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Understanding Auto Insurance: What is Personal Injury Protection?

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 | May 25, 2017
What is Personal Injury Protection?

This article is part three in a series on auto insurance coverage. Read part one here, part two here, and stay tuned for the rest.

Most states in the U.S. require all car owners to have some form of auto insurance to protect from the high costs associated with car accidents. Whether a minor dent or a serious injury, automobile accidents can cause significant financial burdens—without the proper insurance.

What happens if you get injured in a car accident and you’re found at-fault for the accident? What if you get injured in an accident and the other driver is at-fault, but then a lengthy and unpredictable lawsuit starts? Who pays for your medical expenses and when can you get your costs covered?

The medical costs you’d incur from an accident like this could be significant, which is where your Personal Injury Protection (PIP) coverage would kick in. PIP is typically mandated for all drivers in many states, so you may already be paying for this coverage under your auto insurance plan.

But what is personal injury protection and why do you need it? We take a dive into PIP below!

Personal injury protection helps cover your medical costs and services associated with an automobile accident. It is considered a “no fault” coverage, meaning that it will pay the policyholder no matter who is found at-fault for the accident. Whether or not you are responsible, your insurance will likely pay you for your personal medical expenses and related costs.

What Does It Cover?

Personal injury protection helps cover the policyholder’s medical expenses related to an automobile accident regardless of who is at fault (otherwise known as “no fault” insurance). This coverage can include hospitalizations, ambulances, doctors’ visits, rehabilitation treatments, and other direct medical expenses. Depending on the policy, PIP can often pay for up to 80% of medical expenses from an accident.

PIP may also cover additional services that are an indirect result of the accident, like transportation to medical appointments, childcare services, and grocery delivery if the individual is unable to shop. It can also include income continuation if there were lost wages from needing to take time off from work. Furthermore, it may cover funeral expenses for family in the case of death. Some PIP insurance may even cover injuries sustained if the policyholder is a pedestrian hit by a car or is injured while riding public transportation.

The coverage is highly dependent upon the state and insurance company, so it is crucial to have a thorough consultation with a trustworthy insurance representative to find the best solution for your situation.

Note: It is important to note that PIP could be nullified if the policyholder is intoxicated or under the influence, regardless of the “no fault” consideration.

How Does It Differ From Other Forms Of Insurance?

PIP and Med Pay

Medical payment is similar to PIP in that both cover the policyholder’s injury costs that are a direct result from an automobile accident. Med Pay is also “no fault” and will cover related medical costs regardless of blame, but it will not pay for non-medical related expenses.  PIP is more comprehensive than Med Pay, as PIP will often compensate also for lost wages, rehab, funeral costs, and other services.

PIP and Health Insurance

You may be wondering how PIP auto coverage plays a role with your health insurance. If you are injured in a car accident, most policies exhaust the PIP before dipping into the health policy. Some states, like New Jersey, have specific policies that allow PIP to work in conjunction with the health policy to ensure that you are fully covered.

While PIP is usually used before health insurance in the case of an accident, some companies will allow you to set your health policy as the primary coverage. This is important to note because PIP can pay for additional associated services and costs, while standard health insurance usually does not. Talk to a licensed, trustworthy insurer to figure out which form of insurance you would want to use as your primary within your state.

PIP and Bodily Injury Liability

If you are found at-fault for an accident, sometimes the other driver’s PIP would cover their own expenses. If their costs exceed their PIP limit, they may file a lawsuit against you for additional costs, though; this is where your bodily injury liability would come in. The bodily injury would then pay for the other driver’s (or passenger’s) medical expenses if you were found at-fault.

The same is true in reverse. If the other driver were found at-fault, you would often use your PIP policy first to cover your medical costs. If you have additional bills or economic losses, you could then file a lawsuit against the other driver. This can be a long process and require a lawyer, though, so using the PIP coverage as your primary coverage often works as an attempt to save you from court-related headaches and losses.

What Does A Claim Look Like?

One of the best features of PIP is the quick payout. Because it is paid out without fault or blame, you don’t need to wait until someone is found at-fault or a lawsuit is filed. You deal directly with the insurance company after an accident, which saves time, energy, and worry.

Usually, you would submit a PIP claim online or on the phone as you would other insurance claims. These personal injury policies tend to kick in immediately after the claim is submitted to help cover emergency medical expenses.

However, your PIP will not always cover everything. It is common for insurance companies to require pre-approval for treatments and associated costs. If the insurance company does not clear a treatment or service, you might end up paying for these costs yourself. For example, New Jersey requires that medical care even in the first 10 days must first be certified with the insurer. In this way, it’s important to always understand your state’s regulations and your policy’s standards of approval.

Is It Required?

PIP is mandatory in the following 13 states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah. Some states, like Washington, Texas, and Maryland, require PIP unless you formally reject it in writing. All other states usually offer PIP as add-on coverage.

Below you will find the minimum required amount of PIP for each state.

State

Minimum PIP

Florida

$10,000

Hawaii

$10,000

Kansas

$9,000

Kentucky

$10,000

Massachusetts

$8,000

Michigan

No limit

Minnesota

$40,000 (split)

New Jersey

$15,000

New York

$50,000

North Dakota

$30,000

Oregon

$15,000 (no-fault state)

Pennsylvania

$5,000

Utah

$3,000

Even if it is not required in your state, you will likely want to talk to an agent and consider investing in PIP. If you are injured in an accident and have to file a lawsuit, you will go through a lengthy process to get money back—and you can’t be sure how much you are going to get. PIP helps ensure your medical expenses will be covered (up to your limit). Also, if you are found at-fault for an accident, PIP and Med Pay are the only forms of auto coverage that will pay for your personal medical expenses.

How Much Coverage Do You Need?

You must meet your state’s minimum requirements as listed above. However, beyond that, you need the amount of coverage that would cover medical expenses and the time off if you were unable to work or take care of your family. Unlike bodily injury liability, where you should have enough coverage to protect all of your assets in the case you are sued, PIP just needs to cover your personal livelihood and lifestyle costs until you can resume a normal life.

The best way to determine how much coverage you need is to look at your current monthly expenses to determine lifestyle. Then, factor in additional expenses that would be necessary for your medical bills and other services, like childcare or transportation. This will give you a rough estimate to then discuss with your insurance agent

Personal Injury Protection Bottom Line

PIP will be there no matter the situation of the automobile accident and the subsequent events. It is often considered a “principal” auto insurance, because it can cover all of your medical related expenses in the case of a detrimental accident.

Get a quote with InsuraMatch to protect yourself with PIP today!