How Does Personal Injury Protection Work?
Personal injury protection insurance, or PIP, is a provision of an automobile insurance policy that provides coverage to the insured for medical payments and other expenses incurred during a covered accident. PIP coverage varies by state, and in states where the coverage is not required, the insured must sign a written waiver to decline the coverage.
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History
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PIP originated in the 1930's as a way to streamline automobile accident claims processing. It was thought that as a result of this "no-fault" procedure, litigation would be reduced and automobile insurance policy costs would go down. While the first expectation was met, the second one was met only in the early years of the coverage.
Significance
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Personal injury protection is often referred to as no-fault self-insurance, because it provides coverage to an insured regardless of who is at fault in an automobile accident. Thus, any payments provided can begin almost immediately, and do not require that an accident be fully investigated or that liability issues be resolved first.
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Extent of Coverage
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Although specific coverages vary by state, loss of income and reimbursement for medical expenses and hospital services are generally provided up to the policy limits. These reimbursements are paid directly to the insured. Some states also provide for funeral expenses, child care expenses and other costs incurred as a result of a covered accident.
Misconceptions
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It is a common misconception that you do not need personal injury protection if you have health insurance. Depending on your health coverage, you may have limitations on the amounts paid for particular medical services, and you may be seeing doctors outside your health plan's coverage area or network of health care providers. PIP can assist in filling these gaps in coverage as well as cover costs beyond the limitations of your health insurance.
Mandatory Coverage
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Personal injury protection is required for automobile insurance policies issued in:
Colorado
Delaware
Florida
Hawaii
Kansas
Kentucky
Maryland
Massachusetts
Michigan
Minnesota
New Jersey
New York
North Dakota
Oregon
Utah
Tips
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To determine the personal injury protection available in your state, use the link in Resource 1.
It is always a good idea to buy as much PIP coverage as you can afford.
Warning
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PIP is not a substitute for automobile liability insurance, which is required by most states.
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References
Resources
- Photo Credit car crash image by dawn from Fotolia.com
