Navigating the many car insurance coverages that pay medical expenses can be quite confusing. There are three primary types: medical payment coverage, the bodily injury limit of liability coverage, and PIP insurance (personal injury protection). Moreover, in some situations, even your regular health insurance can cover bills for injuries from a vehicle accident.
That’s why we decided to provide a complete guide for each of these protection plans, and PIP is on today’s menu. Here you will learn how it compares to other medical coverages, where it’s mandatory and where it’s optional, what limits you need, and which companies offer the lowest prices.
What Is Personal Injury Protection (PIP) Car Insurance?
PIP car insurance is the type of auto insurance that pays medical expenses for you and your passengers after a vehicle accident, regardless of fault. It was introduced in the 1970s, together with the no-fault system. The goals were to streamline the process of determining responsibility for an accident and to lower insurance prices. Quite the opposite happened since most no-fault states have higher than average insurance costs.
PIP is mandatory in some states, optional in others, and unavailable in the majority of them. Because it’s closely tied with the no-fault system in states where it is compulsory, it’s often called no-fault insurance.
What Does PIP Cover?
Personal injury protection covers medical expenses if you or your passengers were injured in a car accident. Additionally, it may include the following:
How Does PIP Work?
In no-fault states, PIP car insurance repays your and your passengers’ injury-related expenses up to the limit regardless of who was at fault. However, you’ll have to cover the deductible out of your pocket. Insurance companies estimate that PIP covers up to 80% of all expenses resulting from an injury in an accident.
In states without the no-fault system, if other drivers have caused the accident, their liability insurance should reimburse your expenses. Your PIP coverage would first take care of your medical payments up to your limits, minus the deductible. After that, your insurance company will request compensation from the liability coverage of the at-fault driver. Alternatively, if you caused the accident, your PIP, MedPay, or regular health insurance can all help pay the health bills.
Where Is PIP Car Insurance Mandatory?
PIP, or no-fault insurance, is compulsory in the following states: Oregon, Utah, North Dakota, Kansas, Arkansas, Minnesota, Michigan, Kentucky, Hawaii, New York, Massachusetts, Maryland, New Jersey, District of Columbia, Delaware, and Florida.
You can purchase it as an optional coverage in these states: Washington, South Dakota, Texas, Virginia, New Hampshire, and Wisconsin.
Additionally, it is mandatory in Pennsylvania, but if you purchase the more expensive full tort policy, you’ll have the unlimited rights to sue the negligent party (check our PA car insurance guide for more details).
How Much Does PIP Cost?
The expenses of a PIP claim have the most significant influence on the prices of this coverage. Michigan has the highest average PIP payout, at around $35,000, followed by New Jersey ($16,000). Minnesota, on the other hand, has a median PIP reimbursement of only $7,500. When the outlays for this type of claim are extreme, insurance companies have to charge high prices to protect their profits.
Check the table below to see how prices vary among the no-fault states and which insurers are the most affordable. (Note: in Michigan, only American Family offered online quotes.)
The Benefits of Having Personal Injury Protection
The main benefit of having PIP insurance is that you won’t have to go through the lengthy process of determining who was at fault before you receive the insurance payout. You will get reimbursed as soon as possible, and you will only have to deal with your insurer.
Another advantage of PIP is that it covers lost wages and any additional expenses you may have because of your injuries. Even your passengers can enjoy the benefits of your coverage.
In no-fault states PIP is mandatory, but in other places, you may want to check what your health insurance covers first. Some health insurance policies carry an endorsement that eliminates payouts related to car accidents. Others can provide adequate coverage in these circumstances.
What Is Not Covered by PIP Insurance?
PIP coverage excludes several items that fall under other protection plans. Here is the list of what’s not covered:
– Damage to the other driver’s property resulting from a collision. Liability insurance covers the costs of personal belongings and damage to the other driver’s vehicle if you were at fault.
– Damage to your car from a collision. To cover the expenses of repairing or replacing your vehicle regardless of who was at fault, you will need collision insurance.
– Non-driving damage to your car. Perils like theft, natural disaster, riots, vandalism, fire, and falling trees fall under comprehensive coverage.
Furthermore, PIP insurance will not cover any expenses above your limits. However, in some states with no-fault, you may be able to sue for serious injuries or medical costs that exceed a specific dollar amount or a certain threshold. You can find more details in Nolo’s legal encyclopedia.
