BICYCLE INSURANCE – Where Is It?

BICYCLE INSURANCE – WHO’S GOT IT?

Is anyone writing bicycle insurance in the USA right now?  If so, I’m out of the loop.  As far as I can tell, no insurer is writing such a policy in the United States right now.

What do I mean?

If you have a car, you get car insurance.  That policy typically contains a number of different coverages.  If you hit someone in your car, you are covered.  If your car is damaged, your policy can cover it.  If you are hit by an uninsured motorist, or one without enough insurance, this policy may provide a pool of money to pay your claim.  The “Medical Payments” coverage can be used to pay your medical bills.

What if you are a true transportation cyclist and give up your car?  Who pays the claim if you run somebody over?  What if you get hit by an uninsured motorist?  What kind of insurance is available to protect you?

The short answer, in the U.S., is that it is much easier to protect yourself on the bike if you own a car!

If you do NOT own a car, there is no “Uninsured/Underinsured” policy that will protect you if you are hit by an uninsured motorist.  No one is selling this type of “Bicycle Insurance” in the U.S., as far as I am aware.

For some answers to your Bike/Insurance questions, I am reprinting below some of what I wrote in Bicycling and the Law, that epic tome that covers much of the “Bike Law” genre!  Not the sexiest topic for a Blog, I know, but one that is critically important if you ride and want to make sure you and your family are protected, financially, from the idiots out there!

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AN INSURANCE PRIMER FOR CYCLISTS

Introduction and overview

Insurance –  how boring.  How can you dedicate an entire CHAPTER to insurance?  Simple… it’s probably the most important factor in EVERY car/bike collision in the country!  No insurance usually means no recovery, no ability to pay your medical bills, no way to recover your wage loss, no money available to pay your future medical expenses and no funds to compensate you for your pain and suffering.  However, insurance policies and insurance issues frequently become extremely complicated, particularly to those uninitiated in the reading of policies and the laws of insurance.

Health, auto, homeowner’s and life insurance policies all may come into play if you are involved in an injury-causing crash while operating your bike.  More exotic products like “excess” or “umbrella” coverages can also be triggered in more catastrophic incidents.  However, once you tap into insurance coverage, obscure legal concepts such as “subrogation,” “medical payments coverage,” “uninsured/underinsured motorist” and “no fault” or “PIP” can cause you to pull your hair out!  The purpose of this chapter is to give you a brief lawyer’s eye view into the whacky world of insurance to help you understand how it all fits together!  At the end, I’ll give you a warning about a very disturbing new trend which may dramatically impact cyclists in the future!

Basic Assumptions – You are in a Crash, Hurt & Have a Claim

Let’s assume you are in a crash – a particularly ugly crash – in which you are significantly and permanently injured.  You may miss days, weeks or months of work.  You may not be able to work in the future, be forced to retire early or change the way you work and live. You incur huge medical bills and suffer intolerable pain.  You have disfiguring scars and debilitating permanent medical problems.  And it’s all the other guy’s fault… mostly.  In short, from a lawyer’s warped perspective, you have a GOOD case.  How does insurance come into play?  One more assumption for this part of our discussion – you are NOT in a “No Fault” state.  [More on “No Fault” later].

Actually, again from the lawyer’s perspective, the question really is how do you get paid [and how do I get paid?] because that’s our job.  We obtain compensation for injured victims of another’s negligence.  This compensation almost always comes from an insurance company.

What if the motorist who hit you has no insurance?  Where can you get money to pay your medical bills or living expenses?  What if the motorist that hit you has some insurance but not enough insurance to cover your claim?  What if you have great health insurance and disability insurance through your job, but all of a sudden you start receiving “subrogation” letters which seem to say that you have pay back your insurers all the money they paid to your doctors if you get a settlement!?  Can they do that?  What if you are at least partially at fault for causing the crash?  How does this affect your ability to obtain money or your negotiations with various insurers?  What steps do you have to take to protect the rights of your various insurance companies when you look to settle your claim?

All of these questions illustrate the overlap of insurance law into bicycle crash cases.  As soon as that car hit you a LOT of insurance policies were triggered.  Let’s take a look at some of the issues raised above.

