What is a characteristic of add-on plans?

Add-on plans are designed to provide additional benefits while allowing for the policyholder to retain their right to seek legal remedy in the event of an accident. The defining characteristic of these plans is that they include no-fault benefits, which typically cover medical expenses and lost wages, thereby ensuring that the insured receives prompt financial assistance without needing to establish fault. This is particularly useful in situations where determining liability could lead to delays in receiving care or compensation.

Unlike other insurance structures, add-on plans do not restrict the insured's ability to file lawsuits against the parties at fault, thereby allowing them the flexibility to pursue additional financial recovery beyond what the no-fault benefits offer. This distinguishes add-on plans from more restrictive options that may limit legal recourse.

The other answer choices do not accurately describe the nature of add-on plans. For instance, they do not eliminate the right to sue, nor do they strictly mandate personal injury protection (PIP) coverage without offering additional benefits. Lastly, while penalties could be part of certain insurance policies or regulatory environments, they are not a defining or necessary feature of add-on plans. Thus, the focus on providing no-fault benefits while retaining the option for legal action clearly defines the essence of an add-on plan.