How Does Tort Insurance Work? Full vs. Limited

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Tort insurance is a broad system of auto insurance that allows drivers to recover damages from other parties at fault in an accident.

A tort system puts a greater emphasis on liability insurance to cover injuries a driver might cause but doesn't require drivers to insure themselves via personal injury protection (PIP) coverage. This is in contrast to no-fault systems, in which drivers must purchase insurance to cover their own injuries and those of their passengers.

Three states — Pennsylvania, Kentucky and New Jersey — are technically no-fault states, but they give drivers the option to purchase a tort insurance policy instead of PIP coverage. In each state, drivers can then choose between full and limited tort insurance. Full tort is more expensive, but it allows you to sue the at-fault driver for "pain and suffering" as well as medical costs.

What is tort insurance?

Tort insurance is the most popular system of auto insurance in the United States: 38 states use it. In the tort system, the driver at fault for an accident is responsible for paying damages and medical costs for the other party, most often through liability insurance.

Those damages can include:

  • Vehicle damage
  • Medical bills
  • Lost wages
  • Pain and suffering
  • Potential future costs

The tort system is a counterpart to the no-fault system, in which drivers are required to purchase PIP insurance to cover their own medical costs and the costs for their passengers in addition to liability coverage. Notably, no-fault systems usually do not allow drivers to sue to recover damages for pain and suffering, save for a few exceptions.

Full tort vs. limited tort insurance

The difference between full tort and limited tort insurance is that a driver with a full tort insurance policy retains the right to sue another driver for pain and suffering. A driver with limited tort insurance gives up that right in most cases.

Pennsylvania, Kentucky and New Jersey all have laws that allow for these kinds of policies, though the terms "full tort" and "limited tort" are used primarily in Pennsylvania.

A limited tort policy is cheaper but only allows a driver to sue for damages for serious injuries instead of a broader definition of pain and suffering. The bar for serious injuries is high, and examples include:

  • Death
  • Permanent disfigurement
  • Serious impairment of bodily function
  • Dismemberment

A full tort insurance policy costs more, but it allows drivers to sue for pain and suffering. Examples of pain and suffering can include:

  • Physical pain and discomfort
  • Emotional pain and treatment for it
  • Stress and anxiety linked to an accident

The full tort option allows drivers to, in some ways, opt out of the state's no-fault insurance arrangement. No-fault laws were initially put in place to curb lawsuits related to auto accidents.

New Jersey and Kentucky offer similar arrangements in which drivers can pay more and retain the right to sue for pain and suffering.

  • In New Jersey, you can purchase an insurance policy with a limited right to sue or unlimited right to sue for pain and suffering, similar to limited or full tort. The limited right policy is sometimes called a verbal threshold policy. As with the Pennsylvania system, the unlimited right to sue costs more, but with none of the thresholds you'd have to meet with the limited option.
  • In Kentucky, drivers normally must carry PIP insurance, but they also have limited tort rights, meaning if their medical costs or severity of injuries exceed a certain level set by the state, they can sue the at-fault party for compensation. Otherwise, drivers can file a form with the Kentucky Department of Insurance to allow them to opt out of the no-fault system. They would not have to purchase PIP insurance that covers their own medical bills but would be required to maintain a liability policy. In this case, they would also have full tort rights.

Which states use tort vs. no fault?

Twelve states use no-fault insurance systems. In those states, drivers cover their own medical costs with personal injury protection (PIP) insurance policies.

With PIP insurance, injured drivers have their medical bills covered by their own insurance policy and do not have to pass those costs on to the at-fault driver's insurance.

No-fault insurance states

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

Michigan has the highest insurance costs in the country, in part because it requires the highest coverage minimums for personal injury protection. The state also offers an option to file what's called a mini tort claim, in which the party not at fault can sue for up to $3,000 in vehicle damage.

In these states, drivers are required to purchase PIP policies, and all but Florida also require some level of bodily injury liability coverage. Personal injury protection coverage can range from a minimum of $3,000 per person in Utah to $250,000 in most situations in Michigan.

Although the intent of no-fault laws was to lower costs, the addition of PIP often raises insurance costs overall. According to ValuePenguin data, four of the seven states with the most expensive insurance are no-fault states.

Differences between tort and no-fault systems

Tort system
No-fault system
The at-fault party's insurance covers the other driver's minor injuriesEach driver's own insurance covers their minor injuries
Drivers are only required to have liability insuranceDrivers must insure themselves and their passengers in addition to having liability insurance

How are pain and suffering damages calculated?

There is no hard-and-fast metric for how insurance companies, lawyers or drivers calculate pain and suffering compensation. None of the major insurance companies offer calculators on their websites.

Pain and suffering damages are calculated after an accident, usually with the guidance of a lawyer. There are two major ways to calculate pain and suffering:

  • Multiplier method: The total cost of medical bills is taken and then multiplied by a factor that often ranges between 1.5 and 5. The number to multiply by is usually determined by the severity of the injury but can take into account other factors, including the degree to which the other party is at fault or whether your family is suffering because of your injuries.
  • Per diem method: A dollar value is assigned for each day you are injured and multiplied by the number of days you are affected by the injuries. This method is rarely used.

The insurance company does not have to honor the number a driver or lawyer asks for to compensate for pain and suffering. The company might feel the multiplier used was too high and offer a smaller settlement or have investigators check the severity of the situation. Ultimately, the situation might have to be negotiated through a lawsuit.

An example of a high-multiplier injury would be a head-on collision with a truck that left a driver with facial scarring — something that will never go away — and damage to both hands, which made many basic functions difficult for more than a year. Having strong documentation and being able to show that family members suffered while helping with the injuries would bolster the case for a high-multiplier claim.

Is full tort insurance worth it?

Full tort insurance is worth getting if you're comfortable paying a higher premium in exchange for the added benefit of being able to sue for pain and suffering.

It comes down to the risk you want to take, compared with what you want to spend up front.

With limited tort, you still have medical coverage through a personal injury protection policy, so whether you need full tort auto insurance comes down to the desire to potentially pursue pain and suffering compensation.

It's also important to note that retaining the right to sue means that after an accident, you will very likely have to work with a lawyer and potentially go to court to receive damages.

What does full tort insurance cost?

The increased cost for full tort insurance can range from $6 per month to more than $50 per month. Multiple factors affect the price, including location and total coverage.

We compared sample quotes from major insurers and found that opting for full tort insurance adds $80 to $116 to a six-month policy premium. These quotes are for a 2015 Honda Civic with minimum coverage, owned by a 30-year-old man in Pennsylvania.

Increase in 6-month insurance premium for full tort
Progressive logo
Allstate logo
Geico logo
State Farm logo
State Farm$116

Does full tort mean full coverage?

Full coverage and full tort coverage are not the same thing. Full coverage refers to getting a vehicle insured with collision, comprehensive and liability coverage. Having full tort insurance means retaining the right to sue for pain and suffering after an accident.

If you have full coverage, that does not necessarily mean you also have full tort coverage in places where it is an option. If you live in Pennsylvania, Kentucky or New Jersey, it's a good idea to ask about tort insurance or a limited right to sue when buying a policy.

Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.