Automobile Liability Insurance Coverage Minimums In Pennsylvania May Be Insufficient

Did you know that the required minimum liability insurance limits in Pennsylvania have not changed since 1974? There have been legislative initiatives to address this concern, yet none implemented, as the levels remain at $15,000 per person, $30,000 per accident, and $5,000 for property damage. The majority of states maintain higher minimums of bodily injury liability such as $25,000 per person and $50,000 per accident, such as Washington D.C and Delaware. In 2011, Maryland modified their limits to $30,000 per person, $60,000 per accident and $15,000 for property damage. Generally, states also require uninsured and underinsured coverage that is equal to the minimum liability levels.

The $25,000/$50,000 coverage is potentially inadequate in accidents that result in a catastrophic injury. States seek a balance between sufficient minimums in coverage while allowing for affordable car insurance premiums. Pennsylvania’s limits have not been adjusted for years of inflation, higher costs for medical care and vehicle repair. 

If the minimums were increased, the potential beneficiaries would include the state and federal governments as well as private health insurers. Injured parties often rely on their health insurer, Medicare, or Medicaid for medical expenses exceeding the current personal injury protection minimum of $5,000, which is also referred to as “first party benefits”. When insurance policies have higher limits, there are simply more funds available to compensate injury victims. A third party claim may be made for recovery of expenses beyond the minimums; however, if there is no money to collect it will bring no benefit.

Medicaid is a state-based program providing medical coverage for low-income residents. States are increasingly having difficulty meeting their budgets; therefore, Medicaid could benefit from being able to pursue reimbursement for expenses. Those opposing increases, such as many providers within the auto insurance market, contend that premiums will rise and any potential benefits will be offset by the increase in uninsured drivers that will be on the roads now unable to afford the premiums. 

In Maryland, since increasing their requirements in 2011, there has been a negligible rise in uninsured motorists. Pennsylvania has several major highways stretching through the state including I-80, I-76, and others that create potential risks for major accidents.

Pennsylvania auto insurers typically raise their rates at a level that is marginally less than the U.S. national average. The national average in recent years was 25%, while Pennsylvania insurers increased by only a 22% average. Pennsylvania, New Jersey, and Kentucky are among the few states that maintain an “optional or choice” no-fault insurance system. 

Motorists may choose between full or limited tort. Limited tort is a lower cost option because you are waiving the ability to recover for types of damages such as pain and suffering. Another somewhat unique insurance offering in the state is the Assigned Risk Plan. This mandates auto insurers operating in the state to provide coverage for those otherwise unable to obtain it based proportionally on their volume of business conducted within Pennsylvania.