From the desk of Cliff Wilson: Senate Bill (SB) 411, which was recently signed into law by Oregon’s Governor, significantly impacts automotive insurance carriers by expanding uninsured/underinsured (UM/UIM) motorist and personal injury protection (PIP) coverages. The changes result in “stacking” of UM/UIM limits on top of the at-fault driver’s liability limits. The changes increase the PIP coverage period for medical purposes from one year to two, and significantly alters Oregon PIP reimbursement. Read on in detail below to learn more about this landmark change to Oregon’s automobile insurance landscape.
Claims Pointer: Effective January 1, 2016, the new law will significantly alter UM/UIM and PIP claims handling for all Oregon automobile insurance policies issued or renewed after that date. Adjusters and underwriters should be aware of the new law because the changes expand the level of coverage for UM/UIM and PIP policies and will assuredly lead to increased payments. This is a substantial change to Oregon insurance law that will undoubtedly result in increased litigation and claims handling cost. Below are the three changes that we believe to be especially significant as a result of the passage of SB 411.
(1) UIM “Stacking”
UIM coverage is currently determined by comparing the amount of liability insurance of the at-fault motorist with the UIM policy limits. Under the current statutory scheme, UIM is only available when the UIM limit exceeds the at-fault driver’s liability limit, and only in the amount of the difference between the two. For claims on all Oregon UIM policies issued or renewed after January 1, 2016, the UIM coverage will “stack” on top of the at-fault driver’s liability limit. While UIM “stacking” is a new concept in Oregon, it is the rule in many other states, including Washington.
Multiple UM/UIM policies will also stack. Accordingly, when a passenger rides in a non-owned vehicle, the vehicle’s UM/UIM coverage will be primary and the passenger’s UM/UIM coverage, if any, will be stacked on an excess basis.
(2) PIP Time Extended for Medical Benefits
The new law also extends the coverage time of PIP medical benefits from one year after the date of injury to two years after date of injury. The amount of minimum PIP coverage remains at $15,000. This change in time period will undoubtedly lead to increased PIP payments because insureds will have an additional year in which to accrue medical costs up to the policy limits.
(3) PIP Reimbursement Further Limited
Under the new law, PIP reimbursement will only be available to the PIP insurer to the extent that the amount recovered exceeds the injured party’s total damages (which includes both economic and non-economic damages). This is a significant change from the current statute, which allows PIP reimbursement to the extent the amount recovered exceeds economic damages only. As a result of the change, we anticipate that the recovery of PIP benefits paid, particularly involving cases with smaller liability policy limits will become less frequent.
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.