Are there also changes in liability coverage?

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Yes, there are significant changes with the new law. Since 1974, the minimum amount of insurance that a person had to have in the event that the driver injured or killed another person was $20,000. That $20,000 in liability coverage would not go very far to compensate somebody who has a life-altering or fatal injury. But, prior to this change, accident victims had their own unlimited PIP coverage to protect them from medical expenses and lost wages for three years.

With the new law, the standard bodily injury coverage went up to $250,000. However, you can buy less ─ as little as $50,000 in coverage.

Why is this important? Because liability coverage is linked to the new PIP situation where not everyone has unlimited PIP coverage anymore. There are a lot of people who are going to buy the least amount of PIP coverage they can. This means that if they get hurt in an accident, their medical bills are going to exceed the amount of insurance they have to cover them.

Let’s say somebody opts for $250,000 in PIP coverage, but their medical bills after an accident are $1 million (which is not uncommon). That person is then out of pocket $750,000 because they took the lower amount of PIP. What happens? Well, the new law allows accident victims to turn to the at-fault driver and include that claim in their lawsuit.

Ultimately, this means drivers have increased exposure to larger lawsuits if they are at fault for an accident. Now you can get sued for the victim’s past and future medical bills, so you need more liability coverage. Previously, since 1974, victims could not sue the at-fault driver for medical bills because their own PIP insurance paid for them.