What is Personal Injury Protection (PIP) Insurance

PIP insurance is a type of auto insurance that is optional to purchase. Insurers must offer it to drivers, but if a driver does not want it, he or she must reject it in writing.

What types of expenses does PIP cover?

PIP covers medical expenses—like medical bills, dental bills, optometry treatment, an ambulance ride, prescriptions, and medical supplies—from injuries related to an accident. It covers both the driver as well as passengers in the vehicle. PIP will also cover lost wages (up to 80%) if you miss work, and can even cover home help if you’re not able to perform certain household tasks. In the event of a fatality, PIP can also cover funeral and burial expenses.

PIP is a no-fault insurance, meaning even if you are at fault for the crash that causes your injuries, or injuries to your passengers, you and your passengers can collect your PIP policy benefits.

 

How much does PIP pay out?

PIP is typically offered in amounts of $2,500; $5,000; and $10,000. It can be offered above $10,000, but this is rare. These amounts are total per person. For example, this means that if three people are hurt, each injured person can recover up to the amount of PIP coverage purchased.

 

PIP vs Med Pay

With PIP and Med Pay, you can choose one or the other (or neither), but you cannot buy both. PIP and Med Pay have many similarities, but the two differences are big enough to make the decision between the two types of coverage very easy.

First, both PIP and Med Pay cover medical expenses (up to the limits) in the event that injuries sustained in an auto crash. However, unlike PIP, Med Pay does not cover any other type of damages. Did you miss time at work and lose money because of it? PIP can help; Med Pay can’t.

Another major difference between the two is that PIP is not subrogable. This means if you file a lawsuit and make a recovery, part of that recovery does not need to be used to repay PIP for what it has paid you already. If you’re injured in a crash and you have $2,000 in medical bills, PIP can pay that $2,000 very quickly. With PIP, you can still make a claim against the at-fault driver, and recover all of your damages from their bodily injury liability insurance policy. If you had Med Pay, the money you recovered from the at-fault insurance company would be used (partially) to repay (subrogate) the Med Pay payment you received.

In short, PIP has all of the advantages of Med Pay with fewer disadvantages. For that reason, we easily recommend buying PIP over Med Pay. Interesting note, if you’re buying insurance from an insurance salesperson, they will almost always try to get you to buy Med Pay.

 

PIP vs UM/UIM

Because PIP is not offered in an amount above $10,000, it is a good idea to also purchase uninsured motorist/under-insured motorist (UM/UIM) protection. This limits the risk of loss in the event that another driver causes a crash and injures you. Instead of hoping they have enough insurance, or hoping that your damages are less than the $10,000 PIP max, your UM/UIM policy can cover the higher expense.

UM/UIM policies start at $30,000 per person/$60,000 per accident and can go all the way up to your own policy’s bodily injury limits. While UM/UIM offers a higher dollar amount of protection, it will only come into play if another driver causes the crash that injures you; if you cause the crash, your UM/UIM policy will not come into play.

For more information about UM/UIM coverage, click here.

 

How much does PIP cost?

Six-month premiums for PIP typically only increase your auto insurance premiums by $10–$20 every six months (~$3 per month). However, as will all things insurance, each person’s premiums will differ, so check with your auto insurance carrier to see how much adding PIP would cost you. If you decline to purchase PIP, it must be done in writing (typically when you buy your policy).

 

Should I buy PIP coverage?

In the end, because PIP coverage is affordable, it’s no-fault insurance, and it covers damages beyond just medical bills, PIP is good coverage to have. We recommend maxing out the amount you can get, too (e.g. $10,000).