What should you do if your PIP is denied?

     First, you should have an attorney that focuses their practice on personal injury cases.  You need someone who is up to date on autombile insurance.  

     The insurance companies and your agent are sloppy when it comes to PIP waivers.  The waiver must be in 10 point font, certain sections must be bolded, it must have certain information, and it must list the cost of the coverage with and without PIP.  Probably a dozen times this year, I have received a letter from a client’s insurance company telling me there is no PIP due to a waiver.  The first thing I do is request a copy of the waiver.  If they cannot produce the waiver, then the client is entitled to PIP coverage in the amount of $2,500, even if they have not paid for it.  Second, I compare the waiver to the statute.  You would be surprised how many times the cost of the coverage is not listed.  The result is $2,500 in PIP coverage.  Finally, if the provisions of the law are not listed, you guessed it, PIP coverage. 

     I had an adjustor tell me it was wrong for me to obtain PIP coverage for a client who did not pay for it, but she did not understand the law.  The PIP waiver law is a consumer protection law.  The provisions of the law are there so that consumers of automobile insurance can make an educated decision about whether they wish to purchase PIP coverage.  If the insurer does not give the consumer the minimum amount of information required by law to make an educated decision, then the insurance company has violated the law and must provide the coverage.    It is not fair to the consumer to withhold material information just to sell a policy.

     The penalty for failing to provide PIP coverage to one of my clients when the waiver is invalid is a lawsuit filed by me.  Some attorneys don’t like to bother with PIP lawsuits because they don’t generate a large fee, but in the bigger picture, it important that the adjustors know which attorneys will sue and which will not.  If the waiver is proven invalid in court, the law allows the client to collect the $2,500 minimal PIP, plus 18% interest, plus attorneys fees.  The attorney’s fees are a new provision, the result of which is that the insurance companies are more willing to settle and provide the coverage without a lawsuit. 

     As an example of this process, this past summer I had a married couple come to me after being involved in a motor vehicle crash.   I sent a letter to their insurer requesting PIP applications only to find that the husband signed a PIP waiver 13 years earlier.  PIP waivers do not expire.  If you waive PIP, it remains waived until you purchase (not renew) a new policy or change insurers.  I requested the waiver and immediately noticed multiple defects, at least under the current law.  I then pulled the applicable law from 1997 and learned that the waiver was defective when it was purchased.  I called the adjustor and explained the defect; she disagreed.  I then sent a letter to the adjustor explaining my position.  Prior to filing suit, I requested that she have the waiver reviewed by their in-house counsel, which she did.  In the end, the attorney for the insurance company agreed with me and PIP was provided to the clients in the amount of $2,500 each.  I did not have to file suit, it just required some legal research and trip to the law library (neither Lexus nor Westlaw had the old statute).

     Below is an excerpt from the letter that eventually resulted in $5,000 in coverage for my clients. 

Dear Ms. X,

     As we discussed this afternoon, I reviewed Mr. XXXX’s alleged PIP waiver, and have found it to be defective.  The PIP statute in effect on April 12, 1997, the date of alleged waiver, is substantially similar to the current PIP statute, Insurance Article, § 19-506.  The old statute, Art. 48A. § 539 (1993), requires at part (f) (2) (iv), 

                    The form shall clearly and concisely explain in 10 point boldface type:

                    1.  The nature, extent, and cost of the coverage and benefits that would be

                        provided under the policy if not waived by the first named insured;

     Clearly your purported PIP waiver lacks any language as to the cost of the coverage, a common error on many supposed PIP waivers.  In addition, the waiver is silent as to the extent of coverage.  Further, any allegedly proper language may be in 10 point font, but is not boldfaced.  Finally, you may also notice that [name of insurer] even cited the statute incorrectly on its waiver.  As you know, any substantive or even technical violation of the PIP statute compels the insurer to provide minimal PIP benefits; $2,500 coverage each for Mr. and Mrs. XXXX.

     The PIP statute is a consumer protection statute and was written into law to make sure that the insured has all of the knowledge necessary to make an informed decision.  [The insurer]’s defective waiver took that right from Mr. XXXX.  In this case, the PIP statute functioned as it was intended by the Maryland legislature.  [Insurer] is a highly sophisticated negotiator and should have been able to provide Mr. XXXX with the proper waiver.

     The lesson learned is that you should never take the insurer at its word when any coverage is denied.  Also, make sure you have an experienced and knowledgeable personal injury attorney who knows the law.

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