If you're injured in a car accident in one of the dozen or so states that follow some version of a "no-fault" car insurance system, before you can step outside the confines of no-fault and pursue a claim against the at-fault driver, your injury claim must meet certain thresholds set out by state law. (Get the basics on how no-fault car insurance works.)
Some states have monetary thresholds (that means medical expenses related to the accident must be over a certain dollar amount), other states have a "serious injury" threshold, and some states use both kinds of thresholds (letting an injured person file a claim if either threshold is met.)
This article discusses monetary thresholds in no-fault states. For a discussion of states with "serious injury" thresholds, see our companion article No Fault Car Insurance: States with Serious Injury Thresholds.
The no-fault laws in the states listed below allow you to file a third-party car insurance claim (with the insurer of the driver who was at fault for your car accident) or personal injury lawsuit against the at-fault driver whenever your medical expenses meet or exceed a certain dollar amount. The threshold limit is listed next to each state. (Note: The states listed below may also allow a claimant to file a liability claim or lawsuit if their injuries qualify as serious under statutory thresholds.)
Medical expenses that count toward reaching this threshold include not only the obvious things most medical insurance covers -- costs of an ambulance, hospital, clinic, doctor, nursing, and laboratory -- but also other professional health services associated with car accident injuries, including dental work to repair or replace teeth, physical therapy, and chiropractic care. To find out what is counted toward the threshold limit in your state, look at the definition of medical expense in your own no-fault (PIP) insurance policy.
The monetary threshold can be reached only by counting covered medical expenses that are "necessary." Occasionally, the at-fault driver's insurance company might argue that you have not reached the threshold because a particular medical treatment or service you received was either:
The insurance company could claim that after subtracting or reducing the supposedly unnecessary medical expense, your medical expense total does not reach the no-fault threshold and, therefore, you are not permitted to file a liability claim.
For example, let's say your state has a medical expenses threshold of $1,000. You have medical expenses of $1,250, including $650 for physical therapy. The at-fault driver's car insurance adjuster claims that there was no evidence that most of the physical therapy did any good. The adjuster claims that half the physical therapy expenses were unnecessary, reducing the necessary physical therapy expenses by $325. When that $325 is subtracted from your total medical expenses, the total shrinks to $925, less than your state’s threshold and therefore not enough to allow you to file a liability claim in addition to your PIP benefits.
Under some PIP policies, if you file a liability claim and recover damages after you also collected PIP benefits, your own PIP insurance company has a right to be reimbursed by you for the amount it paid you. Under these policies, no-fault coverage works just like an auto policy’s medical payments coverage -- except that it also pays for some amount of income loss. In other words, the amount of liability compensation you get is reduced by whatever your PIP coverage already paid you.
Under other no-fault policies, your PIP insurance company does not have a right to reimbursement from you, but it does have a right of "subrogation" -- which means it can recover your PIP benefits directly from the liable person’s insurance company. Under those subrogation policies, you can’t collect damages from the other person’s insurance that duplicate any amounts your PIP coverage paid you. Carefully read the terms of your own PIP benefits coverage to see whether your PIP insurance carrier has a right of reimbursement or subrogation.
As you receive treatment for your injuries, keep track of how close you are to reaching your state’s no-fault threshold level. There are times when we all have difficulty choosing whether to undergo one more examination or one more treatment toward the end of a course of a treatment for a particular injury. If you are close to reaching the threshold level for being allowed to file a liability claim for damages but are not certain you will reach it, the need to go over the threshold might be another thing to consider when deciding whether to undergo that final treatment or to have that final examination.
And the fact that you could choose not to undergo a particular examination or treatment does not mean that the treatment is medically unnecessary. A treatment or examination is medically necessary if it serves a reasonable diagnostic or therapeutic purpose.
To learn more about how insurance coverage works after a car accident -- and everything you’ll need to navigate your claim -- get How to Win Your Personal Injury Claim by Joseph L. Matthews (Nolo).