You’re ready to buy a car, and you’re probably thinking about the make, the model, the color, and the cost. You know you will need car insurance, but you might not know whether you live in a state that requires or offers Personal Injury Protection (PIP). You may have heard PIP called ‘no-fault protection’ and never paid much attention to it. But if you live in a no-fault state, like Massachusetts, you’ll want to know more about personal injury protection. PIP came to be when several states enacted laws aimed at reducing the cost of automobile insurance by preventing costly litigation over who was at fault in a car accident. By the 1970s, 20 states had passed “no-fault” automobile liability laws, which mandated the purchase of first-party, no-fault coverage for medical benefits and protection against loss of income for drivers and passengers.
Today, only nine states have mandatory PIP because it was found to not reduce the cost of car insurance. But you can still purchase it voluntarily in those states that still have no-fault laws, including MA. PIP is not an option in the other states.
In this article, we’ll discuss why this type of insurance coverage is important for your auto insurance policy and if it’s right for you.
What does Personal Injury Protection (PIP) cover?
PIP is a broad level of car insurance that provides basic medical payment coverage plus the following benefits that may be necessary after a car accident:
• Physical and occupational rehabilitation expenses
• Psychiatric and other professional health services
• Loss of earnings
• Replacement services, such as childcare
PIP regulations are numerous and confusing and are different in each state. PIP laws govern who is entitled to PIP, including certain passengers and pedestrians, which doctors are eligible to receive payments from PIP, how much doctors can charge and be paid, and what you can do if you are in a dispute with your insurance company. It’s best to have your independent insurance agent explain what you need to know about PIP.
How much PIP do you need?
The amount of PIP you must purchase if you live in a no-fault/mandatory state varies by state. The cost of PIP may be fairly high since it is mandatory; therefore, you may want to limit what you purchase, particularly if you have health and disability insurance. In some states, you can stack your PIP limits, which means you can purchase PIP limits for each of your cars and use the total limit as the limit per accident. For example, if you own three cars and your PIP limit is $10,000 per car, you can pay an additional premium and have a $30,000 per accident limit.
If you have health insurance, do you need PIP?
Health insurance has much broader coverage than PIP, and the latter should never be considered a substitute for the former. PIP only pays in the event of an auto accident, and the medical treatment must be necessary and related to the car accident. Since it is mandatory in no-fault states, you don’t have a choice about whether to purchase PIP. Your health insurance carrier will require you to exhaust your PIP limit before you file with your health insurance carrier.
Do you need both Personal Injury Protection and Med Pay Insurance?
Generally, if you live in a no-fault state, you might think there is no reason to buy both medical payment coverage and PIP since PIP provides insurance coverage that is equal to Med Pay. But PIP includes additional coverage and a much higher limit, typically $50,000. However, PIP generally has a deductible, while MedPay has none. Therefore, purchasing both could save you the deductible and provide you with more limits. If you don’t live in a no-fault state and therefore can’t purchase PIP, you may want to consider Medical Payments coverage.
Conclusion
Everyone has different insurance needs based on where they live, what they drive, and how much risk they are willing to take on. Deciding how much PIP coverage is right for you depends on these factors. If you want help deciding if you need personal injury protection insurance coverage, contact us, and we can help guide you through the process.
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