Why Is My Insurance Paying If The Accident Was Somebody Else's Fault?
It's a scenario that recurs frequently. I’ve found that an understanding of the differences between first-party and third-party insurance can go a long way to answering this question. Personal injury protection [or PIP] and collision or comprehensive coverage are the first party coverages applicable to the typical car accident case.
PIP often pays on your medical and wage loss expenses on an immediate, "as-claimed" basis.
First-party insurance is your own insurance. Both collision and PIP are essentially no fault benefits- personal injury protection explicitly and collision as a practical matter. If you are injured in an accident regardless of fault you're entitled to have your medical expenses and lost wages paid by your own coverage. This is separate and apart from any bodily injury claim you might have against the at-fault driver. Your rates cannot be changed for making a single PIP claim. And your PIP provider does not have a right of recovery from any bodily injury claim.* Collision or comprehensive coverage operates in much the same fashion Collision coverage is insurance on your vehicle, for damage to your vehicle. It covers damage to your vehicle again regardless of fault. The advantage of having your vehicle repaired through your own collision coverage is often that of speed and quickness. In some instances, the other parties insurance will delay or “investigate” the claim. Meanwhile your vehicle is damaged, unrepaired and perhaps not driveable. Going through your own insurance company is often the quickest and easiest way to have your vehicle repaired after an accident. If it is ultimately determined that someone else bears responsibility for the motor vehicle accident, your insurance company will recoup whatever they paid out through an inter-company arbitration process. While the peace of mind, and indeed perhaps the financial necessity of getting your car repaired quickly, are nice, routing a property damage claim through of your collision coverage does come with a cost in the form of your agreed-upon insurance deductible. The good news is if your insurance company is successful in inter-company arbitration they will attempt to get that deductible back for you. If you receive PIP wage loss benefits, or PIP pays some of your medical expenses, you can certainly make a claim for those exact same losses against the at-fault driver in your claim. In this sense [because there is no subrogation interest for the PIP carrier, Maryland law is often said to provide a "double recovery" [at least up to 2500] for these losses.
To answer the question posed in the title of this article there are two scenarios in which it might make sense for your insurance company to be involved in an automobile accident where someone else is responsible for the loss.
- Personal injury protection is a no-fault benefit that creates a fund of money to pay your medical expenses in lost wages. It exists wholly independently from, and has no bearing on, you collecting those same losses from the person at fault for the accident.
- Collision coverage is insurance on your vehicle. It is there to pay for damages to your vehicle regardless of fault. It might be the best most efficacious way to repair your vehicle and get it back on the road if the at-fault party has not immediately accepted responsibility.
*The Assembly has recently enacted a change in this process. Marylanders now have the option of carrying less insurance. An insured may now reject personal injury protection altogether, under specific circumstances. See Insurance Article, Md. INSURANCE Code Ann. § 19-506.1.
-This Article was updated by Eric Kirk on 8/28/19 and 11/19/20.