Auto insurance is mandatory for all drivers in Oregon. In addition to liability coverage, every auto insurance policy delivered in Oregon must include Personal Injury Protection coverage. Purchasers of auto insurance in Oregon also can (and in most cases should) purchase Underinsured Motorist coverage. Here we will briefly discuss those types of insurance coverage and some very important changes soon to take effect under SB411.
1. Personal Injury Protection (“PIP”) coverage.
All auto insurance policies delivered in Oregon must include PIP. PIP pays medical expenses associated with injuries suffered as the result of the use of an insured person’s vehicle (it also in some cases covers medical expenses for injuries suffered by a pedestrian who is hit by a car). PIP, under certain circumstances, also may pay a portion of lost earnings related to injuries suffered in a motor vehicle collision.
PIP benefits are available whether a motor vehicle collision is caused by the insured person’s own negligence or the negligence of some other at-fault driver. PIP is subject to time limitations (this will be discussed below) and the dollar limit of the particular policy (with a minimum limit of $15,000.00 for medical coverage).
2. Underinsured Motorist (“UIM”) coverage.
Simply stated, UIM coverage applies to bodily injury damages for which another driver is responsible. UIM coverage applies where the at-fault driver has insufficient insurance limits to compensate an injured person for damages such as medical expenses, loss of income, trauma, pain, inconvenience, and/or disability.
In Oregon, UIM coverage is not mandatory. Nonetheless, it is important coverage, especially in light of Oregon’s minimum bodily injury liability limit of only $25,000.00 per person. All purchasers of auto insurance in Oregon should carefully discuss the purchase of UIM coverage with their insurance agent.
3. Changes Ahead Under Oregon Senate Bill 411 (“SB411”).
To protect Oregon drivers and to ensure that purchasers of auto insurance in Oregon receive the coverage for which they pay, the 2015 Oregon Legislature approved SB411. SB411 was recently signed into law and will take effect on January 1, 2016. For Oregonians injured as the result of a motor vehicle incident after that date, this new law will help ensure that adequate compensation is available. SB411 will apply only to auto insurance policies purchased or renewed in Oregon on or after January 1, 2016 (see below).
A. How will SB411 affect PIP coverage?
Two important changes are being made to PIP coverage in Oregon. First, PIP will now pay for two years of medical expenses rather than one (subject to limits). This is important for injured Oregonians whose injuries may not have fully resolved within one year of their motor vehicle collision.
PIP law is also being improved to afford greater potential compensation to an injured party. Under current law, an insurer may seek reimbursement of PIP payments made before an injured person is fully compensated. Under SB411, an injured person will be compensated before the insurer is reimbursed.
B. How will SB411 affect UIM coverage?
Under current law, UIM coverage applies only if the injured person’s UIM policy limit exceeds an at-fault driver’s liability limit. This means that in many instances Oregonians have paid premiums for coverage they never received or only partially received. Soon, under SB411’s improvements, UIM coverage will “stack” on top of the at-fault driver’s policy limit. This means that purchasers of auto insurance may now receive all of the coverage for which they paid when their damages exceed an at-fault driver’s policy limit. For Oregonians injured in motor vehicle collisions, this is potentially a huge and life-saving benefit. For someone facing catastrophic damages, loss of earnings, and medical bills resulting from a serious motor vehicle collision, this new law will have an enormous positive effect.
4. How Can Oregon Consumers Receive the Benefit of these New Laws?
SB411 will allow Oregon auto insurance consumers to actually receive the insurance coverage for which they have paid. However, these changes will only apply to auto insurance policies which are purchased or renewed on or after January 1, 2016.
Consumers must act. In order to qualify under the new law, we recommend that every Oregonian with a personal lines auto insurance policy contact his or her insurance agent now to discuss coverage and ensure that coverage is afforded under SB411’s new provisions at the earliest possible date. This may involve the renewal or purchase of a new policy. We recommend that this be carefully and thoroughly discussed with a qualified insurance agent to determine which option provides optimal coverage. No consumer of auto insurance in Oregon should be without the new provisions after January 1, 2016.
We recommend that before purchasing auto insurance coverage in Oregon, every consumer discuss each and every provision of the policy with a qualified insurance agent. Ask questions. Make sure the policy is fully explained, by the insurance representative, before purchasing coverage. Don’t be bullied; every consumer has the right to know what he or she is buying before he or she buys it.