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Indiana’s Pay to Play Law

By Jarryd F. Anglin.

Several years ago Indiana passed a “Pay to Play” statute.  While it did not receive a lot of fanfare, it is a potentially powerful tool insurers and their insureds can use to decrease exposure in certain personal injury claims.

In order for the statute to apply a claimant must seek coverage under a motor vehicle insurance policy, own a motor vehicle and not have insurance as required by law, and have a prior violation for failing to carry proper auto insurance within five years from the date of loss. If it applies, insurers can avoid paying non-economic damages and drastically reduce their exposure.

The statute is found at I.C. § 27-7-5.1 et seq. It states in part, “An insurer may not pay non-economic damages on a claim for coverage under a motor vehicle insurance policy issued by the insurer if the claim is for coverage for a loss incurred by an uninsured motorist with a previous violation.”

Non-economic damages are defined to include physical impairment, emotional distress, mental anguish, loss of enjoyment, loss of consortium, and several additional categories. Medical expenses, wage loss, and other pecuniary losses are still recoverable.

There are several facts that could make the statute inapplicable even if the above conditions are met. For instance, the prohibition on payment of non-economic damages does not apply if the uninsured motorist is less than 18 years of age. Passengers in the care of the uninsured are also exempt from the prohibition. Finally, the statute is inapplicable if the defendant is convicted of a crime in connection with the accident.

It is worth noting that the claimant need not be operating a motor vehicle at the time of the accident.  Accordingly, insurers should dig into all claimants’ insurance history during discovery.

There are several nuances to Indiana’s Pay to Play Law. However, if applicable, it can greatly limit exposure for motor vehicle accident claims.

Defur Voran defends a broad range of insurance companies and their insureds. Contact us today for a free consultation.