Insurance Policies that come into play during a crash:

Basic Facts: Car Hits Cyclist, Cyclist is severely injured or killed

MOTORIST’S AUTO POLICY

The first, and most obvious, insurance policy that comes into play when you are hit by an errant motorist is the motorist’s insurance policy [assuming you are lucky enough to be hit by someone who HAS insurance].  The typical automobile insurance policy is designed to pay money to those injured by the motorist’s “negligence” or carelessness.  The motorist [or cyclist] must provide timely “notice” to the motorist’s insurer of the crash. Typically, the insurer then assigns an “adjustor” to handle your claim.  The injured cyclist presents a “claim” against motorist to the adjustor by providing documentation to support the claim.  The claim is then considered by the insurer.  The insurer has the right under the policy to “settle” the claim by paying a sum of money to the injured party.  This sum of money is based on the law of the particular jurisdiction relative “tort claims” or “personal injury” claims and usually covers medical bills and wage loss along with other out of pocket and monies to compensate for “pain and suffering.”    The insurer usually has separate coverage to pay any “property damage” claim arising out of the crash.  If the insurer makes an “offer” to settle, negotiations may ensue and the claim may be settled.  If a settlement cannot be reached, a lawsuit may be necessary.  That’s the claims process in a [long] paragraph.  Let’s look at some critical issues.

NOTICE TO EACH INSURER IS CRITICAL

To trigger any insurance coverage, the injured cyclist or her/his lawyer typically notifies the motorist that a claim is being presented.  The smart motorist provides that letter to his insurance agent or reports it directly to the insurer.  This notification to the insurer is critical.  Failure to timely notify the insurer may give the insurer the right to deny the claim, depending on the terms of the particular policy.  As the cyclist’s lawyer, I always notify the motorist, but also contact the motorist’s insurer myself.  Frequently, the name of the insurer is listed on the police report and each insurer has an “800” number for reporting claims.

THE ADJUSTOR – FRIEND OR FOE?

The insurer then assigns the claim to one or two people, known as “adjustors” or “claims representatives.”  Some insurers have separate adjustors for the “property damage” and “personal injury” claims, some insurers use the same adjustor for the entire package.  Some insurers have adjustors who are actually employees of the carrier.  Some insurers retain a separate company to handle the claim.

A few words about insurance adjustors.  For the most part, they are highly trained professionals who are extremely adept at protecting the insurance company’s assets by paying as little money to the injured bicyclist/claimant as possible.  They are professional cynics – that’s their job.  They handle dozens or hundreds of claims at a time.  In every one, someone wants more money than the insurer wants to pay.  They’ve heard every story on the planet.  They demand documentation to support every element of a claim.  They take nothing for granted and nothing at face value.

Adjustors are trained in property damage, accident investigation, witness interviewing, the law of torts, medical issues, insurance law, subrogation and negotiation.  They are professional negotiators.  The adjustor has probably handled hundreds, thousands of claims – you probably have only been involved in ONE.  Please remember, they know more than you and are very good at what they do!

The personalities of adjustors run the gamut from sugary-sweet to mean and ornery.  Some adjustors make life so miserable for claimants that they take less money than the case is worth just to not have to deal with them any more.  Some adjustors befriend the claimants such that the injured victim feels the adjustor has his/her best interests at heart.  For you, the victim of a negligent motorist, the most important thing to remember is that the adjustor’s job is to pay you the smallest amount of money he/she possibly can to resolve your case!  They are not your friend, but your adversary.  Treat them professionally.  If they do not treat you professionally, document it in a letter and send to a supervisor.  If the treatment is bad enough, you can report it directly to the State Insurance Commissioner.

A SECRET ABOUT DEALING WITH ADJUSTORS

Let me tell one HUGE secret about adjustors.  I learned this secret, sometimes the hard way, during negotiations with hundreds of different adjustors over the past 25 years.  I learned this secret, as well, during my days as an employee with an insurance company where with those adjustors were my colleagues and friends.  I learned this secret as the lawyer hired by the adjustor to defend the case.  The secret is this – DO NOT TICK OFF YOUR ADJUSTOR OVER STUPID STUFF.

An adjustor’s caseload is huge.  Hundreds of claim files may be on his/her shelves at any time.  The adjustor usually has no emotional attachment to a particular case.  Do not give the adjustor reason to have a very negative emotional attachment to YOUR case!

You, on the other hand, have ONE claim and may well have a very strong emotional attachment to that claim.  You don’t understand why the motorist never called to check on you in the hospital.  You are angry because the insurer only gave you one-third of what you felt your property damage claim was worth.  However, if you let that anger over small, petty things spill into the negotiations you may sour the claim forever.

The relationship with the adjustor is critical.  I always try to be professional, precise, prepared and thorough in dealing with adjustors.  I try to establish a good rapport, discussing topics other than the case.  I try to be realistic about my cases – I don’t sell a $500 claim as a $50,000 claim!  I document everything and can back up every comment I make about a case with a reference to a piece of paper.  I know how to read the medical records and know how to read between the lines of the medical chart.  I also understand the adjustor’s job, caseload and motivation and try to treat every adjustor professionally and courteously.

