makes it very difficult to sue for non-economic damages. Some states use terms other than “Med Pay” and “PIP”, such as “Basic Reparation Benefits”, but
the concept is the same.
Today, state automobile insurance laws fall into four categories: (1) traditional tort liability system; (2) add-on states where the carrier pays no-fault PIP or
Med Pay first-party benefits to insured, who retains the right to sue the third-party; (3) modified no-fault states where the carrier pays no-fault first-party
benefits but the insured’s right to sue the third-party is restricted; and (4) choice states where insureds are offered a choice between traditional tort
system and a no-fault system.
Currently, eleven (11) states have “modified” no-fault automobile insurance laws, where first-party economic benefits are provided regardless of fault,
and the right to sue for non-economic damages is allowed only after satisfying a statutorily-defined (monetary, verbal or combination of the two)
threshold. Florida, Michigan, New Jersey, New York and Pennsylvania have verbal thresholds - one which defines in plain language the precise injury or a
level of “serious injury” which must be met in order to sue. Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah have monetary
thresholds, where a specific dollar amount of medical expenses must be reached before being able to sue.
Three (3) states - New Jersey, Pennsylvania and Kentucky have “choice” no-fault. Under choice no-fault systems, drivers have the choice of being covered
under either a pure no-fault policy, where you cannot sue third-parties for non-economic damages and are immune from such suits yourself; or a
modified no-fault policy, where you can sue other drivers who have also chosen to retain their tort rights, and they can sue you. If a no-fault driver is in an
accident with a modified no-fault driver, they are both unable to sue the other party.
Nine (9) states have automobile insurance systems which offer add-on no-fault benefits. They are Arkansas, Delaware, Maryland, Oregon, South Carolina,
South Dakota, Texas, Virginia, and Washington. These states offer PIP or similar benefits in varied amounts and under varied conditions, but do not restrict
third-party lawsuits.
The rest of the states operate under a traditional tort liability system where there are no limitations on the right to sue negligent third-parties.
In no-fault states, there is little reason for an insured to purchase both Med Pay and PIP coverage, because PIP provides coverage equal to and beyond
Med Pay (although PIP often has a deductible and Med Pay does not). Some states provide one but not the other. The recent trend has steered away from
no-fault systems. The most recent state to convert from a no-fault system back to a traditional tort system is Colorado, which did so on July 1, 2003. For
information on insurance limits, proof of insurance and required/optional coverage available in each state, please click HERE. In a majority of states,
statutes mandating PIP and uninsured motorist (UM) coverage typically specify that the “named insured” and “any insured named in the policy” has the
right to reject such coverage.
The following chart provides an overview of subrogation rights for PIP and/or Med Pay-type benefits paid under the automobile insurance laws of all 50
states. For information regarding the symbols found within the chart, please refer to the Chart Legend, which, for your convenience, has been placed both
before and after the chart. The chart is an amalgamation of law and commentary from a variety of sources and does not represent an exhaustive
treatment of the subject. It should be used as a general guideline only and any specific file or fact situations should be addressed and acted on only after
consultation with a lawyer within the confines of the attorney-client relationship and when your attorney has all of the facts and documents on which to
base his or her opinion.
Please note that this chart addresses not only the right of subrogation, but also whether and to what extent the Made Whole Doctrine affects the insurer’s
right of subrogation and/or reimbursement. This chart also makes general reference to each state’s current law regarding whether it applies the Made
Whole Doctrine and whether the Doctrine can be contracted away with the appropriate policy language. Whether or not the insured’s attorney, if there is
one, is entitled to reduce your subrogation interest based on his attorney’s fees and costs (Common Fund Doctrine) is a separate issue which must be
addressed on a case-by-case basis and is subject to the laws of the state at issue and insurance policy language.