If you have been searching around for an auto insurance plan because of your new automobile, you would have inevitably come across this term “Personal Injury Protection”, otherwise abbreviated as PIP. Further research would have thrown out the description of this auto insurance coverage – a coverage that covers medical expenses arising from auto accidents regardless of the at-fault party. At this point, you may begin to wonder: isn’t this kind of like health insurance, as it covers my medical expenses?
Well, you are right in a sense – PIP and health insurance is indeed similar. However, do not confuse the two of them as the same entity; there are many differences between them that may not be obvious on the first look. Let’s take a look at the differences between them.
Health insurance is a package, PIP is just one coverage
Health insurance is, in fact, your portfolio that comprises of different coverage which is pre-determined by you. It can contain coverage for out-patient care, drug prescription benefits or consultation fees. However, PIP is just a coverage in an auto insurance package. Although it bears many similarities to health insurance, it only covers one aspect of an auto insurance policy.
Difference in coverage
As mentioned, PIP only covers medical expenses that arise from auto accidents. In essence, this means that if you are the driver of the car involved in the auto accident, or a passenger of the cars involved, or even a passer-by that was unlucky enough to be implicated in the auto accident, you will be eligible to claim PIP.
However, health insurance has a larger area of coverage. It will allow you to claim the payout for any medical-related fees that is stated in the health insurance. For example, you will be covered for prolonged periods of hospitalization under the long-term healthcare coverage.
It is interesting to note that if your hospitalization was due to an auto accident; your PIP will kick in first, even though your health insurance policy and PIP covers essentially the same thing.
PIP is required by law
In some states, it is compulsory for all vehicle owners to be covered by PIP. This is part of the no-fault law that many states have enacted, which restricts the rights of parties involved in an auto accident to mount a lawsuit suing the other party. This move is to reduce the expenditure and costs arising from an auto accident, thus reducing the financial burden of the parties involved in the accident.
However, health insurances, although a necessity, are not compulsory. There are more than 50 million people to date in America that do not own a health insurance policy, and that number is set to grow. It is still recommended that you get a health insurance policy, because it will prevent you from being struck by sudden medical bills incurred from medical emergencies. However, if you are in a state where PIP is mandatory, you might want to remove some of the coverage that overlaps what PIP covers to save on your monthly premium paid.
Health insurance usually doesn’t cover loss of wages
Health insurances usually do not cover loss of wages. This means that if you are unable to work, and lose some of your income as a result of an accident, health insurances will not reimburse you of your loss of income.
However, PIP does cover loss of wages. In an event of an auto accident, a person covered by PIP will received reimbursements from the insurer for his or her loss of income due to the accident. In a sense, this makes PIP more attractive that health insurance, even though health insurance is many times more comprehensive than PIP; PIP only covers medical bills arising from auto accidents.
PIP does not have deductibles
As with any insurance package, you are required to agree to the amount you are willing to set aside as deductibles for your health insurance. This means that you will pay this set amount, while your insurer will pay the remaining outstanding medical fees.
However, PIP does not require the insured to agree on the deductibles he or she will need to pay. As long as the medical expenses arising from the auto accident is reasonable and within the range of coverage of PIP, the full amount of medical expenses will be borne by PIP’s coverage.
Many people think that with health insurance, you will not need PIP. However, judging from the points above, it might still be a good idea to get PIP – auto accidents are prevalent, especially if you spend a lot of your time on the roads. With better coverage for auto accidents, PIP will be a better option for heavy road users, rather than just depending on health insurance alone.