If you are working with an adjustor, you should never be condescending, arrogant, abusive or grossly unreasonable – even if you feel the adjustor is acting that way!  Each adjustor has his/her own personality, but if you tick off your adjustor by arguing over stupid stuff, you may have ruined any opportunity for obtaining a reasonable settlement.  I’m not saying “Don’t argue.”  Pick your battles and argue over important things.

Adjustors are tough – sometimes difficult to deal with – they have to be in order to protect the insurer’s assets.  You can argue points, present your views, engage in professional “puffery” as you would in ANY negotiations – for a car, a house or a used tuba!  But once it goes beyond professional and into personal attacks, you lose.  The adjustor controls the purse strings and if your file is “red flagged” it will be difficult to gain an edge in negotiations.  Negotiate fairly, aggressively and professionally to get best results.  Once the purse strings are drawn shut, you are stuck either taking an unreasonably low settlement or filing a lawsuit.

I negotiate hard, trying to get the best possible deal for my client. If I think the adjustor is being unreasonable, I say so – but, I always have data to back me up.  This may consist of my personal experience, a series of reported cases or some jury verdict research I have conducted.  I also use my experience of working inside an insurance company for several years to try to see what’s driving the insurer’s position.  Occasionally, I’ve had to get more experienced claims representatives involved when a particular adjustor was unusually obnoxious, but that is very rare.  .

PRESENTING YOUR CLAIM – THE PAPER TRAIL

So what do you need to present your insurance claim?  The one word answer is “paper!”  You need to obtain every single piece of paper related to your case.  The police report, witness statements, photographs of the scene and property damage documentation along with any additional analysis of the crash to show you were not at fault.  You need every single piece of paper in your medical care provider’s files relative to your injuries – every office note, test result, x-ray report – and the record should be “certified” such that the insurer knows you are providing all the records.  If your x-rays or other films show the injury, then you should order copies of the actual films.  Professional photographs of scars, bones, disfiguring bony protrusions or other deformities related to the crash as well as the scene of the crash, the vehicles and all property damage should also be obtained.

I never present the complete package of documentation of a claim until the injured person is fully healed – or healed up as well as possible.  Once that occurs I make sure I have all the documents.  I then organize the paper in a package and prepare a “demand” letter.  This lengthy letter reviews and analyzes all aspects of the case – the liability or legal issues, nature and extent of the injuries, summary of all medical care, and a spreadsheet showing all medical bills and wage loss.  At the end of the demand letter, I set forth the opening “demand”  – the amount of money which my client will accept to settle.  This is always at the very highest end of “reasonable.”

The first “offer” from the insurer is always at the very lowest end of reasonable [or downright UNreasonable], and from there the negotiations proceed much like the dickering over a used car – both sides walking around, poking at the weak spots of the other’s positions, kicking the tires, and trading offers and counteroffers until the case is either resolved or an impasse is reached.

If the motorist’s insurance policy has sufficient policy limits, the case may then resolve.  If the value of your case is greater than the policy limits the insurer should, but probably will not, tell you this and offer the policy limits.  Where do you go if the motorist’s policy is not enough?  How do you know what the policy limits are if the insurer won’t tell you?

In some jurisdictions, the insurer is required to tell you the policy limits.  In many jurisdictions, lawyers who handle personal injury claims know which companies are most likely to sell policies with lower limits.  If you have any type of “big” case involving significant injuries, fractures, burns, scars, surgery and the like, you need to consult with a lawyer.   You should NOT be trying to recover from those injuries and stay on top of a complex personal injury claim!

MOTORIST’S EMPLOYER’S AUTO POLICY

One thing to determine in every case is whether the negligent motorist was “at work” at the time of the crash.  If so, the motorist’s employer may very well have insurance coverage you can tap into to pay your claim.

How do you find out whether the motorist was working for someone else at the time of the crash?   Sometimes it appears on the police report.  Sometimes, when the insurance adjustor contacts you the “Insured” listed on the letterhead may tip you off if it says “Smith Trucking, Inc” or some other business name.  Sometimes you can infer from the circumstances of the crash.  Sometimes you can just call the driver and ASK!

The nice thing about commercial automobile policies is that they almost always have large policy limits – $500,000 or $1,000,000 are typical policy limits.  Due to the “notice” requirements mentioned above, though, you need to do this detective work quickly and put the carrier on notice right away!

