You crashed into someone with your car. Now, who pays for your medical expenses?
As long as there’s insurance, that’s an easy question, right?
Wrong. If you live in a state that requires Personal Injury Protection, this changes everything. All of a sudden, the traditional way of dealing with insurance policies becomes obsolete. Instead of waiting for the other driver’s insurance to kick in, it’s your own coverage that comes into play.
PIP insurance covers all the expenses, no matter who caused the accident.
And you need to know exactly what you pay for if you’re driving in one of the 12 states with mandatory PIP Insurance. Let’s start at the beginning.
Here are the most important points on this topic:
- What Is Personal Injury Protection?
- Why PIP Insurance Is Relevant For Every Driver
- What PIP Coverage Actually Covers
- What Is The Difference Between No-Fault and At-Fault States?
- Mistakes Policyholders Make All the Time
What Is Personal Injury Protection?
Personal Injury Protection is a type of auto insurance that covers medical expenses, and other related costs, following a car accident.
The big difference?
Your insurance pays you back, regardless of whose fault the accident was.
That’s the reason PIP insurance is commonly referred to as no-fault insurance. The money comes from your own insurance company, even if the fault was yours. In fact, a PIP system was designed to help accident victims get immediate medical treatment after a crash without waiting for insurance companies to figure out who’s to blame.
States where Personal Injury Protection is mandatory ensure that all drivers have at least some coverage.
The minimums vary quite a bit from state to state, ranging from 3,000 $ in Utah to 40,000 $ in Minnesota.
Don’t be too concerned by these numbers though. What your coverage should look like depends on your specific situation.
Why PIP Insurance Is Relevant For Every Driver
Here’s something that might come as a surprise for you.
Did you know that about 95% of personal injury cases end in settlements rather than trials?
The problem is that those settlements take time. And the medical bills, they don’t wait.
If you have PIP coverage, your insurance pays for your expenses immediately after the accident. That means:
- Immediate payment for medical bills
- Compensation for lost income if you can’t go to work
- Passengers in your vehicle are covered too
- Knowing that your bills are being covered gives you peace of mind
Think about this.
With 39.5 million personal injury cases requiring medical treatment every year, accidents happen more often than we think. That’s the reason having the right coverage is not an option. It’s a necessity.
The real value of PIP insurance?
Avoiding the hassle of going back and forth with the other driver’s insurance while you’re busy getting back on your feet.
What PIP Coverage Actually Covers
Personal Injury Protection covers more than just your medical bills. As a matter of fact, this coverage provides you with a wide array of financial benefits in case of an accident.
Medical bills (ambulance services, hospital treatment, surgery, medication, rehabilitation, dental care, and chiropractic treatment, just to name a few) – while some states cover 100% of your costs, the majority of US states require you to pay up to 20% of the total sum in coinsurance.
Lost wages (most policies provide 80% of your lost income in case you were unable to work due to injuries from the accident). In some states, this even applies to self-employed people who needed to hire temporary help.
Essential services (cleaning the house, caring for your kids, and other daily tasks you usually take care of but aren’t able to do after the accident).
Funeral expenses (costs related to burial or cremation).
Survivor benefits (financial support in case your death occurs because of the accident).
Extensive coverage, right?
Here’s what PIP Insurance doesn’t cover
Don’t get too excited though.
Before you think that Personal Injury Protection has got your back no matter what, let’s remind you of the things that are out of scope.
- Damage to your own car
- Damage to other people’s property
- Injuries of the drivers of other vehicles involved in the accident
- An accident that happened while you were committing a crime
- An accident that was caused on purpose
That’s why PIP is used in conjunction with other insurance coverages. It’s not a substitute for, say, liability insurance.
No-Fault vs. At-Fault States
Now things start to get interesting.
The United States has two different insurance systems. 12 US states require PIP insurance to be a part of their mandatory auto insurance program.
No-Fault States – the insurance company that issued the PIP policy pays your medical bills regardless of who’s to blame. You have no right to file a lawsuit against the other driver, unless, of course, your injuries are serious and treatment expenses exceed a certain limit.
At-Fault States – the driver who’s responsible for the accident is responsible for paying for the damages. The claims are to be paid by their insurance company.
Why should you care?
Well, because it completely changes the system of processing claims after an accident.
If you live in a no-fault state, claims get resolved much faster. You file a claim with your own insurance company, and it will be paid in a short amount of time. If, on the other hand, you live in an at-fault state, you might have to wait for a while while insurance companies work on the investigation and negotiation.
The real cost of Personal Injury Protection
Ok, here’s a secret most insurance agents don’t want you to know…
The price for PIP Insurance changes a lot depending on your state, limits, and your insurance provider. States with mandatory PIP coverage have set their minimums, but the minimums are not enough.
Let’s take a look.
- In Minnesota – $40,000
- In Utah – $3,000
- In Massachusetts – $8,000
And can you imagine being able to survive a serious accident with only $3,000 worth of coverage? Highly doubtful.
Did you know that medical expenses after a car accident add up very quickly?
Emergency room visits, surgery, physiotherapy, medication, lost income, and other treatments can easily exceed minimum PIP coverage limits. This is the reason most drivers opt for a policy with higher limits than the minimum ones.
Mistakes Policyholders Make
Oh, and here’s another secret.
The biggest mistake most people make with PIP insurance. Do you want to avoid it?
Here are the most common PIP Insurance mistakes:
- Believing that PIP insurance is not needed
- Opting for the minimum amount of coverage
- Not coordinating coverage with health insurance
- Disregarding deductible options
The biggest one of them all?
Not reading your insurance policy from the beginning to the end until you need it.
When You Actually Need PIP Coverage
Ok, so let’s be honest for a second.
When is it PIP insurance that you absolutely need?
You definitely need PIP coverage if:
- You live in a state with mandatory PIP Insurance (12 states have that as part of their auto insurance requirements)
- You regularly have passengers in your vehicle
- Your health insurance has a high deductible
- You’re self-employed and can’t afford to miss work
PIP might be optional, but it’s a good idea if:
- You live in a state that allows PIP Insurance
- You want additional protection on top of the liability coverage
- You like to avoid lawsuits after minor accidents
Don’t forget.
With personal injury filings surging 78% in recent years, having proper coverage is essential. Which means, again, that the more coverage, the better.
PIP Insurance – The Bottom Line
Personal Injury Protection exists for one reason and one reason only.
Speeding up the process of accident victims getting medical treatment without legal hurdles.
If you live in a state that requires PIP or allows you to have PIP as an optional coverage, you should be aware of what it is.
PIP covers medical expenses irrespective of whose fault the accident was. It also covers things like lost wages, funeral costs, and other essential services.
Coverage requirements vary a lot in different states.
The majority of the population needs more coverage than the minimum ones.
PIP insurance is a supplement, not a replacement for other types of auto insurance coverages.
Don’t wait for an accident to happen before you dig into your policy and read the fine print.
Accidents do happen, and when they do, you’ll be very glad that you took your time to learn all about Personal Injury Protection.