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Personal Injury Protection Car Insurance

PIP Insurance, short for Personal Injury Protection, is a type of auto insurance that secures the welfare of an individual in addition to car damages: Medical expenses and lost wages. PIP is optional and can be added to a car-insurance policy. Exceptions apply in 16 states which require mandatory PIP coverage in addition to regular auto insurance. PIP Insurance provides identical coverage as health insurance or Medicare, and although this is considered an overlap it’s legal to combine multiple insurance policies at the same time. The difference is that PIP insurance only activates on car-related accidents while medical insurance covers you for all other medical problems regardless of how they were caused.  

PIP insurance is referred to as no fault insurance and it covers you and any loved ones injured in an injury. PIP insurance extends to all passengers in the car and not only the main driver. If you’re injured in an accident when someone else is driving, you’re covered under a standard PIP policy. PIP insurance is similar to bodily injury liability but the difference is that it only extends to at-fault car accidents, while liability insurance pays for everyone in the other cars if you’re at fault. PIP insurance provides additional security to an existing medical insurance plan because it covers policies that are typically not written under standard health insurance. PIP insurance can be more extensive than Medicare Insurance and provides coverage for everyone in your car.

Benefits Of Personal Injury Protection (PIP) Insurance

PIP insurance is catered towards individuals who rely on their cars for transportation and spend a lot of time in their cars. PIP is not for everyone; however, if you fit the profile of a car-dependent person the following benefits will apply to you:

Coverage for all passengers

All passengers in your car will be insured – PIP extends all medical/wage loss benefits to the passengers in your car. You will protect your spouse, children, parents or any person that drives along. They’re all insured. 

Additional medical insurance

If your health insurance plan is not satisfactory, PIP will provide extra medical coverage that will cover all your hospitalization/rehabilitation needs + the repair damages for the car and financial distress.

Financial compensation

If you’re incapable of working for the time being, the insurer will compensate you by paying out your wage. There are certain regulations in terms of how much you’re entitled to (for ex. some cap salary compensation at $10,000). Financial compensation will also include things such as house cleaning and childcare if the parent is incapable of performing those duties as a consequence of the accident.

Worst-case scenario compensation

If someone passes due to an accident the insurance company will cover their funeral costs.

How Much Does PIP Cover?

PIP coverage costs depend on the insurer + the mandatory state-imposed regulations. Most states assign mandatory minimums for insurance companies and this reflects in the final PIP coverage. For example, Florida mandates that all PIP insurers must cover at least 80% of the medical bills and 60% of all lost wages. Depending on the state, the percentage of mandatory coverage can increase or decrease. Look up the individual PIP requirements for your state to determine how much compensation you’re entitled to. Medical expenses receive the highest coverage, and some insurers provide 100% medical coverage that includes all medical costs: hospitalization, operation, drugs, and post-rehabilitation. Wage compensation can be capped by a certain amount depending on your initial coverage.

What Affects PIP Premiums?

The PIP premiums you pay in monthly or yearly installments will depend on your car and the age demographic you belong to. Example: teenage drivers pay the highest premiums. Premiums start dropping once a person hits into their early 20s and they stabilize until a person turns 65 at which point they increase again. If you drive an old used car you will pay less in premiums. If you drive fewer miles you will pay less in premiums. Any past traffic violations or DUIs will have an impact on your PIP premiums. Use quoting agencies to determine the average PIP price in your area. Moreover, PIP insurance does not only offer extensive medical coverage but also covers all potential downsides of an accident. The person is compensated for their lost wages, childcare, house cleaning and/or funeral expenses. Most normal car insurance does not provide this extensive coverage.

Pro Tip: PIP insurance is more expensive than regular insurance because PIP coverage covers all medical expenses for you and your loved ones (even if you cause the accident).

12 States With Mandatory PIP Insurance

There are 12 states (+ the territory of Puerto Rico) that make PIP insurance mandatory for all auto insurance companies. Those 12 states are the following:

  • Florid
  • Hawaii
  • Kansas
  • Massachusetts
  • Kentucky
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah
  • + Puerto Rico (US territory)

States Where PIP Is Optional

The following states allow PIP as an optional add-on to standard car insurance:

  • Arkansas
  • Delaware
  • Maryland
  • Oregon
  • Texas
  • New Hampshire
  • South Dakota
  • Virginia
  • Washington
  • Wisconsin
  • Washington D.C.

The minimum coverage requirements are determined by the state and might vary. If the policyholder currently has health insurance that insures them for medical expenses/rehabilitation caused by a car accident, they still must purchase PIP insurance if they reside in one of the 12 states that make it mandatory.

Personal Injury Protection (PIP) vs. Liability Insurance

PIP insurance does not replace liability insurance. Liability insurance is mandatory by every US state and it covers you for injuries that you cause to another party such as drivers, pedestrians, cyclists, etc. Auto insurers also provide the option to purchase professional liability insurance which covers businessmen, doctors, lawyers, landlords, or anyone who is at risk of being sued for malpractice/work-related accidents. PIP insurance is considered a high-coverage upgrade because it covers you for the personal day-to-day that ensues after an accident. Meanwhile, liability insurance is basic insurance that will only cover your car repair costs upon collision.