An Overview of § 1702 under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)

Gain a comprehensive understanding of § 1702 definitions under the Pennsylvania MVFRL. This article breaks down complex terminology in simpler terms, allowing plaintiff's attorneys in Pennsylvania to navigate the law effectively.

Statutory Text

§ 1702. Definitions.

The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:

"Assigned Risk Plan." A program for the equitable apportionment of assigned risks and clean risks among insurers.

"Automobile Insurance Policy Act." The act of June 5, 1968 (P.L.140, No.78), entitled "An act regulating the writing, cancellation of or refusal to renew policies of automobile insurance; and imposing powers and duties on the Insurance Commissioner therefor."

"Benefits" or "first party benefits." Medical benefits, income loss benefits, accidental death benefits and funeral benefits.

"Clean risk." An insured or an applicant for insurance who, for the 36-month period immediately preceding the date of application or renewal date of the policy:

(1) has not been involved in an accident as a driver, provided that, for purposes of this paragraph, an "accident" shall not include accidents described in section 3 of the Automobile Insurance Policy Act or section 1799.3 (relating to limit on cancellations, refusals to renew, refusals to write, surcharges, rate penalties and point assignments);

(2) has not received more than three points for violations as set forth in Chapter 15 (relating to licensing of drivers); and

(3) whose operator's license has not been suspended or revoked except under section 1533 (relating to suspension of operating privilege for failure to respond to citation) and the insured is able to produce proof that he or she has responded to all citations and paid all fines and penalties imposed under that section and provided further that the named insured has been a licensed operator in Pennsylvania or another state for the immediately preceding three years.

"Commissioner." The Insurance Commissioner of the Commonwealth.

"Department." The Department of Transportation or Insurance Department, as applicable.

"Financial responsibility." The ability to respond in damages for liability on account of accidents arising out of the maintenance or use of a motor vehicle in the amount of $15,000 because of injury to one person in any one accident, in the amount of $30,000 because of injury to two or more persons in any one accident and in the amount of $5,000 because of damage to property of others in any one accident. The financial responsibility shall be in a form acceptable to the Department of Transportation.

"Injury." Accidentally sustained bodily harm to an individual and that individual's illness, disease or death resulting therefrom.

"Insured." Any of the following:

(1) An individual identified by name as an insured in a policy of motor vehicle liability insurance.

(2) If residing in the household of the named insured:

(i) a spouse or other relative of the named insured; or

(ii) a minor in the custody of either the named insured or relative of the named insured.

"Insurer" or "insurance company." A motor vehicle liability insurer subject to the requirements of this chapter.

"Necessary medical treatment and rehabilitative services." Treatment, accommodations, products or services which are determined to be necessary by a licensed health care provider unless they shall have been found or determined to be unnecessary by a State-approved Peer Review Organization (PRO).

"Noneconomic loss." Pain and suffering and other nonmonetary detriment.

"Peer Review Organization" or "PRO." Any Peer Review Organization with which the Federal Health Care Financing Administration or the Commonwealth contracts for medical review of Medicare or medical assistance services, or any health care review company, approved by the commissioner, that engages in peer review for the purpose of determining that medical and rehabilitation services are medically necessary and economically provided. The membership of any PRO utilized in connection with this chapter shall include representation from the profession whose services are subject to the review.

"Private passenger motor vehicle." A four-wheel motor vehicle, except recreational vehicles not intended for highway use, which is insured by a natural person and:

(1) is a passenger car neither used as a public or livery conveyance nor rented to others; or

(2) has a gross weight not exceeding 9,000 pounds and is not principally used for commercial purposes other than farming.

The term does not include any motor vehicle insured exclusively under a policy covering garage, automobile sales agency repair shop, service station or public parking place operation hazards.

"Self-insurer." An entity providing benefits and qualified in the manner set forth in section 1787 (relating to self-insurance).

"Serious injury." A personal injury resulting in death, serious impairment of body function or permanent serious disfigurement.

"Underinsured motor vehicle." A motor vehicle for which the limits of available liability insurance and self-insurance are insufficient to pay losses and damages.

"Uninsured motor vehicle." Any of the following:

(1) A motor vehicle for which there is no liability insurance or self-insurance applicable at the time of the accident.

(2) A motor vehicle for which the insurance company denies coverage or the insurance company is or becomes involved in insolvency proceedings in any jurisdiction.

(3) An unidentified motor vehicle that causes an accident resulting in injury provided the accident is reported to the police or proper governmental authority and the claimant notifies his insurer within 30 days, or as soon as practicable thereafter, that the claimant or his legal representative has a legal action arising out of the accident.

"Voluntary rate." An insurer's rating plan approved by the commissioner. In the case of an insurer with multiple rating plans, the voluntary rate shall be that rating plan applicable to the risk.

(Feb. 12, 1984, P.L.53, No.12, eff. Oct. 1, 1984; Feb. 7, 1990, P.L.11, No.6, eff. imd.)

1990 Amendment. Act 6 added the defs. of "Assigned Risk Plan," "Automobile Insurance Policy Act," "clean risk," "commissioner," "necessary medical treatment and rehabilitative services," "noneconomic loss," "Peer Review Organization" or "PRO," "private passenger motor vehicle," "serious injury" and "voluntary rate."

