3.1 Oregon Auto Insurance Requirements

Oregon's Four Mandatory Auto Coverages

Oregon is unusual: it requires four coverages on every private passenger auto policy, not just liability. A producer who tells a client PIP or uninsured motorist coverage is "optional" has given advice that violates Oregon law and is a frequent exam trap. The four mandatory coverages are liability, Personal Injury Protection (PIP), uninsured motorist bodily injury (UMBI), and underinsured motorist bodily injury (UIM).

Exam Tip: The shorthand 25/50/20 describes only the liability portion. Remember that PIP ($15,000) and UMBI (25/50) are separately required. Candidates lose points assuming Oregon mirrors states where PIP or UM can be declined.

Liability Coverage Explained

• $25,000 per person caps what the insurer pays for any single injured claimant in one crash.
• $50,000 per accident caps the total paid to all injured claimants combined.
• $20,000 property damage pays for the other party's vehicle, fences, buildings, or contents.

Worked example: An insured at the 25/50/20 minimum causes a crash injuring two people ($30,000 and $24,000 in damages) and a $22,000 vehicle. The insurer pays $25,000 to the first claimant (capped at per-person limit), $24,000 to the second, and $20,000 toward the vehicle (capped at property limit). The insured personally owes the $5,000 and $2,000 shortfalls out of pocket.

Personal Injury Protection (PIP) — Required

PIP is a no-fault, first-party medical benefit paying regardless of who caused the crash. Oregon's statutory minimum is $15,000 per person. PIP covers reasonable and necessary medical expenses (generally for one year), 70% of lost wages up to a monthly cap after a 14-day disability, child-care reimbursement, and funeral expenses. Because PIP pays quickly and without litigation, it is the first source of payment for the insured's own injuries even when another driver is at fault.

Uninsured & Underinsured Motorist (UM/UIM)

• Uninsured Motorist (UM) pays when the at-fault driver has no insurance, is a hit-and-run, or has a carrier that denies coverage.
• Underinsured Motorist (UIM) pays when the at-fault driver's liability limits are lower than the insured's damages and lower than the insured's own UIM limit.

UMBI is mandatory at 25/50 minimum and cannot be rejected in Oregon — the only choice is whether to buy limits above the minimum (up to the insured's liability limit). This contrasts with property-damage UM and PIP step-downs, which are not the focus of the bodily-injury mandate. Oregon law permits the insured to stack UM/UIM benefits across multiple owned vehicles in many policy forms.

Oregon Is a Tort (At-Fault) State

Despite mandatory PIP, Oregon is not a no-fault state. An injured party retains the full right to sue the at-fault driver; there is no verbal or monetary threshold that must be crossed before suing. Recovery is governed by modified comparative negligence under ORS 31.600.

The 50% Bar Rule

• A claimant 50% or less at fault recovers damages, reduced by their own fault percentage.
• A claimant whose fault is greater than 50% (i.e., 51% or more) recovers nothing.

Worked example: A jury awards $100,000 and assigns the claimant 30% fault. Recovery = $100,000 x 70% = $70,000. If the claimant were instead 55% at fault, recovery = $0.

Exam Tip: Memorize the boundary — exactly 50% still recovers; 51% is barred. Oregon is more forgiving than pure contributory-negligence states but stricter than "pure comparative" states.

SR-22 Financial Responsibility Filing

An SR-22 is a certificate the insurer files with the Oregon DMV proving the driver carries at least the 25/50/20 minimums. It is required after events such as a DUII (driving under the influence of intoxicants) conviction, driving uninsured, an at-fault uninsured crash, or license suspension/revocation. Key rules:

• Filed by the insurer, not the driver, directly with Oregon DMV.
• Duration: three years of continuous coverage.
• Any lapse triggers an insurer notice to DMV and automatic license suspension.
• High-risk drivers unable to find standard coverage may use the Oregon Automobile Insurance Plan (assigned-risk market) as a last resort; premiums there typically run well above standard rates.

Proof of Insurance and Penalties

Oregon requires drivers to carry proof of insurance and present it on request or after a crash. Driving uninsured is a Class B traffic violation; a conviction can bring fines, suspension of driving privileges, and a future SR-22 obligation. Oregon also runs an electronic verification program, and the DMV may require proof at registration or randomly. A producer should warn clients that letting a policy lapse — even briefly — while an SR-22 is on file converts a paperwork gap into an immediate license suspension.

Stacking, Limits, and Common Client Pitfalls

Because Oregon's statutory minimums are low, many serious crashes exhaust them. Producers should walk clients through three recurring gaps:

• Liability shortfall — a single hospitalization can blow through the $25,000 per-person cap, exposing the insured's personal assets to a lawsuit; higher limits and an umbrella policy close this gap.
• UIM gap — if the at-fault driver carries only 25/50 but the insured's damages are $90,000, UIM pays the difference only up to the insured's own UIM limit, so buying UIM at minimum leaves real exposure.
• PIP coordination — PIP pays the insured's medical bills first regardless of fault; when a third party is later found liable, the PIP insurer may seek reimbursement, so clients should not assume PIP and a liability recovery both pay in full.

Exam Tip: Distinguish who pays. Liability pays the other party's injuries and property; PIP and UM/UIM pay the insured's own injuries. Confusing first-party and third-party coverage is the single most common auto-section error.