Auto policy minimums leave PI attorneys feeling helpless

Plaintiffs’ lawyers say they’re tired of telling clients there’s not much they can do when a victim is seriously injured in a car accident caused by a driver whose insurance policy provides only $20,000 in bodily injury coverage — the minimum required by state law.

“The cost of medical care has skyrocketed in recent years,” noted Joseph M. Orlando Jr.,  a personal injury attorney in Gloucester. “Wages have gone up, so that means missing time at work means losing more in wages. If that is occurring and you haven’t changed the insurance policy limits, you are leaving no room for any general damages like pain and suffering, scarring and future medical expenses.”

The state’s current compulsory coverage minimums are “out of line” with the actual medical costs, lost wages and other damages typically incurred by plaintiffs injured in today’s auto accidents, agreed Boston PI lawyer Peter J. Ainsworth.

“[The $20,000 compulsory minimum] really covers next to nothing,” said Ainsworth, past president of the Massachusetts Academy of Trial Attorneys. “It’s a disaster for everyone involved when there’s not enough insurance coverage for an accident — and that includes both the people who get hurt and those who caused the accident, too.”

Compulsory limits

The state’s compulsory auto insurance limits are stated in G.L.c. 90, §34A. The statute defines “motor vehicle liability policy” as a policy providing liability coverage “to the amount or limit of at least twenty thousand dollars on account of injury to or death of any one person, and, subject to such limits as respects injury to or death of one person, of at least forty thousand dollars on account of any one accident resulting in injury to or death of more than one person.”

Many drivers on the road are teenagers, elderly people on fixed incomes, and those with low incomes, Orlando said.

“Twenty-thousand dollars used to be a significant amount of money. Now it’s not. The compulsory limits to drive a car — a 2-ton death machine — no longer provide enough coverage. Not anymore.”

“Unfortunately, if somebody is driving around with a compulsory minimum coverage auto policy, they usually don’t have the personal assets to go after for your injured plaintiff,” Orlando said. “They don’t have a house you can attach; they don’t have wages you can garnish.”

In addition, the statute provides that the personal injury protection provision of an auto policy must provide coverage “to the amount or limit of at least eight thousand dollars on account of injury to or death of any one person.”

“The $8,000 compulsory limit for PIP is supposed to cover wage loss, too,” Orlando said. “But when you introduce the substantial cost of medical care, there doesn’t end up being any money left for wages.”

The Legislature adopted the current limits in the Automobile Insurance Reform Act of 1988.

“Twenty-thousand dollars used to be a significant amount of money. Now it’s not,” Orlando said. “The compulsory limits to drive a car — a 2-ton death machine — no longer provide enough coverage. Not anymore.”

State law also requires $20,000 per person/$40,000 per accident coverage for bodily injury caused by an uninsured driver and $5,000 per accident property damage coverage.

Ainsworth calls it a “tragedy” when a client comes to him with serious injuries from a car accident involving a driver who has the minimum policy limits required by state law.

“There’s really not much we can do,” he said. “Most of the time, the people with very limited insurance also don’t have personal assets. Lots of times we tell people we can’t help.”

Nonetheless, Ainsworth said he and other members of the plaintiffs’ bar will frequently work pro bono to help plaintiffs in those cases at least get the $20,000.

“When someone has lost a loved one or can’t work, I just can’t take a third of the limited insurance that is available,” he said. “Plenty of times we help out anyway, but that’s not a solution.”

On the other hand, Ainsworth said that when there are catastrophic injuries involved in the case, insurance companies will often offer the $20,000 policy limit “without a fight.”

“Which is another reason I wouldn’t take a fee on a case like that,” he said.

Legislative initiatives

The Massachusetts Academy of Trial Attorneys is supporting House and Senate bills in the current session of the Legislature that would increase the state’s mandatory minimum coverages, according to Paul Dullea, executive director of MATA.

Sen. Brendan P. Crighton, D-3rd Essex, introduced S. 606 on Jan. 17, 2023. Rep. Michael J. Finn, D-6th Hampden, introduced H. 1006 on Jan. 20, 2023.

Both bills propose increasing the compulsory minimum bodily injury limits, with the per person limit being raised from $20,000 to $50,000 and the per accident limit going up from $40,000 to $100,000. The bills have been languishing in the Joint Committee on Financial Services.

According to Ainsworth, passage of the proposed compulsory minimums would be progress.

“In cases involving minor injuries or collisions, insurance companies do ‘nickel and dime’ plaintiffs around that $20,000 policy,” he said. “If the limit were raised to $50,000, it would make it easier to resolve a lot of cases.”

That said, Ainsworth conceded that raising the compulsory minimums wouldn’t completely solve the underlying problem of underinsurance.

“For somebody who can’t work anymore or whose breadwinner in the family is killed, $50,000 is not enough — but it helps,” he said. “But for a run-of-the-mill [motor vehicle accident] where nobody is seriously injured, it’s a lot more realistic. The last thing you want to do is have to go after somebody’s personal [assets] because they don’t have enough insurance.”

The Legislature recently extended the date for the committee to report its recommendations on the bills to May 17.

“We’re not expecting anything in this session,” Ainsworth said. “Hopefully, next session [the measures will be refiled] and really considered.”

As long as insurers can raise their rates to account for higher compulsory minimums, Ainsworth said he can’t imagine why the insurance industry would be opposed to reform.

“I suppose at the end of the day [insurers] would not be opposed because they can adjust their premiums and sell more insurance,” he said.

On the other hand, Ainsworth recognizes that the specter of higher premiums stands as the largest stumbling block to the Legislature acting to increase current limits.

“The concern is that it would raise rates for folks who really can’t afford it,” he said. “But when the downside is the fact that lives are ruined when there is not enough insurance, forcing people to turn to the state for [assistance], it makes sense to ensure that there is some amount of insurance that can actually help people.”

Simple fix?

According to Orlando, raising the compulsory minimums is only part of the solution for injured plaintiffs.

“The compulsory limits on insurance are too low for this day and age,” Orlando said. “But blanket increases without some form of governance will just mean a giveaway, allowing insurance companies to jack-up premiums. Given the medical cost environment, we have to find a way to higher compulsory limits without hurting the working class with higher premiums.”

Orlando said one piece of the solution would be to allow “stacking” insurance policies to cover a plaintiff’s damages.

The state’s anti-stacking law, G.L.c. 175, §113L, was enacted as part of the 1988 reform act.

The statute provides: “Uninsured motorists coverage shall provide that regardless of the number of vehicles involved, whether insured or not, persons covered, claims made, premiums paid or the number of premiums shown on the policy, in no event shall the limit of liability for two or more vehicles or two or more policies be added together combined or stacked to determine the limits of insurance coverage available to injured persons.”

“The simplest solution is to nix the anti-stacking rule,” Orlando said. “That way the compulsory [underinsured motorist] limits could be added to a tortfeasor’s insufficient policy limits. In essence, you’d actually be getting coverage from compulsory underinsurance [coverage].”

The Massachusetts Defense Lawyers Association did not respond to a request for comment. The Massachusetts Division of Insurance and the Insurance Information Institute were unable to respond to press inquiries prior to deadline.