How Do Tort Options Affect Pennsylvania Auto Insurance Prices and Coverage?

Pennsylvania state flagWhen residents go to buy a standard Pennsylvania auto insurance policy, they will be asked if they want to purchase limited tort coverage or full tort coverage. Going with the limited option means the policyholder will have to pay less on premiums but also that he or she cannot successfully sue for certain types of damages-namely, non-economic damages-after a crash, except under certain circumstances. Consumers who go with the full tort coverage will pay a bit more in premiums but also will have the ability to sue the at-fault party for a wider range of losses.

Types of Damages That Are Off-Limits to Limited-Tort Policyholders

When a driver chooses Pennsylvania car insurance coverage with the limited-tort option, he or she can still recover compensation from the at-fault party for out-of-pocket damages. So if Driver A slams into Driver B's car and causes injuries and vehicle damages, Driver B should be able to get compensation for hospital costs and the vehicle repair bills regardless of which tort option was chosen.

But if Driver B has chosen a limited-tort option, what he or she can't successfully sue for is noneconomic damages. This means compensation for things like pain and suffering, disfigurement and other types of damages that are not easily quantifiable would be off-limits.

There are certain exceptions to this rule, though. A person who has chosen the limited-tort option can still recover for noneconomic damages if the at-fault driver in a crash:
  • is convicted of having been driving drunk or under the influence of a controlled substance at the time of the accident
  • was driving a car registered out of state at the time of the crash
  • caused the crash on purpose with the intention of injuring someone
  • did not have proper insurance coverage

Limited-tort policyholders will also retain full right to sue if the accident was the result of a vehicle defect.

Implications for Pennsylvania Auto Insurance Premiums

Noneconomic damages tend to far outweigh economic damages. For example, the National Safety Council (NSC) estimated that, in 2009, the average economic cost of a car crash fatality was $1.29 million, which is a large sum on its own. But the comprehensive cost of one of those fatalities-meaning the economic costs plus the value of lost quality of life-according to the NSC, was $4.3 million.

Since the typical sum that includes noneconomic damages is more than three times that of strictly economic damages, policyholders who choose the limited-tort option pose less of a threat to insurers' bottom line. And as a result, they give lower premiums to those who go the limited-tort route.

United States flag shaped as PennsylvaniaThe price break for choosing the limited option can be significant. According to a rate-comparison guide issued by the Pennsylvania Insurance Department, a Philadelphia resident who switches from a full to limited option could see a premium reduction of between 15 percent and 30 percent. But while that switch does bring some up-front savings, consumers should weigh those savings with the possibility of not being able to sue for pain and suffering and other types of damages after a serious accident.