Owner Operator Best Practices – PIP & Owner Operators | What You Need To Know
February 1, 2018
Author: Ben Droessler
The following 12 states have “no-fault” laws regarding auto accidents: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. These “no-fault” laws remove the question of who is at fault in an accident by requiring the injured party to pay for their own injury expenses. Insurers add Personal Injury Protection (PIP) to auto liability policies to pay for these expenses including medical and lost wages of the insured. Each of the 12 states has different laws regarding the limits and scope of PIP coverage.
How does PIP affect Motor Carriers using Owner Operators?
Owner Operators can claim PIP benefits under the Motor Carrier’s auto liability policy. These claims can be very costly and increase auto liability premiums. Michigan, for example, has unlimited PIP benefits and even an additional premium charge for “catastrophic” claims.
What can Motor Carrier’s do to protect themselves against Owner Operator PIP claims?
Eliminating PIP exposure is nearly impossible; however, there are a few ways to reduce the likelihood of a claim under a Motor Carrier’s auto liability policy:
- Waive or elect minimum limits where allowed by law on the Motor Carrier’s auto liability policy
- Require Owner Operators show proof of PIP coverage under their own personal auto liability policy if they are residents of a PIP state
- Require Owner Operators carry work accident insurance (Workers Compensation or Occupational Accident) that pays primary to other insurance
- Coordinate PIP benefits with work accident insurance where allowed by law
Contact Ben Droessler with Cottingham & Butler’s Contractor Services Team.
Ben Droessler CIC
Vice President, Independent Contractor Risk