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Have you heard of personal injury protection insurance before? Well, unless you’re an insurance industry nerd like us, chances are you’ve either never heard of it, or if you have, that it’s only been in passing.
So what is personal injury protection anyway?
Personal injury protection, often referred to simply as PIP, is a category easily added onto your car insurance policy. In the case of an automobile accident, personal injury protection will pay any expenses you and your passengers may have, regardless of whose fault the accident was.
Sometimes called “no-fault car insurance” or “first-party benefits coverage,” personal injury protection coverage will pay for a variety of expenses that can be costly following an accident. These include lost wages, medical expenses, and services such as child care and funeral expenses.
Personal injury protection can be a confusing aspect of your car insurance journey, as it often overlaps with both health insurance and disability insurance coverage, but that’s why we’ve created this comprehensive guide: to help you understand the particulars of personal injury protection and to begin the important conversation about whether you and your family need it.
Read on for more information about personal injury protection insurance, or get started on your car insurance journey today simply by entering your ZIP code above.
What is personal injury protection (PIP) coverage?
As we’ve already discussed, personal injury protection, or PIP, is insurance coverage that will cover various, often-overlooked expenses in the case of an automobile accident, no matter who’s at fault for the crash.
These expenses include:
- Lost wages
- Medical expenses
- Custodial services such as child care
- Funeral expenses
According to Investopedia, “PIP covers medical expenses for both injured policyholders and passengers, even if some don’t have health insurance.”
The short video below offers a great overview of what personal injury protection coverage actually is.
The State of Minnesota offers this helpful definition of personal injury protection insurance, explaining;
“Provides basic economic loss benefits. If you are injured in an accident, this portion of your policy pays you and members of your household, within the stated limits, for medical expenses, lost wages, and replacement services.”
What is no-fault insurance?
In short, no-fault insurance is another name for personal injury protection coverage.
According to The Hartford, “Only offered in some states, the term no-fault car insurance is often used to signify a type of car insurance that allows policyholders to recover financial losses from their insurance company, regardless of who is at fault in an accident. No-fault insurance, also known as Personal Injury Protection (PIP) insurance, pays benefits related to bodily injuries resulting from an automobile accident.”
How does personal injury coverage work?
Personal injury coverage works with your other insurance plans – such as health insurance or disability insurance – to cover medical bills and for you and your passengers or other people insured by your policy.
Personal injury protection supplements your health insurance, which means it pays for whatever relevant expenses you have that aren’t covered by your health insurance.
This means PIP can be used to pay for your health insurance deductible and for injuries even when you aren’t driving, such as getting hit by a car while walking through a crosswalk.
The video below from the Maryland law firm of Bruce Robinson & Associates offers a great explanation of how personal injury protection coverage works.
So now that you know a bit about how PIP works, let’s take a deeper look at what it covers.
What is covered by personal injury protection coverage?
According to the National Association of Insurance Commissioners (NAIC), “Personal Injury Protection (PIP) coverage will pay you, your relative or any other person riding in your car a minimum amount per person for injury regardless of fault. The level of benefits varies widely among states. Coverage typically includes medical expenses, rehabilitation expenses, work loss benefits (lost wages), funeral expenses, and survivor’s loss benefits.”
That’s good peace of mind, in other words.
As we’ve already discussed, PIP covers a variety of costly expenses in the event of a car accident, including:
- Lost wages
- Medical expenses
- Custodial services (child care)
- Funeral expenses
But let’s discuss what each of these items actually means.
Often, folks are unable to work after a car accident. Without a paycheck, many people face financial uncertainty and will find themselves even more stressed than they would be from having been in the car accident in the first place.
So what can these people do?
In many cases, personal injury protection will step in following a car accident to replace some or all of your lost wages.
However, not every car insurance company automatically offers this benefit as part of their base personal injury protection insurance coverage. Make sure to check your policy and speak with an agent to ensure that lost wages are covered or that you can add this protection to your existing PIP policy.
Also, keep in mind that car insurance companies rarely cover 100 percent of your lost wages as you recover from a car accident. Our research shows that most insurers with lost wage protection will offer you 80 percent of your lost wages, minus any applicable deductible connected to your coverage.
Some states have maximum amounts when it comes to monthly lost wage payouts. In Michigan, for example, the Southfield-based Law Offices of Lee Steinberg, P.C., explain that the current monthly maximum for lost wage payments is $5,700.
As we’ve already talked about above, medical expenses not covered by your personal health insurance policy will generally be covered by your personal injury protection policy in the case of an automobile accident. Like other PIP components, medical expense allowances extend to your passengers and anyone else covered by your PIP policy.
But what types of medical bills will personal injury protection coverage pay for?
