What is Personal Injury Protection (PIP) Insurance?

Personal injury protection, aka PIP coverage, is a type of auto insurance that can be super helpful if you get into an accident. That’s because PIP insurance can pay your medical bills, no matter who was at fault in an accident, and cover your lost wages. Sometimes, it even covers other expenses, such as household help or childcare. In short, PIP coverage has the power to save you from major financial losses. But is it right for you?

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How Does PIP Insurance Work?

That depends on whether you live in a no-fault insurance state or an at-fault state. In a no-fault state, all drivers are required to carry PIP coverage. After an accident, you must file a claim with your own auto insurance company, whether it was your fault or the other driver’s. That means your PIP insurance will pay for minor injuries, lost wages, and certain other damages. If the cost of your injuries exceeds your PIP limits, then you may be able to sue the at-fault driver for the extra expenses (depending on your state’s laws).

In an at-fault state, PIP auto insurance will generally kick in when you’re at fault in an accident and you or your passenger(s) are hurt. Your PIP coverage may pay for your health insurance deductible, for medical costs that aren’t covered by health insurance, for lost wages and other damages.

PIP insurance can also protect you, in some cases, if you’re hurt by a car when you’re a pedestrian or bicyclist. Your PIP insurance may also cover other members of your household.

PIP insurance does not cover:

  • The other driver’s medical bills — if you’re at fault, your bodily injury liability covers that.
  • Damages to the other driver’s vehicle — your property damage liability covers that, if you’re at fault
  • Damages to buildings, fences or other property — that, too, would be covered by property damage liability
  • Damages to your vehicle — your collision/comprehensive coverage covers that
  • Pain and suffering, or other damages – liability insurance would cover that

What Does Personal Injury Protection Insurance Cover?

You’re on your way to work when you accidentally run a stop sign and crash into a truck. The truck driver’s fine, but your back is killing you. You go to the hospital, where you’re diagnosed with two herniated discs and an injured knee. You start to panic. There’s no way you can go to your job as a home care aide, where you’re expected to be on your feet all day. But you don’t get paid sick leave, either. What are you going to do?

This is when PIP coverage kicks in. Depending on your state, PIP insurance can cover:

  • A percentage of your medical bills, up to a certain dollar amount
  • A percentage of your lost wages, up to a certain dollar amount
  • Mileage to go to medical appointments
  • In-home services you need because of your injuries, such as housekeeping or child care

PIP insurance can also cover your funeral costs and/or pay a death benefit to your survivors — but we really hope you won’t need that!

What is the Difference Between PIP and Medical Payments?

Both personal injury protection (PIP) coverage and medical payments (MedPay) cover medical bills, no matter who’s at fault. So what’s the difference between them? And do you really need both? Here’s a quick comparison.

  • MedPay has no deductible or co-pay. PIP often has a deductible.
  • MedPay is optional in most states. PIP is standard or required in 17 states and Puerto Rico.
  • MedPay, true to its name, only pays for medical expenses. PIP can pay for other losses too, like lost wages or rehabilitation expenses.
  • MedPay usually has a limit of $10,000 or less. The minimum limit for PIP varies dramatically by state, up to a high of $50,000 per person in New York (or unlimited in Michigan).

You probably don’t need both types of coverage, unless your PIP max limits are low and you want to make sure you’re protected.

Is Personal Injury Protection Auto Insurance Necessary?

If you live in one of the states where PIP coverage is required, you’ll have to buy it. But if you don’t, how do you decide if PIP is necessary?

  • First, take a hard look at your health insurance. Do you have a plan with high deductibles, pricey co-pays, or generally stingy coverage? Then PIP can be a big help in case you end up with a lot of accident-related medical bills. Some states have a system where your PIP and health insurance coverage work together to cover your bills. In New Jersey, for instance, you can choose PIP as your primary coverage, and then let health insurance cover the remaining costs.
  • Then, consider your financial situation. Do you work a job without paid sick leave or short-term disability coverage? Do you live paycheck to paycheck? If so, PIP may be necessary to replace your lost wages.
  • Also, think about your family. Because car insurance with personal injury protection can cover your whole household, it may be a smart buy if you have kids. It’s also good protection if anyone in your family doesn’t have health insurance, or if you or family members often get around by bike.

How To File a PIP Claim

How do you file a PIP claim? Very, very carefully. You may have to meet specific requirements in order to get your PIP policy to pay out. Florida, for instance, requires you to see a PIP medical provider within 14 days of the accident. That provider will determine if you have a serious emergency medical condition: If you do, you can be eligible for PIP benefits up to $10,000. If you don’t, then your benefits are limited to $2,500. If you don’t see a doctor in the 14 days, then your insurance company doesn’t have to pay. If you’re filing a PIP claim for lost wages, your employer will have to fill out a form verifying your earnings for the past 13 weeks.

What States Require PIP Insurance?

All true no-fault states require drivers to carry PIP insurance. But a few tort states (that means states where you can easily sue at-fault drivers) also have mandatory PIP insurance, although some let you opt out if you do it in writing. Clear as mud? These PIP states (and Puerto Rico) require the coverage or require insurers to offer it, according to the Insurance Information Institute. States with a * only require insurers to offer PIP, and you may opt out.

PIP insurance is like many auto insurance products; you don’t fully appreciate it until you need it. And hopefully, you never need it. But if you’re involved in an accident that causes more severe injuries, PIP can help you and others focus on recovery and not stress about finances. Compare rates through local auto insurance companies with PIP coverage included. You just might find a cheaper policy with greater protection!

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