When you buy your first insurance policy, you’ll definitely be blown away by a hurricane of words you’ve never seen in your life – terms such as comprehensive coverage, no-fault laws, and liability coverage mean nothing to you at all. Of course, your friendly insurance agent will go through these coverage, conditions and terms step-by-step with you, but chances are that you would’ve tuned out by the third paragraph. However, you must understand this auto insurance coverage, even if have just absorbed more than your fill of auto insurance lingo: Personal Injury Protection.
What is Personal Injury Protection?
Personal Injury Protection (PIP) is an auto insurance coverage that covers any medical expenses, and, in certain insurance policies, lost wages and other costs specified in the policy of the insured in an auto accident.
The PIP is sometimes termed as an extension of car insurances – it extends coverage to yourself and your passengers. Why passengers, you ask? This auto insurance coverage will payout for anybody involved in the auto accident. Since your passengers are considered to be in an auto accident if you, as the driver, is involved in an car accident, your PIP will payout for their medical bills and other costs as well.
PIP is also termed as “no-fault coverage”, as it is mandatory in states that have the no-fault law in place to be covered under PIP. In no-fault states, the insurance company is to payout the insured sum to the insured, regardless of the at-fault party. As such, by enacting this rule, it makes sense to make PIP compulsory for all road-users; for you to claim the insured sum from your insurer, you will need a coverage that pays out for any accident you might be involved in. The actual fault-finding process is done by the two insurance companies involved – they will claim the damages from the other company whose client is found to be the one at fault.
Who is covered under PIP?
It may seem like a nonsensical question to ask – the person who’s insured is covered, of course! However, what many people do not know is that PIP also covers (as mentioned above) the passengers of the driver involved in the accident, and even pedestrians who are involved! It makes perfect sense – this coverage pays out for anybody who is involved in an “auto accident”.
However, it must be noted that PIP does not cover motorcycles, off-road vehicles and farming equipment (such as harvesters). It is possible to get a quote for a coverage that offers a same package as PIP, but it will be ridiculously expensive, especially for motorcycles. You might be better off buying health insurance instead of wasting your money for this.
In addition, PIP does not cover racing events as well – this means that if you crash your vehicle in a racing event, and incur medical expenses due to the crash, the expenses cannot be claimed from your PIP.
I’m still not convinced why I should get PIP
If you are still not convinced why you should always get PIP, here’s the best reason – PIP WILL payout up to 80% of the expenses incurred in an auto accident, even if you’re the one at fault. There will not be any legal costs, as fault-finding and lawsuits are restricted under the no-fault law (which usually comes with PIP), leaving you in a much better financial situation than if you are not covered by PIP.
States That Require Personal Injury Protection Coverage
Of course, if you’re adamant about not getting PIP, then you should know this – as long as you are in a state that practices the no-fault law, PIP is a mandatory coverage. The states where PIP coverage is mandatory include Minnesota, Florida, Kansas, Pennsylvania, Kentucky, Hawaii, Massachusetts, Michigan, New Jersey, New York, North Dakota and Utah.
What if I’m already covered by health insurance?
This issue has been raised many times – do I still need PIP if I’m covered by health insurance? If we leave out the people staying in no-fault states (you’ll have to get PIP even if you’re already covered by health insurance), it will make sense not to get PIP if you already have a personal health insurance policy in place; your health insurance coverage might already include medical expenses and loss of wages in an event of an accident.
However, if your occupation involves you to be frequently on the road, and requires you to carry passengers, it will be advisable for you to still purchase PIP. In the event that you are involved in the accident, the PIP will help you to pay the medical expenses incurred by your passengers. Without the PIP, you might become neck-high in debts from the medical expenses your passenger might claim from you.