References in Text. The act of June 5, 1968 (P.L.140, No.78), referred to as the Automobile Insurance Policy Act, referred to in the defs. of "Automobile Insurance Policy Act" and "clean risk," was repealed by the act of June 17, 1998, P.L.464, No.68. The subject matter is now contained in Article XX of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921.

Cross References. Section 1702 is referred to in sections 1119, 1161, 1798.3 of this title.

Understanding § 1702 Definitions of the Pennsylvania MVFRL

The Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) encompasses various provisions that govern automobile insurance policies and claims. One critical aspect of this law is found in § 1702 Definitions, where specific terms are defined to provide clarity and uniformity in legal interpretation.

This article aims to simplify these definitions, enabling plaintiff's attorneys in Pennsylvania to navigate the MVFRL with ease.

§ 1702 Key Definitions Explained

Assigned Risk Plan

The term "Assigned Risk Plan" refers to a program that fairly divides the responsibility of assigned risks and clean risks among insurance companies. It ensures that high-risk individuals or entities who face challenges obtaining traditional insurance coverage are still able to access essential protection.

Automobile Insurance Policy Act

The "Automobile Insurance Policy Act" refers to the legislation enacted on June 5, 1968 (P.L.140, No.78). Its purpose was to regulate the writing, cancellation, and refusal to renew policies of automobile insurance. Additionally, it vested specific powers and duties upon the Insurance Commissioner to oversee these processes and protect policyholders' interests.

Benefits or First Party Benefits

Under the MVFRL, "Benefits" or "First Party Benefits" encompass medical benefits, income loss benefits, accidental death benefits, and funeral benefits. These provisions ensure that individuals injured in motor vehicle accidents have access to necessary medical treatment and rehabilitation services, income replacement, and financial support in the event of death or funeral expenses.

Clean Risk and Eligibility Criteria

Clean Risk: The term "Clean Risk" refers to an insured individual or applicant who meets specific eligibility criteria demonstrating their low-risk status. To qualify as a clean risk, the applicant must satisfy the following conditions over the 36-month period preceding the application or policy renewal date:

1. They must not have been involved in an accident as a driver, excluding specific accidents outlined in the Automobile Insurance Policy Act and other related sections.

2. They must not have accumulated more than three points for violations as set forth in Chapter 15, which pertains to driver licensing.

3. Their operator's license must not have been suspended or revoked, except under Section 1533 for failure to respond to citations. However, the insured must provide proof of responding to all citations and paying associated fines and penalties. Additionally, the named insured must have held a valid driver's license in Pennsylvania or another state for the preceding three years.

Commissioner and Department

In the MVFRL, the "Commissioner" refers to the Insurance Commissioner of the Commonwealth, responsible for overseeing and regulating insurance matters. The "Department" refers to either the Department of Transportation or the Insurance Department, depending on the context.

Financial Responsibility

"Financial responsibility" refers to an individual's ability to bear liability for damages arising from accidents involving a motor vehicle to a set amount. This amount includes $15,000 for injury to one person, $30,000 for injury to two or more persons, and $5,000 for property damage. The individual must demonstrate this financial responsibility through an acceptable form, compliant with the Department of Transportation's guidelines.

Injury and Noneconomic Loss

The term "Injury" denotes any accidental bodily harm sustained by an individual, including resulting illnesses, diseases, or death. Conversely, "Noneconomic Loss" encompasses intangible harm, such as pain and suffering or other nonmonetary detriments, arising from an accident.

Insured and Insurer

The term "Insured" refers to an individual specifically named as such in a motor vehicle liability insurance policy. It also extends to individuals residing in the named insured's household, such as spouses, relatives, or minors under their custody.

On the other hand, "Insurer" or "Insurance company" refers to a motor vehicle liability insurer subject to the requirements imposed by the MVFRL, ensuring compliance and protection for policyholders.

Self-insurer and Underinsured/Uninsured Motor Vehicle

A "Self-insurer" refers to an entity that provides benefits and meets the qualifications outlined in Section 1787, enabling them to assume the responsibility of providing necessary coverage without relying on a third-party insurer.

An "Underinsured motor vehicle" refers to a motor vehicle whose liability insurance or self-insurance limits are insufficient to cover the full extent of losses and damages incurred in an accident.

On the other hand, an "Uninsured motor vehicle" encompasses various scenarios:

1. A motor vehicle with no applicable liability insurance or self-insurance at the time of the accident.

2. A motor vehicle for which the insurance company denies coverage or becomes involved in insolvency proceedings.

3. An unidentified motor vehicle involved in an accident resulting in injury, provided the accident is reported to the appropriate authorities and the claimant notifies their insurer within 30 days or as soon as practicable thereafter.

Overview of § 1702 Definitions of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)

By understanding the § 1702 Definitions of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), plaintiff's attorneys in Pennsylvania can effectively navigate this complex legal framework. Familiarity with these key terms enables attorneys to advocate for their clients by ensuring they receive the benefits they are entitled to and identifying relevant circumstances, such as clean risk eligibility or uninsured/underinsured motor vehicle claims. Stay informed and utilize this knowledge to protect the rights and interests of your clients under the MVFRL.

Note: This article provides a simplified overview of the definitions within § 1702 of the Pennsylvania MVFRL and is intended for informational purposes only. For comprehensive and accurate legal interpretation, consult the applicable statutes and seek professional legal advice.

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Von Wooding

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