Senate Bill 411, passed by Oregon’s 2015 legislature, will help Oregonians injured in vehicular collisions by expanding benefits under two sections of their own 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.
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.
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.
This 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.