Limited Tort or Full Tort? That Is the Question

Do I really need full tort coverage in my automobile policy and why is my premium so much higher if I get it? There is no doubt you have asked yourself these questions when renewing or applying for automobile insurance. It is very tempting to elect the limited tort coverage option in your automobile policy and take advantage of the corresponding reduced premium, but before you make this “cost-saving” choice, you must consider the coverage of which you would deny yourself.

The limited tort coverage option is the result of the insurance industry’s political maneuvers. Essentially, the insurance companies lobbied the state legislatures to create this option as a means of avoiding their obligation to pay out for personal injury claims. With limited tort coverage, the insurance policyholder elects to waive any and all future claims for recovery of pain and suffering damages in the event of an accident, no matter who is at fault and no matter the extent of that fault.

For instance, if a fully loaded quarry truck were to rear-end the car in which you and your family are traveling, causing all of you to be in the hospital for a period of time, the quarry truck’s insurer would be obligated to pay for the resulting property damage, medical bills, and lost wages. If you fully recover from the injuries, there will be no payment for any pain, suffering, inconvenience, missed opportunities (missed soccer games, holidays, etc.), or the lost ability to enjoy recreational activities.

Even if the driver was texting during the accident, and you prove that the accident was 100% the driver’s fault, there would be no recovery beyond reimbursement for the cost of the property damage, medical bills, and lost wages. This inability to recover is the result of the other damages being considered noneconomic damages, because you cannot value those damages easily by way of setting an exact dollar amount, like you can with property damage, medical bills, and lost wages. The lack of any recovery for the noneconomic damages is the result of the limited tort coverage election. While there are some exceptions in cases of serious bodily injury, death, or permanent disfigurement, the general limitations are meaningful.

Furthermore, what most people do not realize is that they are limiting not only what they as the policyholders can recover but also what their family members and members of their household can recover. If you are driving other members of your household and are involved in an accident, you may be limiting any claims they may have as well. Limited tort election also limits what you and your family members can recover when you are passengers in someone else’s car.

Injuries from automobile accidents can affect your life substantially. Convalescence and recovery can take months; some pain and suffering will not go away for years, substantially affecting and perhaps completely limiting your ability to enjoy your usual past activities. In most cases, the effects go beyond just the hospital stays.

The best way to save money on automobile insurance without handicapping your ability to recover, is to shop around. Insurance companies share your information and claim history with each other so the chances are that if one company knows about your limitations, they all will know; but all companies do not treat claims or driving history the same.

Insurance companies analyze data differently; certain driving offenses, driver location, age, make and model of car, etc. They use the data they have regarding these variables, compare them to the claims they have paid out, and come up with a risk analysis. Where you fall within that risk analysis determines the amount of your premium. Each company uses a different risk analysis; therefore, each company will quote a different premium, even if all of the factors are the same. Another reason why the premiums may differ is the insurance company’s investment success rate. Almost all insurance companies take the policy premiums and invest them in an effort to make greater profits. Insurance companies are required to have a certain amount in reserve to pay out expected claims from policyholders, but they invest the extra money in stocks, bonds, and other investments. If one company’s investments do better when compared to another, that could affect your rates.

If you are a former or active member of the military or the dependent of such an individual, USAA is probably the best option. While USAA unfortunately has limited availability in terms of eligibility, it usually has the best rates because it runs on limited profit. When it can, USAA also periodically returns unused portions of premiums it has not paid out to its policyholders, making it the best insurer in the market, in my opinion (I do not receive any benefit from providing this endorsement).

You should consult with your insurance agent and have that individual explain exactly what is covered and what is not covered, and be sure to get the explanation in writing. The coverages you select should be consistent with your own budget and needs. If you are involved in an automobile accident, you should consult an attorney to see if you have a claim, regardless of the coverages you select.

Now for the obligatory disclaimer (I am an attorney after all):

This article is for informational purposes only and should not be construed as legal advice, nor is any attorney-client relationship intended or established.