Hawaii Auto Accident – What is the Covered Loss Deductible (CLD)

When a claim is made by a person injured in an automobile accident in Hawaii the "covered loss deductible" automatically reduces the amount recovered by the injured party. How does it work? let’s look at the law that applies:

§431:10C-301.5 Covered loss deductible. Whenever a person effects a recovery for bodily injury, whether by suit, arbitration, or settlement, and it is determined that the person is entitled to recover damages, the judgment, settlement, or award shall be reduced by $5,000 or the amount of personal injury protection benefits incurred, whichever is greater, up to the maximum limit. The covered loss deductible shall not include benefits paid or incurred under any optional additional coverage or benefits paid under any public assistance program. [L 1997, c 251, pt of §2; am L 1998, c 275, §17; am L 2004, c 174, §2]

The law refers to "personal injury protection" benefits paid. Those are the medical and wage loss benefits paid by the insurance company for the injured party. Personal Injury Protection benefits are often referred to as PIP. if an injured party goes to doctors, hospitals or therapy and PIP pays out $10,000 then the covered loss deductible reduces any payments from the defendant driver by $10,000. If a judge or jury determines that total damages are $30,000, then the amount is automatically reduced to $20,000. If the attorneys fees are $7,000 and the attorney has spent $5,000 on costs, that leaves the injured plaintiff with $8,000. The plaintiff has received the $8,000 in cash and also has received the benefit of $10,000 in paid medical bills. So the result is a net benefit of $18,000 to the plaintiff. All Hawaii personal injury attorneys know about CLD and can advise an injured party about how it would affect their case.

The purpose of the law is to reduce the burden on insurance companies. How does the legislature know that insurance companies deserve this gift is an interesting question. The insurance companies, along with Major League Baseball, are the companies in the U.S. (and Hawaii) that are exempt from anti-trust law. So the legislatures have a difficult time knowing the details of insurance company finances. And you can imagine that the powerful insurance industry have lobbyists that pressure legislators with money. On your side there really aren’t any lobbyists to pressure legislators except trial lawyers who have nowhere near the resources that the insurance industry can muster.

Perhaps someday the public will be educated enough about these subjects to apply their own pressure on legislators and other elected officials. The voting booth is the ultimate force. Ask your legislators where they stand on insurance companies versus consumers. The Consumer Lawyers of Hawaii fights for consumer rights in this area and the attorneys who belong to the Consumer Lawyers of Hawaii are the only attorneys you should contact if you are in an automobile accident.