From time to time people come to our office and declare, “Kentucky is a no-fault state.” Understanding what this means is important to understanding what insurance coverage is available to you. Kentucky does mandate insurance for automobiles and mandates a minimum of $10,000 of Personal Injury Protection (PIP) benefits. These benefits are also known as “No-Fault” or “basic reparations” benefits. Each person in the vehicle, regardless of fault for the accident, has $10,000 of insurance for medical bills and/or lost wages.
Example 1: You are driving in your car alone and hit a tree. You have $10,000 in PIP coverage for medicals bills and/or lost wages.
Example 2: You are driving your vehicle with two passengers and you hit a tree. You and the two passengers have $10,000 each in PIP coverage for medical bills and/or lost wages. The passengers also likely have a claim against the driver for additional benefits not discussed here.
PIP benefits are for medical bills and/or lost wages. However, the lost wages require proof of your income, a doctor’s note taking you off work and the employer providing the days you have missed. The benefits are limited to $200.00 per week. PIP benefits may also be used for other things such as reimbursing you if you had to pay for transportation due to your injuries or hire someone to do housework or yard work. Reimbursement of out-of-pocket costs for prescriptions is also done through PIP benefits.
1. Can my insurance company simply pay me the $10,000? Yes, if you have the lost wages to justify the amount or the medical bills to justify the amount. Generally, we recommend that our clients let PIP pay the medical bills, rather than taking the funds directly to avoid being sued by the medical providers for the funds.
2. If my company pays the $10,000 to me, is there an attorney fee taken from this amount? We have heard some stories of attorney’s taking 1/3 or 40% of the PIP benefits as an attorneys’ fee. It is our office’s position that doing so is unethical as these are guaranteed benefits under your insurance policy. There may be some situations where they are being denied and a lawsuit is necessary to recover them. In that situation, a fee may be reasonable, but otherwise, we stand by the position that this money is your money and no fee should be taken.
3. What if my bills exceed $10,000? You should always use your car insurance first when you treat with a doctor for a wreck. However, if your bills exceed $10,000, health insurance, Medicare or Medicaid will usually cover the remainder of your bills.
In situations where you are injured due to someone else’s negligence or if your health insurance paid a bill and you did not exceed $10,000 in medical bills, these insurance companies must be repaid out of any settlement or judgment if you were hit by another vehicle or by the PIP benefits.
Another option is to provide the physician or therapist a lien against your case which must be repaid if you obtain a judgment from an at-fault person.