It’s a good question, and you should check with your car insurance agent to get a comprehensive list of medical expenses your policy covers. Our research shows that PIP will generally cover:
- Ambulance services
- Emergency care
- Dental care required from an accident
- Prosthetic devices
- Therapeutic rehabilitation
- Remedial care
- Psychiatric and psychological care required after an accident
- Optometry services
- Speech and audiological services
Additionally, many PIP policies will cover non-medical services that are in line with your personal religious beliefs.
Insurance laws can vary from state to state. In some states, medical expense coverage may be the only part of your personal injury protection insurance. In such places, your car insurance policy might not necessarily include PIP, but it might include medical payments coverage, often called MedPay.
Always play it safe and check with your car insurance agent to learn about the particular personal injury protection policies available to you and your family.
When you hear the phrase “custodial services” as part of an insurance policy, what do you think it means? You might think your insurance company will pay for a janitor to come clean your house, but in reality, it means much more than that.
So what kind of custodial services are covered by personal injury protection policies?
Again, it’s important to check your individual policy or talk to your insurance agent to get a comprehensive list. But our research shows that PIP insurance often covers:
- Child care
- House cleaning
- Lawn services
- Laundry services
When injuries from a car accident cause you to become unable to perform these necessary services, your personal injury protection insurance policy may reimburse you for hiring someone to perform them for you.
According to the Seattle-based law firm The Advocates Injury Attorneys, “if the motor vehicle collision resulted in a fatality, PIP will pay for funeral expenses.” Lawyers.com reports that “in some states, reasonable funeral expenses are protected benefits and have to be paid even when the insurance policy’s other benefits – like medical expenses – have been paid to the policy limits.”
Again, check your personal injury protection policy or talk to your car insurance agent to see if and how much of the funeral and burial expenses are covered under your PIP policy.
So now that we’ve seen what’s covered by PIP, let’s take a look at what’s not.
What’s not covered by personal injury protection insurance?
As we’ve discussed above, personal injury protection insurance covers a lot of potentially costly expenses that may come your way in the wake of an automobile accident.
But personal injury protection coverage often has a number of key exclusions.
Most importantly, property damage is not covered by PIP coverage. Though many other car insurance coverages might pay for damage done to physical property, PIP will not. (Although you should know that if the property damage was caused by a driver other than yourself, then his or her liability coverage will pay for the damage.)
Our research shows that other common exclusions to personal injury protection coverage include instances where:
- The driver was committing a crime, such as fleeing the police or the scene of another crime.
- The driver was driving the car for a ridesharing service, such as Uber or Lyft.
- The driver caused the accident intentionally.
So you might be wondering, who offers PIP, and about how much will it cost? Read on to find out what our research shows.
What car insurance companies offer the best personal injury protection coverage?
Any car insurance company that wants to do business in a state that requires personal injury protection or a required option must offer PIP. Thus, most national insurance companies will offer personal injury protection coverage.
The biggest car insurance providers in the United States offering personal injury protection coverage are:
- American Family
- Liberty Mutual
- State Farm
When shopping for car insurance of any type, the key issues you need to prioritize include:
- The level of insurance coverage you need
- The amount of money you can afford to pay for your car insurance premium
- The type of insurance company you want to do business with
Where is personal injury protection coverage offered or required?
So, you might be wondering, where is it required? And that’s a great question. The map below shows the states that require personal injury protection be a part of your minimum car insurance coverage.
According to Investopedia, 22 states “either require PIP or offer it as an optional add-on to insurance.”
They report that “PIP auto insurance is required in Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Puerto Rico” and that “it is a compulsory add-on to auto insurance in Arkansas, Delaware, Maryland, Oregon, and Texas and an optional add-on in New Hampshire, South Dakota, Virginia, Washington, Wisconsin, and Washington, D.C.”
Some states have minimum requirements for PIP insurance. These minimum requirements are shown in the table below.
|Delaware||$15,000 per person|
$30,000 per accident
$5,000 funeral expenses
|Florida||$10,000 per person|
|Hawaii||$10,000 per person|
|Kansas||$4,500 per person for medical expenses|
$4,500 for rehab expenses
$2,000 funeral expenses
$900 per month for disability/loss of income
$25 per day for in-home expenses
|Kentucky||$10,000 per person|
|Maryland||$2,500 per accident|
|Massachusetts||$8,000 per person|
|Michigan||Unlimited medical expenses|
Up to $5,189/month in lost income
$20 per day for replacement services
|Minnesota||$20,000 for medical expenses|
$20,000 for loss of income
|New Jersey||$15,000 per person|
$250,000 for severe/permanent injury
|New York||$50,000 per person|
$2,000 death benefit
80% of lost income up to $2,000/month
$25 per day for services
|North Dakota||$30,000 per person|
|Oregon||$15,000 per person|
|Pennsylvania||$5,000 per accident|
|Utah||$3,000 per person|
$1,500 per person funeral expenses
$3,000 death benefit
$250/wk or 85% of lost income (whichever is less)
$20 per day for services
The Insurance Information Institute (III) explains that there are three different types of state laws governing personal injury protection:
1. No-fault insurance states that require PIP:
- New Jersey
- New York
- North Dakota
2. States that require PIP but don’t have a no-fault insurance system:
3. Places where PIP is optional:
- New Hampshire
- South Dakota
- Washington, D.C.