A motorist who negligently injures you while acting in the course and scope of his employment generally also causes his employer to liable as well.  There has been a LOT of litigation over the limits of this rule, however, and you are well advised to consult with an attorney if any issues arise.  For example, if the driver was supposed to working but was actually on what early cases referred to as a “frolic” [i.e., stopping off at a bar for a drink], then the insurance company could avoid coverage.

CYCLIST’S AUTO POLICY

In Ohio at the moment, there are many insurers advertising on the television and offering to provide “minimum coverage.”  Ohio has one of the lowest “minimum” coverage requirements in the nation at $12,500.00.  This means that a motorist who hits you only has to have “Twelve Five” coverage to be “legal.”  Almost any significant injury requiring more than minimal medical care will have a value in excess of $12,500.00 however and I frequently find myself dealing with the cyclist’s personal automobile insurance carriers.  What coverages in YOUR automobile policy may come into play?  Well, you can get your medical bills paid or even your entire claim paid through the coverage you have purchased!

MEDICAL PAYMENTS COVERAGE – “Med Pay”

“Medical payments” coverage is usually the first coverage I look at.  This coverage pays YOUR medical bills if the policy terms are met.  The limits are usually relatively low, $10,000.00 or less, sometimes only $1,000.00.  I often use the “med pay” coverage to pay my client’s out of pocket expenses, “co-pays” and such.

What are the requirements for presenting a “med pay” claim?  Reading insurance policies is like reading one 35 page sentence, so I’ll just give you the highlights!

In my automobile policy with Progressive Insurance, it states that Progressive “…will pay the reasonable expenses incurred for necessary medical services received within three years from the date of an motor vehicle accident because of bodily injury…”  so long as the injuries were:

– Sustained by an insured person and

–  Caused by that motor vehicle accident.

Following this broad “we’re happy to pay your medical bills” language is a list of 15 “exclusions.”  Exclusions are an insurers way of saying “We’re NOT paying you” for certain types of claims.

What does this mean?  Well, clearly if you are riding bike and are actually STRUCK by the car, the coverage applies.  What if the car never hits you – the motorist cuts you off, you hit the brakes and go head over handlebars.  A very strong argument can be made that this accident is covered.

A “phantom motorist” claim may also be covered.  In this case, an unknown motorist causes a wreck and leaves the scene.  Some states have a “physical contact” requirement, meaning the car must actually hit the bike.  Some states require proof of some sort other than the victim, some “corroborating” evidence of the presence of a phantom motorist.  Here, you must not only read the policy, but know the case law and statutory law of your particular jurisdiction… sounds like a trip to the lawyer’s office is in order!

HOMEOWNER’S COVERAGE?  ARE YOU KIDDING?

What if a can of soda is thrown from a passing car causing injury?  Courts have gone both ways on this type of assault.  Some courts have found that your automobile insurance coverage applies, some have said no.

If a passenger tosses an object out the window which causes you to crash, then the passenger’s HOMEOWNER’S insurance can come into play!  [I told you this stuff gets complicated!]  However, NO insurance policy in the world covers intentional or “criminal” acts and if the act of throwing an object at a cyclist is deemed a criminal act, then there may be no coverage available.

What if you, the cyclist, are at fault?  You run a stop sign, broadside a Porsche and cause a $10,000 dent?  Here, your HOMEOWNER’S policy comes into play to cover your negligence!  Assuming you have coverage, you can tell Mr Porsche Owner to relax!

WHAT IF YOUR CLAIM IS DENIED BY THE INSURER?

The fact that your claim is “denied” by an insurer is not the end of the story.  If you have handled the claim yourself, you should consult with competent insurance/personal injury counsel to determine your rights.   Many cyclists just go away and forget about presenting a claim when they are told by an insurer that their claim is meritless.  However, a denial is not the end.

Sometimes you can go above the current adjustor’s head to a different adjustor, or a committee of adjustors.  Sometimes you can find new facts, witnesses or information and present that to the insurer to try to re-open negotiations.  Sometimes, the only way find out if the insurer was right in denying the claim is to challenge the decision in court!  If the court determines that the insurer unreasonably denied the claim and acted in “bad faith” you may be entitled to additional damages!  Sometimes all of these issues can be stacked into one lawsuit against both the motorist and your insurer.  Sometimes two separate actions are required.  Again, the particular laws and court rules of your jurisdiction would need to be consulted.  I would strongly urge you to find a good lawyer!

UNINSURED/UNDERINSURED MOTORIST COVERAGE

The main automobile insurance coverage that cyclists turn to in “big” cases is their own “uninsured/underinsured motorist” [or “UM/UIM”] coverage.  If the motorist who ran into you has NO coverage, then “uninsured” coverage comes into play.  If the motorist has some coverage, but not enough to pay the full value of your claim then the motorist is deemed to be “underinsured.”  Either way, the claim is handled the same way.

