Auto Insurance Pip: What You Need To Know

Personal Injury Protection (PIP) is a form of auto insurance that covers medical expenses and lost wages for the insured person and their passengers in the event of a collision, regardless of who is at fault. PIP is mandatory in some states and optional or unavailable in others. It covers medical procedures, surgeries, physical therapy, ongoing professional care, lost wages, death benefits, and funeral costs. PIP is distinct from bodily injury liability insurance, which covers occupants of other vehicles in the event that the insured person is at fault in a collision.

What does PIP cover?

Personal Injury Protection (PIP) is a form of auto insurance that covers medical expenses and lost wages for the insured in the event of an accident. PIP coverage is mandatory in some states and optional or unavailable in others. It is distinct from liability insurance, which only comes into effect if the insured party is at fault for the accident. PIP coverage applies regardless of who is at fault and includes the following:

• Medical costs, including surgeries, medications, diagnostics (x-rays, CT scans), prosthetics, nursing care, physical therapy, and medical devices.
• Lost wages due to injury and recovery.
• Replacement of necessary services normally provided by the injured party, such as childcare or household maintenance.
• Funeral and burial costs.

PIP coverage is designed to protect the insured person and their passengers in the event of an accident, regardless of who is at fault. It covers medical expenses and lost wages for the insured and their passengers and can also provide a death benefit to the family of the insured in the event of a fatal accident. Additionally, it can help cover the costs of essential services that the injured party would typically perform, such as childcare or household maintenance.

The specific expenses covered by PIP can vary depending on the state and the insurance plan. However, in general, PIP covers any necessary medical procedures and associated reasonable expenses related to injuries sustained during a collision. It is important to note that PIP does not cover expenses unrelated to personal injuries, such as vehicle damage or theft.

Is PIP mandatory?

Personal injury protection (PIP) is a type of auto insurance that covers expenses like medical bills, lost wages, and funeral costs. It covers the policyholder and their passengers when they are in a car accident, regardless of who is at fault. PIP is also known as "no-fault" insurance and is mostly required in states with no-fault insurance laws.

Twelve states require all drivers to carry a minimum amount of PIP coverage. These states are:

• Michigan
• Pennsylvania
• New Jersey
• Kentucky
• The District of Columbia
• Florida
• Kansas
• Massachusetts
• New York
• North Dakota
• Utah
• Minnesota

In addition, seven states and the District of Columbia require insurers to offer PIP, but allow drivers to reject this coverage. These states are:

• Arkansas
• Kentucky
• Maryland
• South Dakota
• Texas
• Virginia
• Washington

While PIP is not mandatory in most states, it is a smart investment if you want additional protection in case of an accident. It can provide coverage for medical expenses, lost wages, and other costs that your health insurance may not cover.

PIP vs Med-Pay

Personal Injury Protection (PIP) and Medical Payments (Med-Pay) are auto insurance coverages that pay out regardless of who is at fault in an accident. While these coverages have some similarities, there are also some key differences.

PIP

PIP is mandatory in all no-fault states and in Oregon, Delaware, and Maryland. In no-fault states, PIP policies cover the amount needed for personal injuries. PIP does not pay for damage to the cars involved or any other property. In nearly all no-fault states, at-fault drivers (or their insurers) are responsible for damage to other cars or property. PIP policies do not compensate for pain and suffering.

PIP covers the policyholder, family members living in the household, any driver with permission to drive the covered vehicle, and passengers. Insurers will pay reasonable accident-related medical and funeral expenses within three years of the accident. PIP also covers 80% of lost wages. If the injured person is unemployed, PIP pays for essential services, such as child and lawn care, that the person does for the household.

Med-Pay

Med-Pay is not mandatory and is not offered in Oregon, Minnesota, New York, and North Dakota. Med-Pay covers reasonable accident-related medical and funeral expenses within one year of the accident. Unlike PIP, Med-Pay does not pay lost wages or cover essential services for unemployed injured people.

While both PIP and Med-Pay cover injuries to the driver and any passengers in an accident, Med-Pay provides a small amount of coverage, whereas PIP coverage limits are higher and extend to things like funeral costs. PIP covers medical expenses, physical and occupational therapy and rehabilitation costs, psychiatric expenses, and other professional health services. Med-Pay is designed to complement standard liability coverage and can be used to supplement an existing PIP policy. Med-Pay has a couple of advantages: it pays medical costs quickly, and it has no deductible or co-pay.

How much does PIP insurance cost?

The cost of PIP insurance depends on several factors, such as the insured's coverage level, age, type of vehicle, insurance company, and location. The total cost of PIP insurance will vary based on the policy's coverage limit and deductible, as well as the state in which the insured lives.

In general, PIP insurance is relatively cheap, with monthly costs ranging from $5 to $50 for the coverage limits offered. The cost of PIP insurance in no-fault insurance states is often associated with higher rates, but this is not always the case.

For example, in Florida, PIP insurance typically covers 80% of medical bills and 60% of lost wages, up to $10,000. In Michigan, PIP limits are much higher, which is one of the main reasons car insurance is more expensive in that state.

In a recent analysis, PIP insurance costs ranged from $50 to $200 per six-month period in states requiring no-fault insurance. Michigan, which previously had very high PIP costs, changed its laws in 2020 to give drivers more options for coverage levels, resulting in significantly lower costs.

Should I have PIP insurance?

Personal injury protection (PIP) is auto insurance coverage that pays for medical expenses from car-related injuries, no matter who is at fault. PIP is mandatory in some states, while in others it is optional or unavailable.

Whether or not you need PIP insurance depends on your state and your personal circumstances.

State Requirements

If you live in a state where PIP is mandatory, you will need to purchase it. As of September 2023, 15 states required PIP, and three others required it but lacked "no-fault insurance" laws. In addition, four states and Washington, D.C., offered it as an optional add-on.

Personal Circumstances

If you live in a state where PIP is optional, consider the following:

• Your health insurance coverage: If you have comprehensive health insurance with a low deductible, you may decide you don't need PIP. However, keep in mind that your health insurance policy may not cover all of your medical bills if you're in a car accident, and it won't cover lost wages.
• Your ability to cover lost wages: PIP can cover lost wages if you're unable to work due to an accident, as well as the cost of replacement services for tasks you can no longer perform, such as childcare or house cleaning. If you're concerned about how lost wages could affect your financial health, PIP might be a good option.

Frequently asked questions