What is Personal Injury Protection (PIP) Coverage and Do You Need It?

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Demystifying car insurance, one policy component at a time.

Car insurance is actually made up of several components that cover an array of damages and costs in the aftermath of a car accident. The most common coverage includes liability insurance, property damage, and medical. But, one of the least understood is Personal Injury Protection (PIP) coverage, also known as no-fault insurance.

If these terms sound familiar, you likely hail from one of the 16 states that require it. Even so, many policyholders lack important knowledge in regards to PIP coverage. But knowing what PIP insurance is, what it covers, and when it covers you, can mean all the difference in ensuring that you are fully covered from devasting financial loss.

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What is PIP insurance?

Personal Injury Protection insurance dates back to the 1970s in the United States. As its name suggests, it is meant to cover bodily injury after an auto accident. It was created as a way to address growing concerns over the length of time it took to decide who was the at-fault driver in an automobile accident—basically, who covers all those medical costs.

In most states that require PIP coverage, there will also be restrictions on litigation. This means that the people involved in the accident need to meet certain requirements before they can sue one another.

Beyond this, PIP insurance can be extremely important after an accident. Filing a PIP claim is similar to filing any claim with your insurance company. But PIP covers a range of expenses beyond typical coverage. And while it is possible that components of PIP can overlap other insurance coverage you may have, it is intended to fill any gaps of insurance. The liability of which could cost you…big time.

What does PIP insurance cover?

PIP insurance covers you and any of your immediate family members while occupying a car. It can be your car or someone else’s, which is a powerful benefit. You and your immediate family members are also covered as pedestrians if any of you are struck by a car. Lastly, PIP will also cover any other person while they are occupying your car.

While every plan will vary, PIP will always offer coverage for medical expenses. However, unlike health insurance, PIP may cover a host of other expenses incurred. The range of coverage includes:

Medical bills

As mentioned earlier, medical expenses are always going to have some sort of coverage. Like the other parts of your auto insurance policy, there are caps on coverage. Amounts will vary by state, as different states have different minimum requirements. Amounts will also vary by plan, as you can choose more coverage if that makes sense to your needs.

It’s also important to understand the difference between MedPay and PIP. MedPay is only intended to help cover medical treatment, and it will not cover other expenses incurred treating bodily injury. Sometimes MedPay can be useful in adding more medical payments coverage, but other times it poses an unnecessary overlap in coverage that does nothing more than increase your premium.

Lost income

While not usually required, some forms of PIP insurance will provide coverage for lost wages. This will typically add more cost to your premium and the amount you’re allowed to claim will have limits. Your reimbursement may also be affected if you receive Social Security disability insurance, worker’s compensation, or other social benefits.

It’s important to keep in mind that, if you already have insurance to cover lost wages, you may not need to purchase more insurance. Additionally, you may need more protection than what PIP offers, so you should also consider long-term disability insurance. Be sure to talk to your agent about how coverage works in tandem with other insurance.

Funeral expenses

Typically also optional, this benefit helps cover the cost of a funeral in the event of a death due to a car accident. Be sure to take a careful look at the coverage amounts and restrictions, as it may not be enough to cover all the expenses of a funeral.

For many, life insurance will provide better coverage for funeral expenses. In this case, adding additional coverage, unless required, may not make financial sense.

Death benefit

While certainly more limited than what you’d find with life insurance, some PIP insurance will offer a death benefit in case of death in a no-fault accident. Typically, the surviving family members will receive the remainder of any unused benefits.

Essential services

You know all those annoying chores you do every week? Well, imagine trying to do them with a major medical issue. Mowing the lawn, vacuuming, doing laundry, even child care can be nearly impossible depending on the extent of injuries. PIP coverage can help by reimbursing you for expenses incurred when hiring people to help you with your day-to-day needs.

Bear in mind that in order to be fully covered, you will need to comply with the requirements of your plan. While treatment directly after an accident is almost always going to fall under PIP insurance, you may be required to schedule follow appointments through your car insurance company.

Acting outside of these requirements may put you at risk of not being covered. Be sure to read your insurance documents carefully and speak with your insurance agent about any questions you might have.

What doesn’t PIP cover?

You’ll want to take note of what PIP does not cover. There are some scenarios that will exclude you from PIP coverage (for example, if you are hit by a driver who was fleeing a crime, or if the driver intentionally caused the accident). Be sure to review your policy in order to understand its limitations.

PIP also does not offer coverage for property damage nor will it cover drivers or passengers in other vehicles. Nor will it offer protection due to injuries sustained that does not involve vehicles. A fall at home or work, for example, will not be covered.

Do I need PIP Insurance?

The first question you should ask yourself is does my state require PIP? There are 16 “no-fault states” and all of them require personal injury protection as part of your car insurance policy. You won’t be able to purchase a policy without PIP if your state requires it.

States that require PIP insurance (aka no-fault states):

States with optional PIP insurance:

The next question you need to ask yourself, especially if you are not required to carry PIP insurance, is do I have other insurance that covers me in PIP situations? For some situations, auto insurance may not offer the strongest coverage.

Take stock of the insurance plans you already have in place. If you have excellent long term disability, you may not need coverage from your PIP insurance. The key takeaway here is to cover yourself for what you need while avoiding overlapping coverage.

Bottom Line

PIP can be a powerful component of your automobile insurance and your insurance plan as a whole. It is important to know your state’s requirements, your personal needs, and how coverage works to ensure you’re neither over nor underinsured.

Lastly, don’t forget to compare quotes from top national and regional insurance companies, which you can do in less than two minutes with Insurify. Unlock discounts, explore coverage options, and discover new providers to find the best policy for you.

J.J. Starr is a financial copywriter and enjoys helping readers find the information they need. In addition to her background in banking and financial advising, she is also a poet with an MFA from New York University. She lives in Amherst, Massachusetts. You can learn more at jjstarrwrites.com.