What Is a PIP Claim?

Personal Injury Protection, or PIP, is part of an automobile insurance policy. PIP provides the opportunity to make claims for compensation for medical expenses, and in some cases, lost wages, and pain and suffering, as the result of a motor vehicle accident. As of 2008, a total of 14 states mandate this coverage be included in every policy, and some other states require that insurance companies offer the coverage.

Identification

Personal injury protection coverage provides compensation for medical expenses and other damages resulting from an accident, without regard for who was at fault. The no-fault structure also means the claimant's insurance premiums should not increase as a result. In some states, the insurance provider must pay for the insured's expenses even if the other party is at fault and then recover the money from the liable person's insurance carrier. This is beneficial for the insured because the bills are paid quickly.

Benefits

The coverage is partly a guaranteed health insurance policy for the person who does not have regular health insurance. The injured person is guaranteed up to the maximum amount of coverage in the auto policy for approximately 80 percent of reasonable and necessary medical expenses, minus the deductible. Each injured person is qualified to receive up to the maximum payment, so a PIP of $50,000 will pay up to that amount for each individual injured party.

Considerations

PIP coverage is important for drivers who frequently carry passengers, particularly if the passengers do not have health insurance. If the driver causes an accident that injures a passenger, the driver can be held liable for medical expenses.

Function

PIP covers not only reasonable and necessary medical and hospital expenses but also can cover lost wages, child care and compensation for pain and suffering, loss of enjoyment of life, and loss of abilities. It also may cover funeral expenses. Limits range from $1500 to $250,000 depending on the injury and the state. According to Pilgrim Insurance, PIP claims account for 30 to 40 percent of losses within all auto claims.

Caution

It is essential for policy holders to know the types of coverage they have. Many policy holders assume they have full coverage for any instance, not realizing they must have personal injury protection or will be liable for medical expenses. Each specific coverage only applies to specific liabilities. Property damage coverage cannot be used to pay for medical expenses, for example.