Under a "no-fault" auto insurance system - also known as "personal injury protection" or "PIP" - the insurance company ("insurer"), automatically pays for some of a car accident victim's losses, including "death benefits," which include things like funeral and burial expenses.
These payments are made regardless of who was at fault for the accident.
In addition, some death benefits are often called "survivors benefits," because they are paid to the family or "dependents" the deceased person ("decedent"). These include:
- Accidental death benefits
- Continuation of lost earnings
- Periodic "pension" payments, and
- Replacement services payments
To recover no-fault death benefits, the decedent's death has to be directly and clearly connected to the use or operation of a motor vehicle.
Although the availability these benefits vary from state to state, most no-fault laws place limits on the amount of death benefits that will be paid. In addition, there are special rules for when payments will stop, as well as for claiming benefits.
Funeral and Burial Expenses
Most no-fault insurance plans specifically provide coverage for the ordinary funeral and burial expenses of any person who was accidentally killed as a result of the use or operation of a motor vehicle.
In some states, reasonable funeral expenses are protected benefits and have to be paid even when the insurance policy's other benefits - like medical expenses - have been paid to the policy limits.
Several types off no-fault "death benefits" are paid to the family or relatives of the insured who died in a car accident. In many states, the amounts payable as survivors' benefits are limited by the no-fault law of that state. For example, some states will allow payments for funeral expenses plus the decedent's medical expenses but will not allow payments for lost income.
These benefits are paid only when the death is in fact "accidental," so if an insured commits suicide, which is generally considered to be an intentional act, no accidental death benefits will be paid.
An "accident" is generally defined as an event, which under the circumstances is unusual and unexpected by the person to whom it happens.
Income Continuation Payments
No-fault statutes generally take one of two approaches when it comes to paying for the decedent's lost income:
- The survivors will continue to receive the lost income benefits that would have been paid to the decedent if he had not died, including wages he should or would have earned in the future, or
- The survivors will be paid only what the decedent lost during his lifetime - the time, if any, between the injury and death - without regard to future wages, that is, wages that he or should would have earned if he or she had not died
Under either approach, income continuation payments are usually denied when the insured-decedent was unemployed when he or she died.
Another benefit found under no-fault insurance laws is for "pension payments," also known as "survivors' economic benefits." This is a disability and income payment that is limited to cases where the insured has not been fatally injured, and like income continuation payments, replaces lost income. A key element of these payments is that they are designed to replace real, material goods that the insured would have provided if he or she had not been injured.
Under some no-fault laws, this benefit is applied if the insured dies as a result of the injuries he or she sustained in a car accident. So, if the insured dies, the survivors would receive payments for the purpose of replacing goods that the decedent would have provided if he or she had not died.
Usually, and unlike income continuation benefits, the statutes that provide for this benefit do not require that the insured be employed at the time of the injury or death.
A household's loss of an adult or older child usually includes the loss of certain services performed by the decedent, which might be crucial to the household. Things like lawn mowing, cooking, and home maintenance that were done by the decedent might have to be done by hired help. So, many no-fault plans provide for replacement services coverage to cover such costs.
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