Motorcycle Insurance Issues

What Every Motorcyclist Needs to Know!  (Or, Zen and the Art of Motorcycle Insurance)

The Trap in Your Back Pocket

Every motorcyclist knows that the road holds many traps... .the edge trap where different levels of pavement meet, oil around a curve, the opening door of a parked car. But there's another trap for Kentucky motorcyclists that probably resides in your own back pocket.... it's your insurance card.
A little background is in order. Kentucky is a "no fault" insurance state. In our version of the statute, every auto insurance company must include "Basic Reparations Benefits" in every automobile policy sold in the state. That law says that your own auto policy has to cover the first $10,000 of your (or for a pedestrian you hit) lost wages and/or medical bills from an accident, no matter who's at fault (there are some other things covered as well, and you can buy more than the basic coverage, but that's not really relevant here). This was intended to reduce the number of lawsuits arising from accidents, since now an injured person wouldn't have to sue to get these "basic" things covered and for many people these would be the only consequences from an accident. The flip side (and there always is one) to this benefit is that under "no fault", you can't sue the "at-fault" party for injuries from an accident until you've crossed a "threshold" specified in the law which is basically $1000 in medical bills, a broken bone or some other permanent injury (again, there's a bit more to it than that, but it will serve the purpose for this article) AND you can't recover in a lawsuit anything that is paid or payable under the "no fault" provision.

Therein lies the trap

Under the statute, no automobile insurance can be offered in Kentucky without including the "no fault" benefit, but motorcycle insurance is exempted. That means that "no fault" is an optional coverage for motorcycles, one you must pay for separately if you want to have the benefit. If you do not have, or do not reject, "no fault" coverage on your motorcycle insurance, you could have in effect a $10,000 "deductible" for recovery of medical expenses and lost wages from the "at fault party" in a motorcycle accident. There is a provision in the statute that says a person who has the other required coverages can be "deemed" to have rejected for the purposes of this accident, but as of this writing, I haven't seen that provision used or interpreted by a court. This means if someone makes the typical left turn in front of you at an intersection, runs up your taillight at a stop sign or any of the other things drivers often do when they "don't see" a motorcycle, and you are injured without PIP insurance coverage of your own, you will not have access to your own insurance for recovery of your medical expenses and lost wages and you may NOT be able to recover those elements of damages in a lawsuit against the other driver who was at fault for your injuries. If you obtain a judgment against the other driver in which a jury awards you $10,000 for a combination of medical expenses and/or lost wages, the court may deduct $10,000 off the top, leaving you zero.

Because your right to sue someone who has injured you is Constitutional, the legislature left an "out" in the "no-fault" law.
There is a form that insurance agents have available by which you can "reject" no-fault, either for all coverages or for motorcycles only. If you sign this form, you can retain your right to recover all of your damages in a suit against the other driver. Signing the form also may expose you to some risk (for example, you will not be "protected" by the threshold language from suit by the other driver, but in that case, your own liability insurance kicks in). If you sign the form to reject and do not purchase the PIP ("no fault"}, you will not have the benefit of the insurance to pay for your medical expenses and lost wages.

If you have health insurance and disability insurance through work or otherwise, you may be able to access that coverage for your losses, but be aware of two things: Some work-provided plans exclude "dangerous" activities, such as motorcycling, and; If your health and disability insurance is a work benefit, then that insurer may be able to "subrogate" against your award, thus collecting it back from any settlement or verdict you may get from the at-fault party.. There is no "right or wrong" answer to the question of whether you should purchase the coverage or reject. The "cleanest", most simple, way to do it is to buy the coverage. It can be a bit expensive, particularly if you have multiple bikes. It is an individual decision, based upon your own circumstances, but usually the best option is to purchase the PIP coverage for your bike. Remember that the purpose of insurance is not to be cheap but to protect what you've got to lose. Click here to read Insurance Coverages Article.

You should get advice from your agent and perhaps an attorney before you make the decision to sign it or not.

But the choice seems very clear in one respect. YOU SHOULD EITHER SIGN THE REJECTION FORM OR PURCHASE THE ADDITIONAL "NO-FAULT' COVERAGE. IF YOU DO NOT DO ONE OR THE OTHER, YOU COULD BE IN THE TRAP.

There is at least one more thing to check. Insurance companies in their policies usually refer to the "no-fault" coverage as "PIP", an acronym for "personal injury protection", rather than the "basic reparation benefits" language used in the statute. In some motorcycle policies however, "PIP" can also stand for "pedestrian injury protection", a slightly different version which does not provide the benefit to you, but rather only to a pedestrian who is injured by your motorcycle. This will leave you still in the trap if you are injured, even if you think you've paid for an extra coverage. If the premium for "PIP" on your declarations page isn't substantial, only a few dollars, it's probably the pedestrian variety. That's a good coverage to have, but doesn't keep you from the bind described above. Be sure when you purchase your insurance that you know what you're buying and if there's any doubt, make your agent explain it carefully. If he or she can't do that, get another agent.

The above is not intended to be individual legal advice to anyone and it is certainly not a comprehensive treatise on either tort or insurance law. It is intended only to inform motorcyclists of a situation that exists, one that each person must investigate and decide upon for him or herself. Just as not knowing what to do when the surface changes, the car door opens or the dark spot on the pavement turns out to be oil, not knowing what's in your back pocket can hurt.

Our goal is to provide the highest quality legal services to you and your business in a timely fashion. We welcome the opportunity to talk with you and to discuss how we may be of service. Contact John G. Rice, P.L.C. with your questions or concerns about a cycle accident or denied claims in central or eastern Kentucky. You can reach our attorney 859-759-4404 or toll-free at 1-866-542-2293.