When shopping for auto insurance, you’ve likely come across a term called Personal Injury Protection (PIP). In this article, we’ll outline the key points about PIP coverage and what you should look for in your insurance policy.
What is Personal Injury Protection?
PIP is a type of coverage that pays for your medical expenses, lost wages, death benefits, and other related costs if you or your passengers are injured in a car accident.
The PIP coverage will generally apply regardless of who is at fault for causing the auto accident. This benefits the policyholder because it helps reduce any hassle of getting your bills paid.
PIP coverage requirements and policies vary from state to state. However, PIP coverage is required in certain no-fault states, which include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Utah, Pennsylvania, North Dakota, New York, New Jersey, and Minnesota.
For example, Florida requires all drivers to have PIP. The minimum amount of PIP coverage in Florida is $10,000, covering medical bills, lost wages, and death benefits. In contrast, Michigan requires a minimum of $250,000 per accident, which is substantially higher than the minimums in Florida. Drivers need to familiarize themselves with each state’s specific rules and learn the minimum and recommended levels of coverage.
How Does PIP Differ from Standard Bodily Injury Coverage
Bodily Injury Liability (BIL) coverage will pay the medical expenses and related costs for third parties injured in a car accident where you are at fault for the accident. The minimum amount of coverage will vary from state to state, where some states view BIL as optional coverage while other states require coverage. BIL and PIP interact together, where the BIL coverage applies after accounting for any PIP coverage available to the third party.
The BIL coverage limits are often quoted in 2 numbers. For example, the minimum BIL coverage for Kansas is $25,000/$50,000. The first number refers to the insurance limits paid per individual, while the second number is the total amount paid per occurrence.
For example, assume that you live and work in Kansas and have a policy with a PIP of $4,500 and BIL of $25,000/$50,000. You are at fault for causing an accident and injuring two people in the other vehicle.
Person A suffers $30,000 in damages and Person B suffers $40,000. Person A also has a similar auto policy with $4,500 of PIP coverage. Person A’s policy will provide the $4,500 PIP to both A and B. They receive this amount regardless of fault.
Note the summary in the table below.
| Sample Scenario for Kansas Policy | Person A | Person B |
|---|---|---|
| Total Damages | $30,000 | $40,000 |
| Their Own PIP Coverage | $4,500 | $4,500 |
| Your Responsibility (Damages - PIP Coverage) | $25,500 | $35,500 |
| Your Insurance Pays (Per Person Limit Cap Applied) | $25,000 | $25,000 |
After PIP is applied, Person A and B still have uncompensated damages remaining of $25,500 and $35,500, respectively. The BIL coverage under your policy will pay Person A and B’s damages up to the remaining policy limit of $25,000 per person. The combined amount of $50,000 is also the cap for payouts on a per-accident basis.
What Does PIP Cover After an Accident?
PIP can provide financial relief for various costs following an accident. The most common coverage includes the following items:
Medical Expenses: This includes hospital bills, surgeries, rehabilitation costs, and other related treatments. Some states impose limits on how much can be covered. For example, in Florida, there is a $2,500 limit for non-emergency medical treatments.
Lost Wages: If you sustain injuries in a car accident and are unable to work, PIP may cover part of your lost income. Some states impose additional limits on how much can be covered. For example, the PIP amount in Florida will cover up to 60% of lost wages, capped at the $10,000 PIP amount under the policy. So, PIP will cover lost wages, but it may be less than you initially think.
Funeral Costs: If an accident results in death, PIP may also assist in covering funeral expenses by providing a death benefit up to a certain amount.
It’s important to remember, as discussed above, that the coverage limits can vary depending on the insurance company and the state where you live, work, and have your auto insurance policy.
How Does PIP Differ from Health Insurance?
While it’s true that both PIP and health insurance can cover medical expenses, they serve different purposes. PIP generally begins immediately after the accident occurs. Health insurance policies and procedures may require deductibles, co-pays, or waiting periods, which can delay the process.
In addition, PIP offers benefits like lost wage compensation and certain rehab services, which many health insurance policies will not cover.
Do You Need PIP with Your Auto Insurance?
Whether PIP is mandatory under state law will depend upon where you live and drive your vehicle. If you live in a state where PIP is required, it must be included as part of your insurance policy.
Even if you live in a state where PIP is not mandatory, it is highly recommended that drivers add this to their auto insurance policy. Adding the PIP coverage will provide you some added peace of mind, especially if you have little to no savings or no emergency fund relief.
For example, if you are living paycheck to paycheck and cannot afford to save money for an emergency fund, the PIP coverage can provide you lost wages if your accident prevents you from working.
What Should You Do If You Are In a Car Accident?
If you’ve been involved in a car accident, there are several key steps and phone calls you need to make.
Call the Police. First, contact the police to report the accident. Calling the police is a must because you’ll need their police report and official record of what occurred. The report will also gather the names and information of witnesses.
Exchange Information. You can exchange your contact information (name, address, phone number) with the other individuals involved in the accident. It is best to not say more than this, because any statements you make can be used against you.
Seek Medical Care. If you are injured and in pain after the accident, seek medical care as soon as possible. Do not sit back and wait for days or weeks to speak with a medical professional.
Contact a Personal Injury Attorney. Your next step should be to contact an attorney that focuses in personal injury law, and even more specifically, auto accidents. You should speak with an attorney before contacting your own insurance company, or speaking with the insurance company of the other driver. Your attorney can advise on what information and statements can be made.
Many personal injury attorneys take your case at no cost to you unless you receive a settlement from the insurance company or win a judgement in the courts. Because there is zero cost to you initially, you really have nothing to lose.
Follow Attorney’s & Doctor’s Instructions. Many people make the mistake of not following instructions and it can damage your case and monetary recovery. For example, if your lawyer helps organize certain medical appointments and treatments with your doctor, you should attend every single appointment. Do NOT miss appointments! Same goes for keeping in touch with your attorney. If your attorney regularly calls with updates and leaves you a message asking to speak with you, always return their phone calls.
Final Thoughts on PIP Coverage for Auto Insurance
Personal Injury Protection is one of those lesser-known aspects of auto insurance that many people don’t think about. Whether it’s required in your state or just an option, PIP can be an essential part of making sure you’re financially secure after an accident.
So, as you review your auto insurance policy, consider whether PIP might be a smart addition. While we all hope never to need it, having the right coverage in place could make all the difference if the unexpected happens.