What Is PIP Insurance?
Personal injury protection insurance (commonly referred to as PIP insurance or simply by the colloquial "pip") is most often associated with auto insurance and is designated to cover medical expenses and lost wages. Personal injury protection insurance is also known as "no-fault" insurance because coverage extends regardless of the party at fault.
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Purpose
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Personal injury protection insurance is usually required in "no-fault" states. No-fault states are those that have elected to forego the standard at-fault basis that is costly to both the state and litigants in a lawsuit arising from auto accidents. The result is a type of insurance that pays an insured's medical expenses, rehabilitation costs and lost wages resulting from an automobile collision up to their coverage amount.
This no-fault system is placed in lieu of the injured suing the other driver for pain and suffering and emotional distress, but does not take away an injured party's right to sue or access to the courts. In the event the PIP insurance does not cover the medical expenses and other expenses related to the accident, the injured may seek compensation through legal action if such expenses can be demonstrated to rise above thresholds set forth by state statutes.
Coverage
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States that have no-fault laws set amounts for PIP reimbursement coverage. In Florida, a no-fault state, PIP insurance must pay 80 percent of medical expenses and/or 60 percent of lost wages that occur as a result of an automobile accident. This coverage is only extended after the deductible is satisfied; as a result, the insured must pay the deductible before the PIP insurance begins to cover her medical expenses and/or lost wages. And because PIP coverage is in no-fault states, the injured may not sue the other driver for the deductible, even in the event the other driver is at fault.
The 60 percent lost wages coverage will be awarded approximately 30 days after submitting proof through a "wage and salary verification form" provided by a doctor. The remaining 40 percent of lost wages can be recovered from the at-fault driver through filing a lawsuit against that driver.
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Misconceptions
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While personal injury protection insurance does cover medical expenses and lost wages (up to the amount of purchased coverage), it does not cover liability and/or damage to the vehicles involved a collision. Therefore, if the driver is at fault, the PIP insurance will not cover medical expenses, pain and suffering, and lost wages (collectively called liability) of an injured party as the result of an auto accident.
Additional Coverage
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Motorists in no-fault states should carry additional insurance to protect from liabilities not covered under PIP. Because of PIP limitations, motorists should carry uninsured motorist insurance (UM), collision coverage insurance and bodily injury insurance (BI). These additional insurance coverage will provide a motorist full coverage.
No-Fault States
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No-fault states include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and the Commonwealth Puerto Rico. Of these, in three states, Kentucky, Pennsylvania and New Jersey, consumers may choose between a conventional tort system and no-fault.
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References
Resources
- Photo Credit Jeep and car after the road accident. image by Dragan Trifunovic from Fotolia.com