PIP vs. MedPay
PIP and medical payment coverage work in a similar manner. They provide fast reimbursement for your medical expenses regardless of who was at fault. PIP can be mandatory or optional coverage, while MedPay is always optional. Typically, only one of these coverages is available in your state.
The main difference between MedPay and PIP insurance is that the former includes expenses besides medical treatment, such as lost wages, child care, and similar outlays. Additionally, you can opt to buy MedPay without any deductibles or coinsurance.
What PIP Limits Do You Need?
So what is a sufficient PIP limit? For a start, you cannot go below the minimum that the laws of your state prescribe. However, these minimums are usually insufficient when an accident happens.
Florida, for example, has minimum limits of only $10,000. If you opt for this, the chances are you’ll be adding money from your pocket even in a minor accident. And the more passengers you have, the higher the expenses will be. We advise choosing at least $100,000 to have a decent level of security.
Tips for Buying PIP Auto Insurance
As with all insurance products, the prices and the quality of the customer service vary significantly across the market. That’s why a little bit of research can benefit your nerves and your bank account. Start by reading some of the many auto insurance reviews on our website. You’ll be able to find how each major US insurer scores in financial strength, customer service, affordability, and other important departments.
This will help you make a shortlist of the companies that are best for you. It doesn’t have to be long, but we recommend including at least five companies that offer no-fault coverage to start. Then get a quote from them. An online quote takes anywhere between 8 and 20 minutes to complete. Phone calls with an agent last a little bit longer but not more than an hour. The whole ordeal shouldn’t take more than an afternoon, and you could end up saving a few thousand dollars and get higher quality insurance.
If you live in a state where price optimization is legal (check the full list here), you should shop around at every renewal term. Doing so demonstrates your willingness to switch to a better deal if there’s a chance. Once your insurance company realizes that, they will offer their most competitive prices to keep you.
Tap yourself on the back. You’ve just learned how to get the most out of your auto PIP insurance. In addition to that, we’ve also shown how the minimum limits may not be sufficient in most circumstances. $100,000 is the amount we’d feel the most comfortable with. In the end, it’s up to your budget. Nonetheless, make sure to check how much coverage your regular health insurance provides, to avoid doubling your protection.
Finally, at the risk of sounding like a broken record, we cannot stress enough the importance of shopping around for PIP car insurance. That’s the only way to be confident that you’re getting the best coverage at the lowest price.
Frequently Asked Questions
Will my insurance go up if I use PIP?
Every insurance coverage increases your premium. This means that if you add it to your policy in states where PIP is optional, you will and up paying more for car insurance. In locations where PIP is mandatory, your minimum coverage includes PIP by default. If you choose to increase the limits, your insurer will undoubtedly charge you more.
Should I get PIP insurance?
Personal injury protection is mandatory in most states where it’s available. In the locations where it’s optional, you should first verify if your regular health insurance protects you. Check if your health insurance limits are adequate and if there’s no endorsement excluding payments related to car accidents.
What is the difference between personal injury protection and medical payment coverage?
PIP car insurance pays for additional expenses such as lost wages and child care, while MedPay doesn’t cover these items. You can get MedPay without a deductible or coinsurance, which is not an option for PIP.
Both of these protection plans provide fast payments regardless of fault. PIP is mandatory or optional, depending on the state, while MedPay is always optional.
What is PIP insurance in Florida?
In Florida, PIP is a mandatory coverage, with the minimum limits of $10,000. It pays your medical expenses, lost wages, and similar outlays if you were injured in a car accident. It doesn’t matter who was at fault.
Does PIP cover the other driver?
No. The medical expenses, lost wages, and similar outlays paid by PIP car insurance are only your own and your passengers’. It doesn’t matter who was at fault. It has a limit, which is the maximum amount your insurance company will pay. Additionally, it carries a deductible, which is the amount you’ll be paying out of your pocket.
If you were at fault, in some no-fault states the other driver will still be able to sue you if the injury was severe and their expenses substantial.
Does PIP pay for pain and suffering?
PIP insurance does not cover these expenses. However, if you’ve been injured, and you are not liable, you can still sue the at-fault party for pain and suffering. Nonetheless, it can be a hard battle to win, since the at-fault driver’s insurance company will do anything they can to avoid paying you more.