Posted on Thursday, September 24th, 2020 at 2:48 pm
In Kentucky, all automobile insurance policies default to having at least $10,000 of Personal Injury Protection (PIP) benefits. These are also called no-fault benefits or, in some policies, basic reparations benefits (BRB). It’s possible to waive these benefits, but you must sign waivers with some strongly worded disclaimers. Very few drivers execute such a waiver, so if you’re a Kentucky resident, the odds are that your car insurance has between $10,000 and $50,000 in PIP coverage.
PIP coverage is unique because it is paid as you go, regardless of who was at fault. It pays for medical bills and up to $200 per week of lost wages. There are no co-pays, and only some plans have a deductible. Usually you do not have to go to an independent medical exam to access PIP benefits, and the carrier is not allowed to deny coverage upon only a paper review of your medical records. In the world of auto insurance, where most adjusters are trained to fight you on your claims – or even convince you not to file a claim – PIP benefits can be a real life saver.
Unfortunately, because most adjusters are trained to fight you on a claim for bodily injury from automobile insurance, you’re likely to need a lawyer at some point during the claim. Trying to resolve the claim without one is usually a big time sink, a big headache, and a big shot in the dark. We frequently tell clients that hiring a lawyer is like hiring a plumber – both are service industries where hiring someone with more knowledge and better tools than you makes a job easier than doing it yourself would be. Since personal injury lawyers get paid by taking a percent of the money you get from an insurance policy, it would be easy to assume a lawyer gets a percentage of the PIP payment from your auto insurance. But they don’t.
Kentucky has a statute that controls when an attorney can take a fee from PIP: KRS 304.39-220. This statute says that attorneys can take a fee when PIP benefits are unreasonably overdue and recovered by the attorney. The attorney must have either filed the case in court or at least sent a letter to the insurance company telling them a lawsuit over the overdue PIP benefits was coming. However, the statute is very clear that “[n]o part of the fee for representing the claimant in connection with these benefits is a charge against benefits otherwise due the claimant.” In other words, the attorney fee must be in addition to the PIP benefits owed to you. The attorney fee doesn’t get deducted from the PIP benefits owed to you. This is different from every other kind of insurance coverage, where the insurance policy pays one amount that the attorney fees come out of.
If your attorney is taking a fee from your PIP benefits, you have every right to question it. An attorney taking a fee from the PIP owed to you is doing something illegal. In fact, this is a big red flag that the attorney may be incompetent to handle your case. If you call Lawrence & Associates one of our attorneys will review the PIP paperwork for you at no charge and advise whether the attorney fee is appropriate. If an attorney takes a PIP fee inappropriately, we will give you guidance on how to report this to the Kentucky Bar Association so you can get the money back. On the other hand, if the attorney took the fee appropriately, you’ll at least have the peace of mind in knowing you were treated fairly under the law. Speaking up might not only benefit you, but also benefit other clients who will fall into the same trap.