Pip's Place In Auto Insurance: Understanding No-Fault Coverage

Personal Injury Protection (PIP), also known as no-fault insurance, is an optional add-on to auto insurance policies that covers medical expenses and related costs resulting from a car accident, regardless of who is at fault. PIP is available primarily in no-fault states, where each person must cover their own medical expenses after an accident, regardless of who is responsible. In addition to making medical care more affordable, PIP often provides payments for lost income, childcare, and funeral expenses related to the accident.

Who is covered by PIP?

Personal Injury Protection (PIP) covers the policyholder and their passengers, regardless of whether they have health insurance. PIP also covers any pedestrians struck by the policyholder's car.

PIP covers the following people:

• The person named on the policy
• Household residents related by blood, marriage, or adoption
• Step or foster children
• Any non-family passengers

In some states, PIP also covers:

• People who aren’t members of your household if they don’t have their own PIP coverage
• Cyclists struck by your car

In addition, PIP covers the policyholder and any additional drivers listed on a policy if they are injured in a car accident as a passenger, a pedestrian, or while they are biking.

What does PIP cover?

Personal injury protection (PIP) covers medical expenses, lost wages, and other related costs if you or your passengers are injured in a car accident, regardless of who is at fault. It is sometimes called "no-fault insurance".

PIP covers medical expenses for both injured policyholders and passengers, even if they don't have health insurance. It also covers lost income, childcare, and funeral expenses related to the accident. In addition, PIP provides some death and disability benefits that you may not find through a medical payments (MedPay) insurance policy. For example, if you or a passenger are killed in a car accident, the PIP policy would cover funeral expenses. If you are left unable to work due to your injuries, the insurance would reimburse you for a percentage of your lost wages, up to the limits of the policy.

PIP is required in some states as part of "no-fault auto insurance" laws that restrict your ability to sue for car crash injuries. In other states, PIP is optional, but it can still be a valuable addition to a car insurance policy. Requirements for this coverage vary from state to state.

When is PIP not applicable?

Personal Injury Protection (PIP) is not applicable in several scenarios, and it's important to note that these scenarios may vary slightly depending on the state and specific insurance policy. Here are some common situations where PIP coverage may not apply:

• Injuries to Other Drivers and Their Passengers: PIP typically covers the policyholder and their passengers but does not extend to the other driver and their passengers involved in the accident. In such cases, the bodily injury liability portion of your car insurance comes into play to cover the medical expenses of the other driver and their passengers if you are at fault.
• Work-Related Injuries: If you are driving for work purposes and get into an accident, your PIP coverage may not apply. This exclusion typically applies when you are using your vehicle for business or commercial activities and are injured in an accident.
• Injuries While Committing a Crime: PIP coverage will generally not apply if you are injured in an accident while committing a crime, such as fleeing from the police.
• Damage to Someone Else's Property: PIP is designed to cover medical expenses and related costs for injuries. It does not cover damage to someone else's property resulting from the accident. For this, you would need property damage liability insurance.
• Damage to Your Vehicle: Similarly, PIP does not cover damage to your own vehicle. To protect against this, you would need collision coverage or comprehensive insurance, depending on the situation.
• Exceeding PIP Coverage Limits: Each PIP policy has coverage limits, and if your medical expenses and related costs exceed these limits, you may need to rely on your health insurance or other sources to cover the excess amount.
• State-Specific Exclusions: PIP requirements and exclusions vary by state. For example, in Texas, PIP works differently, and you would first make injury and lost wage claims against the other driver's liability insurance before turning to your PIP coverage.

How much does PIP coverage cost?

The cost of PIP coverage depends on several factors, including the state in which you live, the insurance company you choose, and the specific policy you select.

State Requirements

Personal injury protection (PIP) is required in some states and optional in others. In states where PIP is mandatory, the minimum coverage amount is set by the state government and can vary. For example, in Florida, the minimum PIP coverage required is $10,000, while in Kansas, the minimum is $4,500 per person for medical expenses and $900 per month for disability/loss of income.

Insurance Company and Policy

The maximum PIP coverage limits are typically set by insurance companies and can vary as well. Maximums are usually no more than $25,000, but some states, like New York, allow for higher limits of up to $50,000. Additionally, PIP coverage may have a deductible, which is the amount you are responsible for paying towards the cost of a claim.

Health Insurance Coverage

If you have health insurance, PIP coverage may not be necessary, especially if your health insurance plan provides adequate coverage for medical expenses related to car accidents. However, if your health insurance has a high deductible, PIP coverage can help cover those out-of-pocket costs.

Other Factors

Other factors to consider when determining the cost of PIP coverage include your ability to cover lost wages in the event of an accident and whether you want additional benefits such as funeral costs, childcare, and household services.

Why is PIP beneficial?

Personal Injury Protection (PIP) insurance, also known as "no-fault insurance," is beneficial as it covers medical expenses and lost wages for both you and your passengers following a car accident, regardless of who is at fault. PIP also covers instances where you are a passenger in someone else's car, or if you are hit by a car while a pedestrian or cyclist.

Medical Bills Coverage:

PIP insurance covers necessary medical procedures and reasonable expenses related to rehabilitation following a car accident. This includes hospitalization costs, surgeries, physical therapy, and ongoing professional care. It also covers medical expenses for pedestrians or cyclists struck by your vehicle.

Lost Wages:

If you or your passengers are unable to work due to injuries sustained in the accident, PIP insurance can help cover lost wages. This includes situations where you need to hire temporary workers or substitutes to perform your job duties.

Funeral and Death Benefits:

PIP insurance can provide financial assistance with funeral, burial, or cremation expenses in the unfortunate event of a fatality resulting from a car accident. It also offers death benefits to surviving dependents, helping to replace lost income.

Household Services:

PIP insurance may cover expenses for duties you are unable to fulfill due to your injuries, such as childcare, house cleaning, or yard work. This can be especially beneficial for stay-at-home parents or those with caregiving responsibilities.

No-Fault Coverage:

As "no-fault insurance," PIP covers your expenses regardless of who is responsible for the collision. This means that you don't have to wait for liability lawsuits to be resolved to receive compensation. PIP insurance is particularly useful in no-fault states, where drivers are required to carry such coverage, ensuring that your expenses are taken care of regardless of who is at fault.

Additional Protection:

Even if PIP is not required in your state, it can still be a valuable addition to your auto insurance policy. It provides extra protection and peace of mind, knowing that you and your passengers are covered for medical expenses and non-medical costs like childcare and lost wages.

Frequently asked questions