When I discuss insurance issues with cyclists I always add a piece of advice – Buy as much UM/UIM coverage as you can afford.  Do not let an insurance agent cut the cost of your insurance bill by deleting your UM/UIM coverage.  This coverage protects YOU in the event of an encounter with someone who lacks sufficient insurance or assets to pay you.

If you thought “med pay” issues were complicated, you’re going to LOVE UM/UIM issues.  In Ohio, for example, in the past 10 years or so, there have been hundreds of court of appeals decisions on UM/UIM issues.  Pro-insurance company forces try to change laws to limit recoveries.  Pro-plaintiff groups argue for expanding the law.  Let’s look at what you should do if you find yourself turning to your UM/UIM coverage.

BEWARE OF THE “UM/UIM” TRAP

First, read the policy.  Yes, parse that 35 page sentence until you know exactly what you have to do to protect your claim and your carrier’s rights.  You must also be able to spot a critical trap that can destroy your UM/UIM claim and deal with it appropriately.

This trap arises when the motorist’s insurer admits to you that your claim exceeds the motorist’s policy limits.  The insurer then offers you the policy limits and all of a sudden there’s this pile of money sitting there for you – all you have to do is sign a release and the money is yours!  What harm can possibly come from this?

RELEASES, UM/UIM AND “SUBROGATION” – A Very Sticky Thicket of Problems

Do NOT sign that release. Let me say that again.  Do NOT sign that release – not until you have consulted with counsel.

You must comply with every possible requirement under your UM/UIM policy and the statutory and case law of your particular jurisdiction relative to these claims.  Your failure to do so may close off your ability to collect any additional money under your auto policy.  Signing a release without obtaining the approval of your UM/UIM carrier is one of those events that can lead to the loss of your UM/UIM coverage!

There is a concept in the law known as “subrogation” that arises in virtually every bike/car crash claim.  “Subrogation” is the right of an insurance company to “stand in the shoes” of its insured once it pays money to the insured.  This means two things. First, if you receive money from the person that ran into you, you may have to pay back the insurer that paid your medical bills or your UM/UIM claim or your disability claim or wage loss claim.  [This is discussed later.]  Second, “subrogation” permits an insurer that paid money to you to file a lawsuit against the motorist that ran into you to try to collect back that money.

OK, but how does your signing a release screw all that up?

Once you sign a release, you claim is dead – a lawsuit can never be filed against the motorist relative to the accident by you or anyone who “stands in your shoes.”  Signing that release effectively destroys the ability of any other interested party to go after the motorist including your health insurer, UM/UIM carrier or disability insurance provider.  Because your claim against the motorist dies when you sign the release, the claims of these “subrogated” insurers also die.

By signing a release without the knowledge or consent of the subrogated insurers, you have prevented those carriers from getting their money back.  In our example, if you sign the release, and take the money, you may not be permitted to present a UM/UIM claim against your own insurer, thereby robbing you of an additional significant recovery.

Each jurisdiction has a manner for dealing with this problem.  In many jurisdictions, and under the terms of many auto policies, you are required to notify all subrogated parties when you receive an offer of money from the motorist’s insurer.  The subrogated parties then have a “reasonable” time to tell you either that it is “OK” for you accept the money and sign the release or not.

The subrogated parties are supposed to investigate the assets of the motorist during this “reasonable” time.  If they think they can sue the motorist and obtain some of their money back, the subrogated party might offer to pay you the same amount of money offered by the motorist’s insurer.  That way, you get the money, but you do not have to sign a release thereby keeping the claim against the motorist alive so the insurer can sue the motorist later should it so choose.

Complicated?  You betcha!  That’s why this “trap” snares many unsuspecting injured victims, as well as many LAWYERS who do not regularly deal with personal injury or insurance claims!

UNDERSTANDING UM/UIM POLICY LIMITS

So, just how does this insurance stuff work?  Let’s assume you took my advice and purchased automobile insurance coverage with $250,000.00 UM/UIM policy limits.  The person that ran into you also has policy limits of $250,000.00.  Let’s say your claim is worth in excess of $500,000.00.  So you get $250,000 from the guy that hit you and $250,000 from your UM/UIM carrier, right?  Wrong!

In many states, you can only use “underinsured” motorist coverage if the other guy’s coverage is LESS than yours.  Further, you can only recover the difference between your policy limits and the other policy limits.  Thus, if the motorist has $100,000.00 in coverage and you have $250,000.00, you can recover $150,000.00 from your own UM/UIM carrier – assuming your case has significant value.  In our example, though, because your coverage [$250,000.00] was EQUAL to the motorist’s coverage, you would get zero from your own policy, even though you paid for $250,000.00 of coverage and even though the $250,000.00 from the motorist is only one-half of the value of your claim!

