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Wait, which insurance pays for my car accident in Kentucky?

Two hands folded over car insurance policy documents on a clipboard

Know your rights and options after a car crash

Getting into a car accident leaves you dazed and confused to begin with. Dealing with the insurance company can make it even worse.

Kentucky's car insurance system is complex, and figuring out how to get compensation for your car accident is tricky. Of course, the insurance company will take advantage of that confusion to find ways to reduce or deny your claim — after all, that's how they make their money.

We deal with the car insurance system in Kentucky every day. Here's what you need to know.

Kentucky is a "choice no-fault" state

Most U.S. states use a fault-based system for car insurance, but there are a dozen states (as of this writing) that use no-fault insurance systems of one sort or another.

Kentucky is unusual even among no-fault states, though, because it allows motorists to opt out of the no-fault system, making it effectively an "optional no-fault" or "choice no-fault" system. (The other "choice no-fault" states are New Jersey and Pennsylvania.)

How no-fault insurance works in Kentucky

By default, when you buy car insurance in Kentucky, the policy includes mandatory no-fault insurance known as personal injury protection (PIP), of at least $10,000, with the option to purchase more.

PIP pays for your medical expenses, lost wages, and some other out-of-pocket costs related to your accident, regardless of who caused it. You access these benefits by filing a claim with your own insurance company, called a first-party claim.

Whether your injuries are covered by your own PIP insurance or someone else's depends on the circumstances:

  • If you are injured in an accident while you are in your own vehicle, your PIP insurance applies.
  • If you are injured as a passenger in someone else's vehicle, their PIP insurance applies first, but you are covered by your own insurance if that vehicle is uninsured. You may also be covered by the insurance policy for another vehicle involved in the accident.
  • If you were hit by a car as a pedestrian or cyclist, the PIP insurance for the vehicle that hit you applies first, but you are covered by your own insurance if that vehicle is uninsured.
  • If there is no policy available — for instance, if you are a pedestrian hit by an uninsured vehicle and you don't own a car yourself — then you can get PIP coverage through the Kentucky Assigned Claims Plan.

The no-fault system limits your ability to pursue compensation for your injuries from the other driver, which would include damages in excess of your PIP benefits as well as costs not covered by PIP at all (such as pain and suffering). However, an exception applies if your injuries are sufficiently severe to cross the no-fault threshold:

  • Permanent disfigurement
  • Fracture of a weight-bearing bone
  • Compound, compressed, or displaced fracture of any bone
  • Any permanent injury
  • Any permanent loss of a body function
  • Any injury or combination of injuries requiring over $1,000 in medical bills

Note that the no-fault system only applies to compensation for injuries; you can always file a third-party claim for property damage, such as damage to your vehicle.

What happens if you opt out of no-fault insurance?

If you opt out of no-fault insurance (which must be done in writing), then you retain the right to file a claim with the at-fault driver's insurance company (a third-party claim) or a personal injury lawsuit to get compensation for your injuries, regardless of the severity.

On the other hand, you no longer have the mandatory $10,000 in PIP benefits for yourself and your dependent family members (note that your spouse's choice to opt out is separate from yours).

You still have to pay for "guest PIP," which covers non-family passengers in your car as well as pedestrians hit by your car. In addition, if you opt out of no-fault, you must take a $1,000 deductible on your policy.

Whether you should opt out of no-fault coverage is up to you, but we don't recommend it. Opting out of no-fault may save you a little bit on your premiums, but you also lose potentially thousands of dollars in coverage in the event of an accident.

The restriction on your right to sue is usually not a big deal: almost any accident that causes significant damages is going to cause over $1,000 in medical bills or be covered under one of the other no-fault exceptions anyway.

In short, situations in which opting out would actually work to your advantage are quite rare, and situations in which opting out could hurt you financially are much more common.

An experienced Kentucky attorney can protect your rights from the insurance company

Again, navigating the insurance system in Kentucky can be difficult, especially if there is a dispute regarding which insurance company has to pay and which coverage applies.

In a free consultation, we can review your insurance policy documents and determine whether the insurance company followed the law when you bought your policy.

For instance, if they are claiming you opted out of PIP benefits, we'll ask to see the documentation that you did so in writing as required by Kentucky law. We are adept at working through the insurance situation and finding your path to the compensation you need.

If you've been hurt in a car accident in Louisville or anywhere in Kentucky, don't go up against the insurance company alone.

Get a lawyer on your side as early in the process as possible. Contact the Whaley Law Firm today.

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