It’s important to know the particulars of personal injury protection where you live. For instance, if you live in Washington, D.C. and have PIP, you have 60 days after an accident to decide whether to stick with no-fault insurance or make a claim against the other driver.
As we’ve discussed briefly above, PIP and MedPay are two types of insurance that often confuse people.
What’s the difference between PIP & MedPay?
We understand the differences between personal injury protection, or PIP, and medical payments coverage, or MedPay, can be confusing. After all, this is a very nuanced segment of the car insurance industry that few people think about until they need it.
But rest assured: having a little knowledge about these two important coverages can go a long way.
According to the Baumgartner Law Firm of Houston, Texas, one key difference between these two coverages is that PIP will often cover lost wages, where MedPay never will. They also explain that “MedPay has a provision that requires you to pay the automobile insurance company back if you collect from the other driver, or another negligent party. It is called subrogation, and personal injury protection does not require you to pay the insurance company back.”
So you might be wondering, do any states require MedPay coverage? Yes, two states currently require MedPay coverage to be a part of your minimum car insurance: Maine and New Hampshire.
Who needs personal injury protection?
As we’ve already discussed, some states require all drivers to carry personal injury protection as part of their car insurance coverage.
So if you live in Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah or Puerto Rico, you don’t have a choice. You must carry personal injury protection coverage.
But if you don’t live in one of these places, you might be wondering: do I need PIP if I have health insurance? Don’t they seem redundant?
There is some redundancy, sure, but PIP also covers some things regular health insurance doesn’t cover, such as lost wages. And that can come in handy if you’re unable to work following a car accident.
Also, according to Kevin Lynch, an associate professor of insurance at The American College in Bryn Mawr, Pa., “your having health insurance is not going to benefit other people in your car if you have an accident,” whereas personal injury protection will.
16 states currently require PIP coverage. In these places, you are usually required to file a claim with your PIP insurance before your standard health insurance. But it’s important to know that these insurances aren’t mutually exclusive. PIP and health insurance can end up more fully covering you in the case of an injury-inducing accident.
That’s great to know that your health insurance and personal injury protection car insurance can work in tandem instead of just being redundant.
Who will be covered by your PIP policy?
According to Washington State’s Office of the Insurance Commissioner, the following people will be covered by your personal injury protection policy:
- The person named on the policy
- Household residents related by blood, marriage or adoption
- Step or foster children
- Any non-family passengers and pedestrians involved in an accident
So, you might be wondering, how much will PIP cost me?
How much does personal injury protection coverage cost?
Like all insurance coverages, the cost of PIP will vary depending on a number of factors, especially what car insurance company you do business with, where you live, and how much PIP coverage you want.
According to the Accident Doctor organization, “As an average [personal injury protection] can cost anywhere from 5 to 50 dollars extra a month. It won’t be the most expensive coverage on your policy, but it is not the cheapest either.”
In some places, such as Florida, personal injury protection can be more expensive due to the high number of fraudulent claims. The Florida Office of Insurance Regulation explains that “in recent years, the number of drivers and auto accidents has remained relatively constant, but the amount of PIP claims, and PIP payments has skyrocketed.
“The National Insurance Crime Bureau lists Florida as having several cities reporting the highest amount of ‘questionable claims’ nationally. While PIP premium represents roughly 2 percent of Florida’s collected insurance premium, this issue accounts for nearly 50 percent of fraud referrals.
“In 2012, the State of Florida passed HB 119 – Personal Injury Protection (PIP) for Auto Insurance Fraud to address this issue by reducing PIP fraud, and passing these savings to consumers.”
Personal Injury Protection: The Bottom Line
As we have already discussed, personal injury protection coverage is often an easy add-on to your existing car insurance policy.
And even if you have good health insurance, PIP can be a good idea as it covers both lost wages and your passengers, unlike personal health insurance policies.
It’s good to remember how the State of New York describes the benefits of personal injury car insurance. They explain that PIP “is designed to pay promptly, regardless of who is at fault or whether there was any negligence, for economic losses (meaning medical/health expenses, lost earnings, and certain other reasonable and necessary expenses related to injuries sustained), up to $50,000 per person (‘basic No-Fault coverage’), to the driver and all passengers injured in your car as well as any pedestrians injured by your car.”
We know PIP can be a confusing element of the car insurance industry, but that’s why we created this comprehensive guide: to help you become a better informed — and thus safer — car insurance consumer.
What part of this guide was the most helpful? Is there something we could explain more clearly?
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