Again, complicated stuff.  You are well advised to consult with attorneys well versed in insurance law in any such case.

Do You Carry an UMBRELLA When You Ride? – Excess or Umbrella coverage

The vast majority of bicycle insurance claims do not involve catastrophic losses.  However, every once in a while there is a bicycle/car crash that paralyzes or kills the rider or causes a loss of a limb or other injuries that can devastate the rider’s ability to live a normal life or require a lifetime of medical care.  What kind of insurance protection can you purchase to protect you in the event of such an event?

“Excess” or “Umbrella” coverage is available from many insurers.  This is a highly specialized type of insurance coverage with very large policy limits that only comes into play when all other available coverages are exhausted.  You must carry a particular level of “underlying” coverage, perhaps $250,000 or more, before you can purchase an “excess” or “umbrella” policy.  The cost of umbrella coverage is relatively low in comparison with other coverages – primarily because it is only rarely used.  When you need it though, it is invaluable.

As I write this, I have a relatively new case sitting on my desk.  A cyclist, a professional man in the prime of his earning potential, suffered a broken neck when a pick-up truck backed out of a driveway directly in front of him.  His unstable fractured neck was treated by fusing his neck at two levels – a very complex operation that leaves him at risk for future problems. Fortunately, he was not paralyzed.  His medical bills are approaching $100,000.00 and his wage loss will likely reach a similar figure, assuming he is able to return to work effectively at some point.

The pick-up truck driver only carried Ohio’s “minimum” coverage – $12,500.00.  My client carried “UM/UIM” coverage of $300,000.00 – pretty good coverage.  Using the math from the explanation above, we should be able to obtain $287,500.00 [$300,000.00 – $12,500.00] from my client’s UM/UIM carrier.  Where does he go for compensation for the rest of his claim, assuming the value is in excess of $300000.00?

Fortunately, my client carried an “umbrella” policy with policy limits of $1,000,000.00.  As I explained to him, this incident illustrates exactly and precisely why I encourage people to buy an “umbrella” policy.  Instead of looking at a lifetime poverty or bankruptcy due to six-figure medical bills, the client’s insurance choice will provide him the money to keep his life relatively “normal” in the face of his current level of disability.

Does he just “get” a million bucks?  No, not unless his claim is “worth” a million bucks.  At the appropriate time, we presented to the UM carrier a thoroughly documented claim. After some difficult negotiations we were able to resolve the claim  to the client’s satisfaction.  We negotiated an appropriate settlement based on the injuries, recovery, losses and other relevant factors and we did not need to resort to litigation.

CYCLIST’S HEALTH INSURANCE

Health insurance seems like it should not present any complicated legal issues.  You got hurt.  You submit a claim for your medical bills.  The bills get paid.  Life goes on.  However, the “subrogation” concept we discussed earlier comes into play to muck up almost every injury case!

Health insurers have become extremely adept at figuring out which of their insureds have been involved in accidents and then sending out “subrogation notices” demanding repayment of the bills it paid out of any settlement.  Many insurers have entire “Subrogation Departments” whose job it is to ferret out such potential claims.  Other insurers retain the services of companies devoted to pursuing such claims.

The problem for cyclists arises when they handle their own claims.  It seems like the subrogation notices get stuffed in the back of the drawer or not understood.  Injured cyclists negotiate what seems like a decent settlement with the motorist’s insurer and are shocked to discover they have to pay back their own insurer!  If they have negotiated a deal which did not take the “subrogation” claim into account, they may have to give up all or most of their settlement to the health insurer.

CYCLIST’S EMPLOYMENT BENEFITS

I know this will come as a shock to some, but many cyclists not only have JOBS, but actually have good jobs, with benefits like short term or long term disability insurance, accident insurance or “PTO” [paid time off].  However, as you can probably guess by now, while these benefits can help you when you are injured by a negligent motorist, the insurance companies underwriting these benefits have “subrogation” rights.  When negotiating with the motorist’s insurer, the cyclist must keep these subrogation rights in mind.

One area of potential recovery that many people overlook when they negotiate their own claims is the ability to recoup employee benefits used due to injury.  If you accumulate “leave” or time off as you work and have to use that leave as a result of your injuries, you should include this in your negotiations.  You worked for it.  You earned it.  Now, you’ve had to use it due to someone else’s  negligence and the time off is no longer available if you get pneumonia, have a heart attack or otherwise need time away from work.

