Understanding Commercial Auto Insurance Pip Costs

Personal injury protection (PIP) is a type of auto insurance that covers medical expenses, lost wages, and funeral costs after a car accident, regardless of who is at fault. It is also known as no-fault insurance and is required in some states. PIP can be purchased as an add-on to a commercial auto insurance policy, and it is an important addition as it covers what your personal health insurance might not. The recommended coverage and minimum limits for PIP insurance differ according to state insurance laws, typically ranging from $2,500 to $50,000. Even when it is not required, it is a wise investment for small businesses that use vehicles for work purposes.

What does PIP insurance cover?

Personal Injury Protection (PIP) insurance, also known as no-fault insurance, covers medical expenses and other costs resulting from a car accident, regardless of who is at fault. PIP insurance provides coverage for the policyholder, passengers, and even pedestrians involved in the car accident. It covers medical expenses, lost income, and other damages.

In terms of medical expenses, PIP insurance covers doctor's visits, medical exams, prescription medication, and diagnostic tests like X-rays or bloodwork. It is important to note that PIP has limits and does not cover all medical expenses. For example, in Florida, PIP covers only 80% of each medical bill, with a maximum coverage of $10,000.

PIP insurance also provides compensation for lost income if the insured is unable to work due to their injuries. This benefit can also apply to self-employed individuals who need to hire temporary workers to perform tasks. Additionally, PIP can cover the cost of replacement services, such as childcare or housecleaning, that the insured would typically perform if they were not injured.

In the unfortunate event of a death, PIP insurance offers death benefits, including funeral, burial, or cremation expenses, as well as compensation for lost income for surviving dependents.

While PIP provides valuable coverage, it is important to understand its limitations. PIP does not cover the injuries of other drivers in a collision or any injuries sustained while committing a crime or receiving payment for driving. It is also important to note that PIP requirements and coverage limits vary from state to state, so it is essential to review the specific laws and regulations in your state.

What does PIP insurance not cover?

Personal Injury Protection (PIP) insurance, also known as "no-fault insurance", covers medical expenses and related costs resulting from a car accident, regardless of who is at fault. However, there are certain situations and types of expenses that are not covered by PIP insurance.

• Damage to other people's property: PIP insurance does not cover damage to someone else's vehicle or property. This type of damage would typically be covered by the liability portion of your car insurance policy.
• Injuries to other drivers involved in the accident: PIP insurance covers the medical expenses of the policyholder and their passengers, but not the injuries of other drivers involved in the accident. The bodily injury liability coverage of your car insurance policy would typically cover the medical expenses of other drivers if you are at fault for the accident.
• Injuries sustained while using certain types of vehicles: PIP insurance typically does not cover injuries caused by using recreational or off-road vehicles, motorcycles, or other types of vehicles that are not standard cars. Separate insurance policies may be needed for these types of vehicles.
• Intentional injuries: PIP insurance does not cover injuries that are intentionally caused by the insured person or policyholder.
• Injuries sustained while committing a crime: If the policyholder is injured while committing a crime, such as fleeing the police, PIP insurance will not cover their medical expenses.
• Injuries sustained while driving for work purposes: PIP insurance does not cover injuries sustained while the insured person is driving for work or receiving payment for driving. This includes situations such as driving for a ridesharing company or delivering packages.
• Injuries caused by an uninsured car owned by the policyholder or their family: If the policyholder or an immediate family member is injured by an uninsured car that they own, PIP insurance will not provide coverage.
• Funeral expenses beyond a certain limit: While PIP insurance covers funeral, burial, or cremation expenses, there is typically a limit to the amount it will pay out. For example, in Washington state, PIP covers up to $2,000 for each person who died in the accident.

It is important to note that PIP coverage can vary by state and insurance company, so it is always a good idea to carefully review your specific policy to understand what is and isn't covered.

How does PIP insurance work?

Personal injury protection (PIP) insurance, also known as "no-fault insurance," is a type of car insurance that covers expenses like medical bills, lost wages, and funeral costs resulting from an accident, regardless of who caused it. PIP covers both the policyholder and their passengers, even if they don't have health insurance. It is mandatory in some states and optional or unavailable in others.

Here's how PIP insurance works:

Coverage

PIP insurance covers medical expenses for injuries sustained in a car accident. This includes ambulance services, medical and surgical treatment, hospital stays, nursing, medication, medical supplies, rehabilitation, prostheses, dental care, optical treatment, and chiropractic services. PIP has a minimum coverage amount and a per-person maximum coverage limit, which varies by state and insurance company.

In addition to medical expenses, PIP may also cover:

• Lost wages: If you or your passengers are unable to work due to injuries, PIP can help recover lost wages. It may also cover the cost of hiring substitute employees if you are self-employed.
• Funeral and burial expenses: PIP can help cover funeral, burial, or cremation costs in the event of a fatal accident.
• Childcare and household expenses: If your injuries prevent you from caring for your children or performing household duties, PIP may cover childcare, house cleaning, or yard work expenses.
• Disability and rehabilitation costs: PIP can assist with disability and rehabilitation expenses.

