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New Oregon law expands insurance coverage in traffic crashes: What you need to know

Posted by on January 6th, 2016 at 2:35 pm

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(Photo © J. Maus/BikePortland)

This guest article was written by Cynthia Newton as part of our ongoing paid partnership with Portland law firm Swanson, Thomas, Coon & Newton.

Senate Bill 411, passed by Oregon’s legislature in 2015, will help Oregonians injured in vehicular collisions by expanding benefits under two sections of their automobile policies: Personal Injury Protection (PIP) and Underinsured Motorist (UIM) coverage. The law goes into effect on January 1, 2016, and applies to policies issued or renewed on or after that date. In this article I’ll share more information about those two types of insurance, how the new law impacts them, and why this is important for people who drive, walk or bike.

PIP Coverage

Few are aware that after a collision an injured person’s automobile insurance pays medical bills first — before health insurance and before the at-fault driver’s auto insurance. The injured party’s own Personal Injury Protection (PIP) coverage pays these bills. Senate bill 411 changes PIP coverage in two important ways. First, the payment period is increased. Under current law, PIP coverage pays for bills incurred during the first year after the collision. Under SB 411, PIP will pay for bills incurred during the first two years after the collision–a full year longer. The most common amount of PIP coverage is $15,000, the minimum required by Oregon law, but it is possible to buy more coverage.

Second, SB 411 changes the circumstances under which the at-fault carrier must reimburse the PIP carrier. Under current law, the at-fault party’s carrier must reimburse the PIP carrier in full unless the injured person’s economic damages (medical bills and lost income) are greater than the amount recoverable. If the PIP carrier insists, it will be reimbursed even if there is not enough coverage available to compensate fully the injured person. Under SB 411, the at-fault party’s insurer is required to reimburse the PIP carrier only after the injured person recovers all her damages, including both economic and non-economic (pain and suffering) damages. In this way, the new rule allows the injured party to receive greater compensation.

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UIM Coverage

SB 411 increases the amount of available UIM coverage. Under current law, the UIM carrier subtracts from the UIM limits the at-fault driver’s bodily injury (“BI”) limits to determine the amount of UIM coverage available. Under the new law, the UIM carrier must add the UIM benefits to–or “stack” them on top of–the at-fault party’s BI limits.

The following example shows the important difference stacking makes: An injured cyclist with $50,000 UIM coverage is hit by a driver who runs a stop sign. The cyclist’s injury claim is valued at $75,000. The driver’s BI limits are $25,000. The cyclist settles her claim against the driver for the full $25,000 of the BI limits and makes a UIM claim seeking the remaining $50,000.

Under current law, the UIM carrier subtracts the BI limits from the UIM limits, here subtracting $25,000 from $50,000, leaving $25,000. The cyclist can recover $25,000 in UIM benefits or $50,000 total. Under the new law, UIM limits stack on top of the BI limits. Thus, the cyclist can recover $25,000 from the at-fault driver plus $50,000 from her own UIM coverage ($25,000 + $50,000). In this way, Senate Bill 411 will allow her to recover the full $75,000 claim value.

SB 411 applies only to policies written or renewed after January 1, 2016. All Oregonians should contact their insurance agents right after the new year to renew their automobile policies to obtain these additional benefits.

— Cynthia Newton

Trial attorney Cynthia Newton has represented hundreds of cyclists, pedestrians and motorists injured or killed in vehicular collisions. She is licensed in Oregon, Washington and California and is a partner in the firm Swanson, Thomas, Coon & Newton.

Browse our Get Legal story archives to learn more about Oregon laws.

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Spiffy
Subscriber

since I haven’t even checked to see if I can get a better deal in the 3 years I’ve been with my insurer it seems that now is the time to update my policy…

Pete
Guest
Pete

Thanks for this info! My insurance agent recommended that I choose the minimums and take out an Umbrella Policy, though, so I wonder how this will affect that “stacking.” Sounds like I need to call her with some questions…

LC
Guest
LC

And for those without car insurance policies because of no car..?

B. Carfree
Guest
B. Carfree

While these changes are welcome, what we really need is a pool of money funded by a fee on auto insurance policies that “covers” cyclists injured in hit-and-run collisions, sort of a crime victim compensation fund. As it stands, a car-free person is totally on the hook for all the bills (although hopefully everyone has health insurance). Isn’t Oregon supposedly trying to encourage people to minimize or even eliminate driving in their lives?

PomPilot
Guest
PomPilot

LC
And for those without car insurance policies because of no car..?Recommended 0

It has been several years since I was in the insurance business. However, there were several carriers who offered ‘Non-Owners’ coverage. This was designed for the licensed driver who did not own a car but drove a rental car or a vehicle provided for their use.

Mark
Guest
Mark

It’s unfortunate that the uninsured motorist coverage of your auto insurance will only pay out if you are injured while in a motor vehicle.

I asked my insurer (USAA) and also the Senior Policy Analyst of the State of Oregon, and the answer was the same. I would love to see policy reform that allowed that coverage to be paid out even if injured while operating a bicycle, which is legally a vehicle, or if injured as a pedestrian. That $15,000 PIP coverage will be used up quickly in any serious collision involving a vulnerable road user.

Dead Salmon
Guest
Dead Salmon

My question about the additional coverage due to the new law is “How much will premiums go up due to this change?”

J4son
Guest
J4son

“Mark: It’s unfortunate that the uninsured motorist coverage of your auto insurance will only pay out if you are injured while in a motor vehicle.”

What defines a “motor” vehicle? If a person adds a small motor assist to their commuter bike, will that qualify the bike as a “motor” vehicle?

Beth
Guest

There are a surprising number of bike-riders in Portland who not only don’t have cars, but also don’t have drivers’ licenses. What happens to them if they’re injured in a collision?

Allan L.
Guest
Allan L.

Now I understand why my rates went up. Thanks. And thanks, Obama.

BJCefola
Subscriber

Random auto insurance policy question:
What would the required minimum limits look like over time adjusted for inflation?

I came across a paper indicating the per person limit in 1945 was $5,000. Trending that for just cpi inflation would put it at $65K today, considerably higher than the $25K minimum in force. What would that look like taking medical inflation into account?