Personal Injury Protection (PIP) Explained

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Joel Ohman
Founder, CFP®

UPDATED: Apr 8, 2019

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Here's what you need to know...

  • Personal Injury Protection insurance pays for medical expenses and personal injuries sustained in an automobile accident
  • Medical Payments Coverage is an additional policy that will pay for expenses not covered by PIP
  • Twelve states require drivers to have no-fault coverage

PIP insurance (Personal Injury Protection) is a type of car insurance that may be added onto a policy. It pays for personal injuries and medical expenses incurred by you and your family members if they are injured in a car accident.

It also covers lost wages if the injured person needed hospital care or needed time away to attend medical appointments or go for treatments following the accident. Some personal care expenses may be covered under a PIP insurance plan as well.

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Definition of PIP Insurance


PIP stands for Personal Injury Protection. Along with you and your family members, this type of coverage also kicks in to pay for medical bills and other expenses incurred by other people who are traveling in your vehicle at the time of the accident.

The policy may also provide coverage if you or a family member are hit by a car while walking.  If the accident is fatal, PIP may also provide coverage for funeral expenses.

The policy terms will set out exactly how much coverage is available and what types of expenses it will cover. PIP coverage will pay out up to the policy limits, less the deductible that you choose.

Your deductible is the amount you have agreed to pay yourself before the insurance company will pay out on a claim.

The PIP insurance will likely reimburse the injured person or persons for a percentage of his or her medical bills and lost wages. The maximum amount payable may be set out under state law or in the policy language itself.

To make up the difference between what PIP insurance coverage will pay and the full cost of medical bills and other expenses, Medical Payments Coverage is an option.

If no Medical Payments Coverage is in place, the injured person may need to consult an attorney to find out what his or her options are to recover the rest of this or her expenses incurred as the result of the accident.

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Is PIP auto insurance required by law?

In some states, PIP insurance coverage is required by law. In the same way that drivers may need to buy bodily injury liability insurance coverage, their state may also require them to have a minimum level of PIP protection in place.

This coverage is in addition to any personal health insurance coverage they may also have.

A person who does not have personal health insurance or who has limited coverage under this type of plan may want to consider buying a higher level of PIP coverage.

Without insurance coverage in place, he or she may be looking at paying for the cost of medical treatments and making up the cost of lost wages and other expenses on his or her own.

What states require personal injury protection insurance?

United States of America map-1600x1600

Another name for personal injury protection, or PIP insurance, is no-fault insurance. There are currently twelve states that require insured drivers to carry no-fault insurance.

These states are Kentucky, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, Pennsylvania, New York, North Dakota, and Utah. Washington, D. C. also requires insured drivers to carry no-fault insurance.

Which insurer pays out?

PIP insurance is considered no-fault coverage. The insurance company pays out on this type of coverage without having to first make a determination about which driver was responsible for the accident.

If an accident occurs, the insured would submit the required claim forms to his or her insurance company for payment. The insurer will process the claim and pay out on it.

The injured person’s insurance company may look to the at-fault driver’s insurer to reimburse it for the amount it pays out on the claim.

Any disputes between their primary insurance company and the other driver’s insurer are deal with between the two companies, in a behind the scenes manner.

Now that you know what PIP insurance is, why don’t you take the next step to find out how much this important protection will cost you?

The free insurance quote tool on this page can help you to compare rates from different providers so that you can find the right level of protection for your needs.

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