Personal injury protection pays the expenses of an insured person and his or her passengers when no fault can be established.
Your car insurance policy is made up of different types of car insurance that protect you in different situations in which you’d otherwise be financially liable. Some of those coverages are legally required, but others may be optional, depending on where you live and whether you own or lease your car.
Personal injury protection, or PIP, is a type of car insurance that pays the expenses you and your passengers incur after being hurt in a car accident, regardless of who was at fault. Also called “no-fault car insurance” and “first party benefits coverage”, PIP coverage can pay for medical expenses, lost wages, custodial services like child care, and even funeral expenses.
However, personal injury protection may be less important than other types of car insurance because of its coverage overlap with your health insurance or disability insurance. You may be able to save on your auto insurance premiums by reducing your PIP insurance to your state’s legal minimum as long as you still have the coverage you need.
Read on to learn more about personal injury protection insurance:
Personal injury protection insurance pays for expenses that result when you, someone insured by your policy, or your passengers are hurt in a car accident if no fault can be established. The expenses have to be related to the injury, which means that property damage won’t be covered by PIP.
As with all types of auto insurance, your PIP coverage is bound by a limit of liability, meaning the maximum obligation the insurance company has to you. After a claim, once the carrier has paid up to its limit of liability, you’ll have to pay any excess costs out of pocket. You can pay higher premiums to increase your limit of liability under this or any protection. The amount you purchase in PIP coverage and how much you pay for it will be listed on your declarations sheet.
Note that if one party is at fault, then his or her liability coverage will apply to the other party’s expenses instead of the latter’s PIP coverage. Additionally, your personal injury protection may be limited by a deductible, the amount you have to pay out of pocket for a given claim before the insurer’s obligation kicks in.
Additionally, while the coverage in each of these protections may be limited, you can always purchase more coverage for each provision. Many insurers not only offer basic personal injury protection coverage but also additional personal injury protection coverage, at an even higher premium, that increases the payments provided for a given expense and adds new provisions that may not be included under the basic no-fault insurance terms.
Policygenius can help you find a car insurer that offers enough coverage in every component of car insurance, including personal injury protection if applicable, for a policy that won’t break the bank.
Your PIP coverage applies to a range of expenses:
No-fault insurance covers your medical bills and those of your passengers and other people insured by your policy, except for expenses paid for by health insurance. Your coverage extends to you even if you’re not driving at the time of the injury, such as if you get hit by a car while walking. Your PIP coverage can even pay for your health insurance deductible.
Medical bills are usually defined as “reasonable” or “necessary” expenses, which may include:
Surgery, nursing, emergency care, X-rays, prescriptions, dental care, and prosthetic devices.
Therapy, rehabilitation, and remedial care.
Psychiatric and psychological care.
Speech and audiological services.
Nonmedical care in accordance with your religious beliefs.
In some states, you may be offered only this part of no-fault insurance. In these states, your auto insurance policy won’t necessarily have PIP coverage, but it will have medical payments coverage, which is often abbreviated to MedPay. It’s also possible to have both MedPay and PIP coverage, the latter of which kicks in first for a claim.
If you can’t work as a result of an injury you received from a car accident, some forms of PIP insurance will replace some of your wages. However, not every insurer offers this part of PIP insurance, and it may cost extra to add to your base car insurance policy.
Although every insurer offers different terms, the amount you’re allowed to claim in lost wages may be limited by your policy. Insurers usually reduce the amount you’re owed by 20% as well as any applicable deductible. Depending on state law, your earnings reimbursement may also be reduced by any social benefits you receive, such as workers’ compensation or Social Security disability insurance.
If you need more robust coverage for lost wages, a long-term disability insurance policy may pay higher benefits and last for a much longer period of time than the lost earnings provision in your auto insurance policy.
Personal injury protection coverage may even pay out a small sum, called a death benefit, to the survivors of someone killed in a no-fault auto accident. The amount is usually limited to a dollar amount or the remainder of any unused PIP benefits.
However, if you already have life insurance, the death benefit offered by PIP coverage may seem small in comparison. Since life insurance also covers you if you die in a car accident, the PIP provision for death benefits isn’t worth it on its own if you can afford a term life insurance policy.
As with the death benefit provision, your auto insurance’s PIP coverage may also include benefits that provide reimbursement for funeral expenses. Likewise, funeral expenses coverage will also be limited by the terms of your policy.
Since funerals can be very expensive, the funeral expenses provision of your PIP coverage may not provide you with the amount of coverage you’d need for full reimbursement. For that, an affordable term life insurance policy may be a better choice.
When your injury causes you to become unable to perform necessary services, the expenses you incur to hire people to perform those services may be eligible for reimbursement under your PIP coverage.
Such essential services include:
No-fault insurance covers the following people:
You, the person insured by the policy, while occupying a car or when hit by another car.
Any of your immediate family members, while occupying a car or when hit by another car.
Any other person, while occupying your insured car.
Personal injury protection coverage comes with a number of exclusions. If the injury you suffer in an accident was caused by one of these exclusions, you’ll be ineligible to receive reimbursement under your PIP terms.
Common exclusions include:
The driver caused the accident intentionally.
The driver was committing a crime, including fleeing the police.
The driver was driving the car for a fare, such as for Uber or as a taxi.
The injured person was struck by or was occupying a car you or an immediate family member owns that was not insured.
The injury was caused because of perilous human activity, such as war, insurrection, rebellion, or a nuclear explosion.
Additionally, property damage is not covered by personal injury protection. If the property damage was caused by another driver, then his or her property damage liability coverage will provide reimbursement. If you caused the damage, or if a force beyond your control (other than a driver) caused the damage, your collision insurance or your comprehensive insurance will reimburse you.
There are two types of states which require liability in a car accident. In a no-fault state, each driver’s insurance covers their own damages and expenses from a car accident, regardless of who caused the accident. In an at-fault state, also known as a tort state, the party who is liable for the damage is responsible for paying, whether through his or her car insurance or out of pocket.
In no-fault states, you’re required to have personal injury protection insurance. In tort states, PIP insurance may not even be offered at all; or it may be required as an add-on to your liability insurance, which means you can still sue the other party as well as receive injury expenses reimbursement from your car insurance company; or it may be completely optional.
In tort states that don’t offer PIP coverage, you may still be able to get MedPay coverage. Always talk to your car insurance company to make sure you’re getting the coverage you need.
New Hampshire (car insurance in general is not mandatory in New Hampshire, but fault is assigned when an accident occurs)
Virginia (car insurance is optional in Virginia if you pay an uninsured motorist fee, but fault will still be assigned in an accident)
The District of Columbia mandates that drivers have auto insurance, but the coverage may be either at-fault or no-fault; personal injury protection is optional.
When you’re injured in an accident, if you purchased PIP, you can decide whether you want to accept PIP benefits or file a claim through the other party’s liability coverage. However, even if you do accept PIP benefits, you may still be able to file a claim through the other party’s liability coverage if your injuries are particularly severe and receive additional reimbursement for your medical and rehabilitation expenses.
But if the injured person doesn’t have PIP, he or she will have to file a claim against the other party’s liability coverage.
Zack Sigel is a SEO managing editor at Policygenius. He covers personal finance, comprising mortgages, investing, deposit accounts, and more. His previous work included writing about film and music.