Major change to car insurance payouts as new law could leave drivers $1ks out of pocket – but you can still sue

A MAJOR new law coming to a US state will change car insurance payouts and could leave drivers out of pocket by thousands of dollars.

While injured parties will still have the right to sue, the changes could significantly impact their ability to recover full medical costs.

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A law coming to a US state will change car insurance payouts – potentially leaving drivers thousands of dollars out of pocket[/caption]

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The change comes into effect on January 1, 2026, with a focus on the way medical bills from car crashes[/caption]

A report by WBRZ claims the ruling comes into effect on January 1, 2026, with a focus on the way medical bills from car crashes are handled in court.

Under the law, injured victims will only be allowed to sue for the actual amount paid for their medical bills – rather than the full amount billed by healthcare providers.

For example, if a hospital charges $100,000 but the victim’s insurance negotiates it down to $30,000, the victim can only recover the $30,000 in court and not the original $100,000.

Set to come into effect in Louisiana, proponents of the law, like the CEO of Independent Insurance Agents and Brokers of Louisiana, say this is a step toward lowering auto insurance rates, as well as addressing legal system abuse.

But critics, including personal injury attorneys, believe it harms injured parties by limiting their ability to fully recover costs.

This could be especially true in cases of severe injuries with high medical bills.

What’s more, there is skepticism about whether this change will actually lower insurance rates for drivers.

The law applies to car crashes that happen after its effective date and is part of a broader insurance reform package.

Personal injury attorney Chet Boudreaux said: “Some of these injuries that we see exceed a million dollars in medical bills.

“So when someone is seriously injured, or they need some of their maximum health insurance coverage later, some of that is going to get depleted because of the fault of someone else.”

Boudreaux added: “It basically passes off the cost to our clients and injured parties and takes rights away from them.”

This comes as a major tax change could save car buyers up to $10,000 a year – but only if they meet six specific conditions.

The benefit comes from a sweeping tax cut and spending law signed last week by President Donald Trump, known as Trump’s “Big, Beautiful Bill”.

It includes a new deduction for interest on loans used to buy eligible vehicles in the US, with the savings applying only to new cars, and only if they’re made in America.

Buyers can write off up to $10,000 per year in interest costs, a big deal, especially with current auto loan rates hovering above 6%.

To qualify, the vehicle must be purchased between 2025 and 2028.

It also must weigh under 14,000 pounds and be used only for personal, not business, purposes.

Only brand-new vehicles are eligible; used cars don’t count under the final law.

There’s also an income cap.

Single filers making $100,000 or less and joint filers making up to $200,000 can claim the full deduction, Spectrum News reported.