CYCLIST’S STATE OR FEDERAL BENEFITS

Many people today do not have health insurance.  They are forced to rely on benefits provided by state or federal governments.  Benefits such as Medicare [federal] or Medicaid [state] provide health insurance for millions of Americans today.

Like private health insurance, the federal government has provided a special mechanism for Medicare to recoup money in situations where a motorist runs over a cyclist and the cyclist utilizes Medicare to cover medical expenses.

The “Medicare lien” has been referred to as a Super Lien by some lawyers.  The code provisions which define the lien, how it is calculated and defining the responsibilities and potential liabilities of the parties are incredibly complicated.  Long seminars for lawyers covering only Medicare lien issues are not uncommon!

What YOU need to know is that the Super Lien is dangerous.  The government can come after you for payment of its “subrogation” at any time.  You MUST notify the government within 60 days of settlement.  It can take weeks, months or YEARS for the government to get back to you.  If you ignore this lien and choose to not pay the lien, there can be civil or even criminal penalties!

“COMPARATIVE NEGLIGENCE?” – What Do You Mean It’s MY Fault?

One issue that comes up in virtually every “bike” case I handle is an argument by the adjustor that the bike rider did something wrong.  They argue the cyclist was not riding “as far right as practicable,” failed to signal a turn or committed some other infraction rendering the cyclist “negligent” or “comparatively negligent.”

“Comparative negligence” is a relatively new legal concept, coming into full flower only in the past 25-30 years.  The guts of the “comparative negligence” concept is that where both parties were negligent, a judge or jury would “weigh” the negligence of each and assign a percentage of fault to each side.  [Obviously, the percentages need to equal 100%!]  The behavior of the parties is thus “compared” and the injured party’s recovery effected in some manner.  Under the “old” law, ANY negligence by the victim meant the victim could not win the case.

In Ohio, for example, if the cyclist’s negligence is found to be 50% or less, the cyclist still wins.  However, the money awarded by the jury is reduced by the percentage of fault assigned to the cyclist.  But… and here’s the key point… if the cyclist’s negligence EXCEEDS the motorists, the cyclist LOSES completely in Ohio.  Thus a 50% negligent cyclist who is awarded $100,000 in damages, only gets $50,000.  But a 51% negligent cyclist gets NOTHING.

In a “pure” comparative negligence state, the victim always wins unless the jury assigns 100% of the blame on the victim.  Under such a rule, a cyclist who was 99% liable, but was awarded $1,000,000 in damages, would still win 1%, or $10,000!  As always, check the law of your particular state to see what rules apply.

One key point – the alleged negligence by the cyclist must actually play SOME role in causing the crash.  For example, if a car/bike accident occurs at night, the motorist may argue the cyclist had no front headlight and was thus in violation of state law and negligent.  However, if the accident was a “rear-ender” the cyclist might argue the absence of a FRONT headlight played no role in causing the motorist to strike the cyclist from behind!  Thus, the cyclist argues, there can be no reduction for comparative negligence.

WHAT THE HECK IS “NO FAULT?”

Many states have adopted “no fault” insurance in the past 30+ years.  “No fault” is a bit different than the traditional “tort” system we have discussed in this chapter, and is applied differently in each jurisdiction.  Under “no fault” rules, there is no need for a cyclist to prove a motorist was “negligent.”  In a car/bike crash, the cyclist would generally be entitled to receive payment of any medical bills and economic losses automatically.  The trade off is that the “pain and suffering” awards are done away with.

This can have the effect of dramatically limiting recoveries, particularly if the injuries are incredibly painful and debilitating, but where there is little that can be done – i.e., fractured ribs, disfiguring injuries, etc.

Most no fault states have some mechanism which permits the injured party to escape the no fault provisions.  Sometimes a particular level of medical bills must be met, or a particular type of injury diagnosed.  Again, the law is different everywhere.   Find your friendly neighborhood “bike lawyer” and enlist her/his services!

BEWARE OF A NEW INSURANCE PRACTICE THAT COULD CAUSE YOU TO STOP RIDING YOUR BIKE!!

Some health insurance companies are looking very carefully at the risks they underwrite.  In the past few years, there have been several reported cases where health insurance policies have included exclusions for certain activities, including riding a MOTORCYCLE.

The motorcycle industry and lobby has taken notice of this and challenges it whenever possible.  The American Motorcycle Association is particularly aggressive in cataloging and publicizing the horrific impact of this practice.  In one case, the health insurer refused to pay the significant medical bills of a motorcyclist who was injured by a drunk driver.  Had the motorcyclist been the operator of a car, even a drunk operator, the insurance would have paid 100%.  Despite being the victim of another motorist’s gross negligence, no payment of medical bills was forthcoming because the victim was riding a motorcycle.

