOUR PARTICULAR SITUATION AND NEEDS.
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— LaJuan Sweasy | Frankfort, Kentucky