Personal Injury Protection (PIP) – What It Is and What Does PIP Cover

Personal Injury Protection (PIP) is a type of car insurance that covers the medical expenses and other related costs of you and your passengers if you are injured in a car accident, regardless of who is at fault. PIP can also cover lost wages, funeral expenses, and services that you cannot perform due to your injuries, such as child care or house cleaning. PIP is also known as no-fault insurance because it pays for your claims without regard to who caused the accident.

In this article, we will explain what PIP covers, how it works, how much it costs, and where it is required or available. We will also compare PIP with other types of car insurance, such as liability insurance and medical payments coverage. Finally, we will provide some tips on how to choose the right amount of PIP coverage for your needs.

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What Does PIP Cover?

PIP covers the following expenses for you and your passengers after a car accident:

  • Medical expenses: This includes the costs of ambulance, hospital, doctor, surgery, medication, dental, prosthetic, rehabilitation, and other necessary medical services. PIP can also cover the costs of psychological counseling and psychiatric treatment if they are related to the accident.
  • Lost wages: This includes the income that you lose due to your inability to work because of your injuries. PIP can also cover the loss of earning capacity if your injuries affect your future earning potential.
  • Replacement services: This includes the costs of hiring someone to perform the tasks that you normally do for yourself or your family, such as cooking, cleaning, laundry, child care, lawn care, etc.
  • Funeral expenses: This includes the costs of burial or cremation and other funeral services for you or your passengers who die as a result of the accident.
  • Survivor benefits: This includes the payments to your spouse, children, or other dependents who rely on your income for support.

The amount and extent of PIP coverage vary depending on the state and the policy. Some states have minimum requirements for PIP coverage, while others allow you to choose the amount and type of coverage that you want. Some states also have deductibles, copayments, or limits on certain types of expenses that PIP covers.

How Does PIP Work?

PIP works differently depending on whether you live in a no-fault state or a tort state. A no-fault state is a state that requires you to file a claim with your own insurance company for your injuries after a car accident, regardless of who caused it. A tort state is a state that allows you to sue the at-fault driver for your injuries after a car accident.

In a no-fault state, PIP is usually mandatory and is the primary source of payment for your medical expenses and other related costs. You cannot sue the other driver for these costs unless your injuries meet a certain threshold of severity or amount. The threshold varies by state, but it usually involves permanent disability, disfigurement, death, or exceeding a certain dollar amount of medical bills.

In a tort state, PIP is usually optional and is the secondary source of payment for your medical expenses and other related costs. You can sue the other driver for these costs if they are at fault for the accident. However, if you have PIP coverage, you must first exhaust your PIP benefits before you can pursue a lawsuit against the other driver.

How Much Does PIP Cost?

The cost of PIP depends on several factors, such as:

  • The state where you live
  • The amount and type of coverage that you choose
  • The deductible and copayment that you choose
  • Your driving record and history of claims
  • Your age, gender, marital status, and occupation
  • Your vehicle make, model, year, and safety features
  • Your credit score

According to NerdWallet, the average annual cost of PIP in 2020 ranged from $19 in North Dakota to $186 in Michigan. The national average was $92.

To get an accurate quote for PIP coverage in your area, you can use online tools such as Bing or Forbes Advisor to compare rates from different insurance companies.

Where Is PIP Required or Available?

PIP is required in 12 states and Puerto Rico as part of their no-fault car insurance laws. These states are:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky (offers a choice of no-fault or some ability to sue)
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey (offers a choice of no-fault or some ability to sue)
  • New York
  • North Dakota
  • Pennsylvania (offers a choice of no-fault or some ability to sue)
  • Utah

PIP is also available as an optional coverage in four states and Washington D.C. These states are:

  • Arkansas
  • Delaware
  • Maryland
  • Oregon

PIP is not available in the remaining 34 states. However, some of these states offer a similar coverage called medical payments coverage, or MedPay, which covers only the medical expenses of you and your passengers after a car accident, regardless of fault. MedPay does not cover lost wages, replacement services, funeral expenses, or survivor benefits.

How Does PIP Compare With Other Types of Car Insurance?

PIP is different from other types of car insurance, such as liability insurance, collision insurance, comprehensive insurance, and uninsured/underinsured motorist coverage. Here is a brief comparison of these coverages:

Liability insurance

This covers the medical expenses and property damage of the other driver and their passengers if you are at fault for the accident. It does not cover your own injuries or vehicle damage. Liability insurance is required in most states.