Availability and Requirements

PIP insurance is required in some states, primarily those with no-fault insurance laws. In no-fault states, each driver must file a claim with their own insurance company after an accident, regardless of who is at fault. As of 2023, there are 15 states and Puerto Rico that require PIP insurance. The minimum coverage requirements are set by state governments and can vary.

In other states, PIP insurance may be optional or not offered at all. Even if it's not required, purchasing PIP insurance can be beneficial if you want additional protection in case of an accident.

Claims Process

If you're involved in a motor vehicle accident, you'll need to file a PIP claim with your insurer. Your insurance company will then pay for your damages up to your state's threshold amount. If your bodily injury damages exceed this amount, you can file a lawsuit directly against the at-fault driver.

Comparison with Other Types of Insurance

PIP insurance is different from liability insurance, which covers the medical costs of a third party (not the policyholder) if the policyholder is at fault. PIP also differs from medical payment coverage (MedPay), which only covers medical expenses and funeral costs. PIP offers expanded coverage for other losses, such as lost wages and household services.

PIP insurance requirements by state

Personal Injury Protection (PIP) insurance is a type of car insurance that covers medical and other related expenses resulting from a vehicle accident. It covers the policyholder, the car's passengers, and anyone driving the vehicle for injuries sustained from a collision, even those who do not carry insurance. PIP is also known as "no-fault insurance" because it is mandatory in states that impose no-fault auto liability insurance laws. In these states, laws also prohibit injured motorists from suing at-fault drivers for compensation unless the injuries are severe or their medical expenses exceed the state's minimum requirement to sue.

As of December 2021, the following 12 US states require PIP coverage:

• Delaware
• Florida
• Hawaii
• Kansas
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Oregon
• Utah

In addition, Pennsylvania law requires drivers to purchase $5,000 in medical benefits, but does not specifically mention PIP. PIP coverage is also available but optional in seven other states and the District of Columbia.

• Delaware: $15,000 per person and $30,000 per accident, including up to $5,000 for funeral expenses.
• Florida: $10,000 per person, covering 80% of medical and disability expenses and up to $5,000 in death benefits.
• Kansas: $4,500 in medical expenses per person, $900 per month income loss for one year, $25 per day for at-home services, $4,500 for rehabilitation expenses per person, and $2,000 for funeral expenses per person.
• Massachusetts: $8,000 per person/per accident. PIP is the primary payer for the first $2,000 in medical expenses, after which the driver's personal healthcare coverage kicks in.
• Michigan: Unlimited PIP coverage, $50,000 (lowest option available for Medicaid recipients), or opt-out for drivers with a qualifying health insurance plan that covers car accident injuries.
• Minnesota: $40,000 per person/per accident, including $20,000 for hospital/medical expenses and $20,000 for non-medical expenses.
• New Jersey: $15,000 per person in medical expenses, with add-ons for essential services such as house cleaning and lawn care.
• New York: $50,000 per person, including a $2,000 death benefit.
• North Dakota: $30,000 per person, covering medical expenses, lost wages, and funeral expenses.
• Oregon: $15,000 per person, covering lost wages up to $3,000 per month, essential services, childcare, and a death benefit of up to $5,000.
• Pennsylvania: $5,000 per person. Injured parties may sue the at-fault driver, but only if the injuries are severe.
• Utah: Injured parties may sue the at-fault driver in cases of severe injury or if medical expenses exceed $3,000. PIP coverage includes lost wages (up to 85% or $250/week), $1,500 for funeral expenses, and a $3,000 death benefit.

Do you need PIP insurance?

Personal injury protection (PIP) insurance is a type of car insurance that covers expenses like medical bills, lost wages, or funeral costs. PIP covers you and your passengers when you are in a car accident, regardless of fault. PIP insurance, also known as "no-fault" insurance, is required mostly in states with no-fault insurance laws.

You need PIP insurance if you live in one of the 12 states where PIP coverage is required. These states include Florida, Kansas, Hawaii, Massachusetts, Minnesota, Michigan, New Jersey, New York, North Dakota, Kentucky, Utah, and Pennsylvania.

Even if it is not required, buying PIP insurance is a good idea because PIP can pay for accident-related medical expenses for you and any passengers in your car, while your health insurance may only cover you. Additionally, PIP covers non-medical costs like childcare and lost wages.

While you may be able to collect from the at-fault driver’s bodily injury liability coverage, the claims process and potential litigation may delay payments for several months, leaving you and your passengers on the hook for your own medical expenses from the accident in the meantime.

If you live in a state where PIP coverage is optional, you might choose to decline it if you have a good health insurance plan that you’d use for car accident injuries. Still, PIP has some perks that health insurance won’t offer, such as reimbursement for lost wages and payments for services you can’t do, such as house cleaning.

Frequently asked questions