I bring this up because if permitted to continue, I could easily see this concept being extended to bicycle operators.  There are those who consider bicycle riding to be “dangerous,” especially in light of the annual data published by the government indicating some 500,000 emergency room runs occur each year from “bicycling accidents” and a large number of “head injuries.”  Insurance companies must be challenged to stop these types of discriminatory policies – at the grass roots level and in the halls of government.  Today, this is just a warning – be on the look-out for those who would limit your insurance coverage because you choose to ride a bike!

Printed from: http://www.ohiobikelawyer.com/uncategorized/2010/01/bicycle-insurance-where-is-it/ .
© 2016.

6 Comments   »

  • Steve, very comprehensive post and something most people don’t know where to start with – until its to late. After seeing numerous accidents I started a website on the topic of bike insurance to lift awareness. In terms of the US market you make some great points. Comparisons wit the US market to other parts of the world can be found at

    Cheers

  • christopher says:

    I remember reading something about AAA companies in northwestern US (around Portland, go figure) are offering insurance to cyclists now. Might want to dig that up if you can.

  • Kevin says:

    Steve, I am from Columbus, OH.

    I was trying to get an auto insurance that covers hit-n-skip bike accidents using the “UM/UIM” coverage. Do all insurance companies automatically cover bike accidents as well?

    I called Nationwide to verify and the guy said (after consulting somebody) that UM/UIM as well as Medical coverage ($10k limit) applies only if I am in a motorized vehicle. If I am on bicycle, they are not going to cover and I have to use my health insurance. Can you recommend any auto insurance companies that are bike friendly?

  • Steve Magas says:

    Kevin
    [DON’T BUY NATIONWIDE] – er did I say that out loud?

    Thank you for tracking me down and for the EXCELLENT comment. You are doing exactly what I tell cyclists to do. Call around. Ask questions about the application of insurance to your cycling passion. See what the agents tell you.

    Nationwide has taken the position that the language of their medical payments coverage, which is pretty much the same as everyone else’s, does NOT cover you if you are hit by a car while riding your bike. Virtually every other auto insurer will cover you. I have had this come up time and time again. I have a case pending now in the Hamilton County Common Pleas Court where we are going to test this legally. When I have asked Nationwide about this policy, the adjustors have cited a few old cases.

    The key case is Schroeder v. Auto Owners. Mrs. Schroeder was hit by a car while riding her bicycle. Defendant turned down her UM/UIM claim on the basis of the word “pedestrian” in the policy – claiming that a cyclist was not a pedestrian and, thus, not entitled to coverage. The parties briefed the issue extensively, including the submission by the plaintiff of many other policies which provided coverage under similar language while arguing that “customary meaning and trade usage” must be considered. The trial court held the word “pedestrian” was to be read sufficiently broadly as to capture those insureds riding a bicycle at the time they got whacked by a car. The 6th App. District agreed and upheld the decision.

    While Schroeder was a UM case, not a med pay case, it dealt with the word “pedestrian” in an auto policy and held that that word INCLUDES cyclists. The cases cited by Nationwide don’t have anything to do with insurance. Rather, they are traffic or criminal cases that look at the definition of “pedestrian” in the Ohio Traffic Code, which says “a person afoot.” From a traffic perspective, cyclists are VERY different from pedestrians. From an INSURANCE perspective, however, the intent of Med Pay and UM provisions is to provide protection for the insured in the event an errant motorist runs you over.

    To me, the answer is clear. Schroeder is actually ON POINT while the old case on which Nationwide always cites is not. Schroeder was an AUTO INSURANCE case where coverage was denied based on the issue of whether a victim/insured on a bicycle constituted a “pedestrian.” The case cited by Nationwide has nothing to with insurance. Schroeder is a 2004 appellate decision on the very point raised here. I submit it is controlling on this issue. What OTHER configurations of person/device would not be “pedestrians” in Nationwide’s eyes? Is someone on crutches not a pedestrian? Roller skates? Riding a “Razor” scooter. In a wheelchair? Are those people to be denied coverage if they are run over by a car?

    Speaking of wheelchairs, Schroeder was cited and relied upon in Lakewood v. El Hayek, a muni court decision interpreting the word “pedestrian” in a crosswalk. The court decided that a man on a motorized scooter was NOT a pedestrian, but recognized the validity of Schroeder, stating that a “person operating a bicycle was held to have the same protections as a pedestrian” in Schroeder.

    THANKS!

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