Collision insurance

This covers the damage to your vehicle if you are involved in a collision with another vehicle or object. It does not cover your injuries or the other driver’s injuries or vehicle damage. Collision insurance is optional in most states, but it may be required by your lender if you have a loan or lease on your vehicle.

Comprehensive insurance

This covers the damage to your vehicle from events other than collision, such as theft, vandalism, fire, flood, hail, animal strike, etc. It does not cover your injuries or the other driver’s injuries or vehicle damage. Comprehensive insurance is optional in most states, but it may be required by your lender if you have a loan or lease on your vehicle.

Uninsured/underinsured motorist coverage

This covers your medical expenses and vehicle damage if you are involved in an accident with a driver who has no insurance or insufficient insurance to pay for your losses. It does not cover the other driver’s injuries or vehicle damage. Uninsured/underinsured motorist coverage is required in some states and optional in others.

How to Choose the Right Amount of PIP Coverage?

The right amount of PIP coverage depends on your personal situation and preferences. Here are some factors to consider when choosing your PIP coverage:

Your state’s minimum requirements

If you live in a state that requires PIP, you must at least meet the minimum amount of coverage mandated by law. However, you may want to buy more than the minimum if you think that the minimum is not enough to cover your potential expenses after an accident.

Your health insurance

If you have health insurance, you may not need as much PIP coverage as someone who does not have health insurance. However, you should still consider buying some PIP coverage to cover the expenses that your health insurance does not cover, such as deductibles, copayments, coinsurance, out-of-network providers, etc. You should also check with your health insurer if they coordinate benefits with your auto insurer, meaning that they will pay only after your PIP benefits are exhausted.

Your disability insurance

If you have disability insurance, either through your employer or on your own, you may not need as much PIP coverage for lost wages as someone who does not have disability insurance. However, you should still consider buying some PIP coverage for lost wages to cover the gap between your disability benefits and your actual income. You should also check with your disability insurer if they coordinate benefits with your auto insurer, meaning that they will pay only after your PIP benefits are exhausted.

Your savings and assets

If you have enough savings and assets to cover your medical expenses and other related costs after an accident, you may not need as much PIP coverage as someone who does not have enough savings and assets. However, you should still consider buying some PIP coverage to protect yourself from unexpected and large expenses that may deplete your savings and assets.

Your risk tolerance

If you are willing to take more risk and pay more out-of-pocket expenses after an accident, you may not need as much PIP coverage as someone who is more risk-averse and wants more peace of mind. However, you should still consider buying some PIP coverage to avoid financial hardship and stress in case of a serious accident.

To sum up, PIP is a type of car insurance that covers the medical expenses and other related costs of you and your passengers if you are injured in a car accident, regardless of who is at fault. PIP can also cover lost wages, funeral expenses, and services that you cannot perform due to your injuries. PIP is required in 12 states and Puerto Rico as part of their no-fault car insurance laws. It is optional in four states and Washington D.C., and not available in 34 states.

PIP can be valuable coverage to have if you want to protect yourself and your passengers from the financial consequences of a car accident. However, the amount and type of PIP coverage that you need depend on various factors, such as your state’s requirements, your health insurance status, your disability insurance status, your savings and assets, and your risk tolerance.

Frequently Asked Questions (F&Qs)

How much PIP should I get?

The amount of Personal Independence Payment (PIP) you get depends on how difficult you find everyday activities (‘daily living’ tasks) and getting around (‘mobility’ tasks). The PIP amounts are as follows:

  • Daily living part: A lower weekly rate is £68.10 and the Higher weekly rate is £101.75
  • Mobility part: Lower weekly rate is £26.90 and the Higher weekly rate is £71.00

PIP is tax-free and the amount you get is not affected by your income or savings. If there’s a change in your personal circumstances or how your condition affects you, you should tell the Department for Work and Pensions (DWP) straight away.

How long does PIP last?

The length of a PIP award depends on how likely it is that your needs will change over time. Most PIP awards last for fixed periods of 2, 5, or 10 years, and you will be contacted to renew your claim before the end date. However, PIP can also stand for Performance Improvement Plan, a tool for managing employees who are underperforming. In this case, a PIP may last for 30, 60, or 90 days.

Personal Injury Protection (PIP)
Personal Injury Protection (PIP)

Personal Injury Protection (PIP)

Personal Injury Protection (PIP)