Tort insurance: Full vs. limited

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You may have heard of no-fault insurance, where states require drivers to carry personal injury protection (PIP) to pay for their own medical bills, regardless of who is at fault for an accident. Tort states are the opposite of no-fault states. In tort states, drivers are held responsible for the damages and injuries that they cause to others.

However, there are a few no-fault states — Kentucky, New Jersey, New York, North Dakota and Pennsylvania — that do allow drivers to sue for damages. There are also different kinds of tort insurance: limited and full. Bankrate can help you understand the difference and how each option affects your car insurance.

What is tort insurance?

Tort insurance allows auto insurance companies to recover the damages from the party that caused an accident. Tort insurance is not available from all insurance carriers and depends on the state you live in.

Most states require vehicle owners to have some form of car insurance. However, each state has its own limits and regulations. Some states are considered no-fault states, in which each person pays for their own injuries and medical expenses, regardless of who is at fault. The majority of states in the U.S. follow tort insurance law, meaning the party that was responsible for the loss is financially responsible for the damages. Kentucky, New Jersey, New York, North Dakota and Pennsylvania are no-fault states but do allow drivers to retain some ability to sue for compensation, meaning they follow both tort and no-fault law.

Full tort vs. limited tort

Tort is nuanced. There are variations, known as full tort and limited tort, that affect your ability to sue for damages. The limited vs. full tort terminology is used primarily in the three no-fault states that have tort options — Kentucky, New Jersey and Pennsylvania. In these states, you may have the option to retain your ability to sue another driver, essentially opting out of your state’s no-fault laws.

So what is the difference between limited and full tort? Before we can answer that, remember that these states’ no-fault laws only apply to injuries and medical expenses. Property damage is always settled on a tort basis, meaning that the at-fault party is always responsible for the damages they cause to other vehicles and property. In these states, the limited and full tort terms only refer to drivers choosing to retain their ability to sue for injuries.

Limited tort, as the name suggests, sets limits on what you can sue another driver for. Generally, limited tort means you can only sue for serious injuries, and that threshold will be determined by each state. Limited tort is often cheaper but does not allow you to recover as much as you could under full tort.

What is full tort? Full tort broadens your ability to sue an at-fault driver. In addition to being able to sue for just serious injuries, you may also be able to sue for pain and suffering.

Remember that property damage is always settled on a tort basis. Even in no-fault states, drivers are expected to pay for the property damage that they cause in accidents.

Can I choose between full and limited tort?

You can only choose between limited vs. full tort in three states. Pennsylvania has guidelines for both full and limited tort insurance. New Jersey also allows for vehicle owners to decide on the right to sue. Kentucky vehicle owners can opt out of the state’s no-fault system by filing a form with the Kentucky Department of Insurance. In New York and North Dakota, you may have the right to sue another driver, but you do not have to choose this option; it is available to all drivers who meet certain thresholds.

In states where all claims are settled on a tort basis, you cannot choose between full or limited tort. In these states, called tort or at-fault states, at-fault drivers are expected to pay for the full extent of the damages and injuries that they are found negligent for.

Tort insurance vs no-fault insurance

States fall into two main categories when it comes to car insurance: at-fault/tort states or no-fault states. The majority of the states in the country apply at-fault principals when it comes to car accidents. If you are at-fault, you are expected to pay for the damages, often through a car insurance policy. Only a dozen states follow no-fault laws, which means each driver pays for their own injuries and medical expenses after an accident.

No-fault insurance

A common misconception in no-fault states is that each driver pays for all their damages — including injuries, vehicle damage and a rental car — after a loss, regardless of fault. This is not true. No-fault insurance refers to personal injury protection (PIP) coverage and means that each driver uses their own PIP to pay for their injuries after an accident. In some no-fault states, you may have the option to retain your right to sue for your injuries by choosing full or limited tort.

Tort insurance

Tort states expect at-fault drivers to pay for the damages they cause. In tort states, you will not likely have the option to purchase full or limited tort. These options function to allow you to retain your right to sue an at-fault driver, but in tort states, you never lose that right. If a driver causes injuries and damages, you always have the right to sue for compensation.

Frequently asked questions

What does tort mean?

According to the Merriam-Webster dictionary, tort means “a wrongful act other than a breach of contract for which relief may be obtained in the form of damages or an injunction.” To simplify, tort, in an insurance capacity, means that the at-fault party can be held responsible for the damages or injuries they caused. If the driver or their insurance company does not pay you for the damages, you can sue.

Is full coverage the same as full tort?

Full coverage is not the same as full tort insurance. Full coverage is a combination of liability coverage that pays for damages to third parties and collision and comprehensive coverages that add financial protection for damages to your vehicle. Full tort insurance is a form of vehicle coverage that allows you to sue for your damages. Full tort car insurance is not available in all states. However full coverage can be purchased regardless of the state you live in.

Does tort insurance pay for pain and suffering?

If you live in a state where you can choose between full and limited tort, choosing full tort insurance allows you to sue for pain and suffering. If you elect to purchase limited tort insurance, you may save on the cost of car insurance but you waive your right to sue for pain and suffering.

Is full tort more expensive than limited tort?

When comparing the cost of full tort vs. limited tort insurance, full tort insurance is typically more expensive than limited tort coverage. Full tort insurance allows you to sue the at-fault party for additional expenses such as pain and suffering. Because of this broader ability to sue, the coverage is generally more expensive.

Written by
Cynthia Paez Bowman
Personal Finance Contributor
Cynthia Paez Bowman is a finance and business journalist who has been featured in Bankrate, Business Jet Traveler, MSN, CheatSheet.com, Freshome.com and TheSimpleDollar.com. She regularly travels to Africa and the Middle East to consult with women’s NGOs about small business development and works with select startups and women-owned businesses to provide growth and visibility.
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